Stiglitz-Sen-Fitoussi-Commission

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The Commission on the Measurement of Economic Performance and Social Progress ( CMEPSP ) , named after its leaders as the Stiglitz-Sen-Fitoussi-Commission , was a commission of experts that, on behalf of the French government under Nicolas Sarkozy, examined the means by which prosperity and social progress were made Measure progress without relying one-sidedly on income variables such as gross national product. The commission was formed in February 2008 and Joseph E. Stiglitz was appointed its chairman. Amartya Sen acted as scientific advisor and the coordination was carried out by the French economist Jean-Paul Fitoussi . The commission comprised a total of 25 renowned economists and social scientists. The Commission's final report was presented in September 2009. Twelve recommendations relating to the three subject areas of economic indicators, quality of life and sustainability / the environment are presented and explained. In addition, there is a statement from the three leading personalities, which deals in particular with the task set against the background of the financial crisis from 2007 onwards .

Executive summary

The summary of the final report emphasizes that the importance of statistical indicators for the assessment of measures for the further development of society is increasing. Because what is measured influences action. Wrong measurements thus lead to wrong policies. Previous statistics on growth , unemployment or inflation often do not correspond to the perceptions of the citizens. The frequent focus on gross domestic product as the sole indicator for economic development is criticized.

For example, GDP growth is not a sufficient indicator if at the same time inequality is increasing and a significant part of the population does not benefit from growth. For example, more traffic jams on the motorways lead to increased gasoline consumption, which is reflected in higher GDP, although the well-being of those affected has decreased and they have less money available for other consumption . The GDP as an indicator does not give any information about air pollution or climate change . The task is therefore to look for a sensible method of measuring welfare that also takes into account the ecological and social aspects and the question of sustainability .

The importance of the task is also shown by the fact that the financial crisis of 2007 and the subsequent economic crisis were not predicted by previous reports and that all political decision-makers were surprised by the development. However, one should not overestimate the forecasting possibilities for such relationships. Nevertheless, the report shows that some other data and new indicators can be used to indicate the need for change.

The commission set up three working groups to deal with the issues. With the above-mentioned focuses:

  • Questions of the classic measurement of the national product
  • life quality
  • sustainability

As a result of its work, the commission makes twelve basic recommendations:

Recommendation 1: When measuring well-being, income and consumption should be recorded instead of the previous measurement of production .

GDP expresses the value of production for the market in monetary units. However, this value cannot express the prosperity of a society. The actual standard of living results from the income. The production value can deviate significantly , for example due to price changes or exports of income and consumption.

Recommendation 2: Pay more attention to the household perspective

Studies have shown that real household incomes have in some cases developed more slowly than GDP. One of the main reasons is the state quota and the fact that the state is increasingly providing services, particularly in the areas of education and health , that were previously provided in the private sector and without pay. For this reason, a separate presentation of the household sector is considered useful. In addition, it is recommended to differentiate price indices according to household groups.

Recommendation 3: Consider the relationship between income and consumption and existing wealth

Income and consumption are fundamental to assessing the standard of living, but savings or the consumption of wealth can distort the picture. This also applies at the level of economies . An assessment requires balance sheets in which the assets are recorded. The assessments of the assets should be supported by indicators on sustainability and risk. Non-monetary indicators can also be useful for this.

Recommendation 4: Pay more attention to the distribution of income , wealth and consumption

Average or overall sizes are not sufficient to assess the existing conditions. Thus, an average growth in income may have no effect on part of the population. For this, more information is needed about the conditions in the lower and upper sections of the population. The commission recommends presenting the median income instead of an arithmetic average. In addition, information should also be given on the distribution of economic growth according to different socio-economic groups in order to be able to show the development of the income gap. The calculation of the Gini coefficient is considered useful here.

Recommendation 5: Increase the income measures to include informal activities

There have been significant shifts over time. Today, more and more services are offered on the market that used to take place in the private sector and without pay, such as the care of the elderly and the sick. As these activities are now recorded in the income statistics, the reported prosperity increases, although there has been no factual change. This also affects the comparison between countries, although in the less developed countries the proportion of goods directly produced in households is much higher. As a measure of well-being, the available free time must also be taken into account.

The commission emphasizes that well-being has to be determined in several dimensions. She mentions dimensions that cannot be expressed in terms of income alone:

  1. material standard of living (income, consumption, wealth)
  2. health
  3. education
  4. personal activities including work
  5. Political voice and governance
  6. Social connections and relationships
  7. Environment (current and future conditions)
  8. Uncertainty (both economic and physical)

Recommendation 6: The quality of life depends on the objective conditions and the chances of realization (English capabilities ) of the people. Steps should be taken to improve people's health, education, personal activity and environmental indicators. In particular, significant efforts should be made to develop and implement robust and reliable indicators of social connections, political voting rights, and insecurity that allow statements about life satisfaction.

The information relevant to quality of life extends beyond the self-assessment and perception of those affected, including the options for action (English functionings ) and freedoms. What is really important are people's chances of realization, that is, the scope of their possibilities and the freedom to choose within this scope. Only the availability of goods is not a sufficient measure of quality of life. In order to record the dimensions of well-being, not only objective, but also subjective measurements are required. The existing gaps in the information about this must be recorded and the statistical basis must be expanded and adapted.

Recommendation 7: The indicators on quality of life in all dimensions mentioned should evaluate inequalities in an understandable way.

The indicators should not only be used over time, but also for interpersonal comparison for socio-economic groups, gender and generations, with special attention paid to current developments such as immigration . As well as looking at the persistence of patterns across generations. 

Recommendation 8: The studies should be designed in such a way that the links between the different areas of quality of life can be assessed for the individual and this information should be used in the design of interventions in the different areas.

By creating cross-connections, the effects of individual measures on quality of life in other areas can be recorded. Therefore, in the investigations of various fields, data should be collected that allow the creation of cross-connections.

Recommendation 9: Statistical offices should provide the required information in such a way that the cross-connections between the various dimensions of quality of life are summarized and different indices can be formed.

The statisticians' need lies not only in a variety of indicators, but also in the possibility of combining the selected indicators in such a way that the effect of individual effects can be analyzed in an overall indicator.

Recommendation 10: Both objective and subjective measures provide key information about quality of life. Statistical authorities should set up surveys that deal with the evaluation of life, with joyful (English hedonistic ) experiences and preferences of the people.

Research has shown that there are also ways to define meaningful and trustworthy measures for the subjective assessment of quality of life. The subjective well-being is determined by various aspects such as the cognitive evaluation of one's own life, happiness, satisfaction, as well as positive feelings such as fun and pride, or negative emotions such as suffering and worry, all of which can be recorded in measurable quantities. The previous successful results in smaller studies should be placed on a broader basis.

Recommendation 11: The assessment of sustainability requires a well-identified dashboard of indicators. The distinguishing feature of the components of this dashboard should be that they can be interpreted as deviations from an existing "stock" (English stock = existing assets). A monetary index of sustainability has its place in such a dashboard, but according to the current state of the art , it should essentially remain focused on the monetary aspects of sustainability.

Measuring and assessing sustainability is an aspect of paramount importance to the Commission. However, this is difficult due to the complexity of the topic and is made even more difficult because there is still no uniformity between the various countries for determining sustainability. Sustainability must be examined separately in addition to the current investigation of well-being. Mixing up the topics can lead to incorrect conclusions. The indicators for sustainability must reflect the various stocks of natural resources, human, social and physical capital. The reduction of sustainability indicators to monetary values ​​fails because there are no bases that can be assessed with a market value for various aspects. Moreover, even if such values ​​existed, it would not be guaranteed that the current evaluation would correspond to the perspective in the future.

Recommendation 12: The environmental aspect of sustainability requires a separate follow-up study based on a well-chosen number of physical indicators. Above all, there is a need for a clear indicator that describes the proximity to dangerous levels of environmental pollution (e.g. climate change or overfishing ).

The selection of adequate indicators requires, on the one hand, the competence of natural scientists ; on the other hand, the requirements are global, so that the approach of individual national statistical authorities must remain inadequate.

As regards the way forward, the Commission stresses that it regards its report as a beginning which should lead to further research and further development through discussion in the professional world.

Commissioners

literature

  • Joseph Stiglitz, Amartya Sen and Jean Paul Fitoussi: Mismeasuring Our Lives. The New Press, New York 2010, ISBN 978-1-59558-519-6

Web links