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Five Questions for Erwin De Leon

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Erwin de LeonErwin de Leon answers five questions about moving beyond gross domestic product (GDP) as a country’s sole measure of prosperity. In “The State of Society: Measuring Economic Success and Human Well-Being,” de Leon and coauthor Elizabeth T. Boris identified 14 categories of indicators that together provide a more accurate and complete picture of how a society and its economy are faring.

July 6, 2010

1. The gross domestic product is the default measure of success, but your report points out that it’s not enough. What does GDP fail to consider?

The GDP is an economic metric, so it doesn’t consider non-economic realities. It fails to reflect individual lives, communities, and families—and a country’s economic success depends on its people’s development and well-being. For instance, it doesn’t include unpaid work, including time spent caring for children and the elderly. It doesn’t capture the state of the environment, access to education, social inequality, or the status of women and minorities.

Even as a measure of our economic well-being, it’s inadequate. GDP went up during the third and fourth quarters of 2009, indicating economic progress and recovery. But the unemployment rate tells a different story.

For decades, policymakers and researchers have been saying we need to look beyond GDP when we talk about a country’s progress, but we still rely on it. It’s easy. It’s one number, and people like numbers. It’s an important statistic, but the problem starts when GDP is used as a catch-all for everything that’s going on in a country. It was never meant to symbolize everything.

2. Your report describes 79 indicators of national well-being organized into 14 categories—poverty, health, education, employment, income and wealth, shelter, national environment, political participation, civil society, economic participation, human rights, national stability and sustainability, family and household well-being, and personal well-being. How did you decide what to include?

"The GDP…fails to reflect individual lives, communities, and families—and a country’s economic success depends on its people’s development and well-being."

We looked at 28 reports on alternative measures of well-being. Most homed in on certain areas—say, children or women or the environment. Others were more multidimensional. Many indicators were used over and over, such as school enrollment, health statistics, and the poverty rate. We pared down the list and organized it into 14 categories, though some indicators span different categories. Taken together, these indicators comprehensively assess national and individual well-being.

No one category can give you a complete picture. And these categories should not be considered separately because each one influences the others. For example, look at political participation. The number of women leaders in office is affected by that country’s educational system and the health and poverty of its citizens. If young girls can’t go to school, they won’t have the knowledge or self-esteem to participate in government.

Another way to frame it is to think of measuring well-being in a single person’s lifespan. Every step matters. Maternal health and prenatal care affect a baby’s health and development. Once the baby is born, his or her life chances depend on family circumstances and environment—is the baby a boy or girl, is the family poor, is formal schooling available? Education affects employment, which affects income and wealth, and so on.

3. Your report doesn’t single out any one category but does stress measuring the economic contributions of women, especially their unpaid work as caregivers. Why?

Women make up at least half of the world’s population and deserve more attention. Also, women are the main caregivers of children and the elderly. This important economic contribution is not captured by GDP or other institutional measures. Moreover, caregiving is an investment in the next generation, which affects a country’s economic success.

We also stress the importance of measuring the lives and well-being of minorities—racial and ethnic populations; indigenous peoples and tribes; lesbian, gay, bisexual, and transgender individuals, etc. The idea is to look at the entire spectrum of society.

4. How do you measure well-being?

There’s the rub. Even though policymakers and researchers have been talking about alternative measures of well-being for decades, there’s no consensus. There’s general agreement that poverty, health, and education should be measured, but some argue that measuring personal or family well-being is too qualitative. Some studies have quantified individual well-being, however.

So first we have to agree on what to measure—no mean feat. Then we need to agree on the methodology—how to measure. Some countries don’t have the capacity to measure many of these indicators. And some countries may not want to quantify their progress on, say, human rights or the environment.

Also, it would be hard to come up with a statistical model that ties all 14 categories together. There are plenty of challenges, there’s no doubting that, but they shouldn’t discourage us from looking beyond GDP.

5. Why is it important to measure the state of society?

We should, as a society, be concerned about the well-being of our citizens, who, at the end of the day, are the drivers of our economy. Measuring poverty, inequity, human rights, and so on gives us a handle on our status.

The debate over alternative measurements has been around for a while, but it seems to be coming to a head. The federal government is funding a new set of indicators called the State of the USA Project. And the Commission on the Measurement of Economic Development and Social Progress—created by French President Sarkozy and chaired by Joseph Stiglitz from Columbia University—released a report on measures of societal well-being last year.

It’s great that we’re all talking about the same need. Our report pulls together common indicators and identifies gaps in current efforts. We hope that it informs and fuels a deeper dialogue about how to move beyond GDP to create more accurate and comprehensive measures of well-being.