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GDP’s power stems from its symbolic and political use, not just its use in econometric analyses by civil servants.
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To really go beyond GDP, citizens must be involved in the creation of a small set of headline indicators that can shape our understanding of progress and redefine political debate.
Critiques of GDP as a measure of progress have been rehearsed since the establishment of the indicator in the 1940s. GDP includes expenditures that do not contribute to welfare, it excludes the care labour that our societies are built on. It doesn’t consider inequality or the state of the environment. And, most fundamentally, as Robert Kennedy said in 1968, it simply doesn’t measure “that which makes life worthwhile”. Today such critiques have become mainstream, and the European Union’s conservative President Ursula von der Leyen followed politicians such as David Cameron and Jacinda Arden by quoting Kennedy at the Beyond Growth conference in the European Parliament last month.
However, there is some disagreement about the most important implications of this mismeasurement, or at least the solutions that need to be prioritised. Some have considered ‘going beyond GDP’ as a technical issue. They talk about the needs of policy-makers for a broader set of wellbeing and sustainability indicators that can help them better track progress, identify problems and redirect resources. Recognising that this cannot be simply about increasing the number of environmental indicators used in environment ministries or the number of social indicators in social ministries, there has been a focus on dashboards or tools that are intended to be used across policy areas. For example, the UK Green Book for cost-benefit appraisals now includes guidance on how to include wellbeing assessment. New Zealand has a Living Standards Framework that is used in budgeting decisions, and the UN has developed the Sustainable Development Goals, which the Secretary-General considers to be “the most comprehensive ‘Beyond GDP’ framework agreed to and measured today”.
But, as has been noted again and again, these initiatives are not having the transformative effect on policies that some Beyond GDP advocates had hoped for. Even in those countries that have been most progressive on this agenda, such as New Zealand and Scotland, new measurement has, according to political scientists Anders Hayden and Clay Dasilva, at best only achieved incremental improvements, rather than the transformational change required to address climate change and inequality.
Of course, indicators on their own won’t change the world. As Jason Hickel put it at the Beyond Growth conference, “if you are speeding towards a cliff, it is not enough to simply fiddle with the speedometer in your car”. But indicators can make a difference: not simply because they help us measure things; but because they communicate things.
GDP’s power does not stem only from its use by policy-makers in decision-making, but because it frames political debate and, even more profoundly, frames our understanding of progress. If we want to go beyond GDP, we need to understand this and create an alternative (or even just a complement) that has the same framing power. This is a point made by Lucas Chancel, Geraldine Thiry and Damien Demailly in an excellent report. GDP influences political debate because politicians squabble over whose policies will increase it the most, and then use the data to defend their own record and criticize the record of their rivals – this is the political use of the indicator. More profoundly, GDP helps concretise the notion of increasing material consumption as the epitome of progress – that is the symbolic power of the indicator.
As Chancel and colleagues highlight, without symbolic power, political use of an indicator will be limited. And without both, the instrumental use will never be deep and transformational, but only marginal.
Can another indicator or set of indicators achieve this power? We believe this is possible, but it depends not just on the indicator(s) themselves, but on a) how they are produced, and b) whether they tell a concise story that people can understand and share.
In terms of the production of alternative Beyond GDP indicators, the French economist Florence Jany-Catrice worries that most alternatives are produced in a similar way to GDP itself – by ‘experts’ in closed rooms. The gender balance may be better than in the 1930s and 1940s (all the people involved in the development of GDP were men), but other forms of diversity are lacking. Jany-Catrice and others stress that the most important question is “who decides what counts”.
Citizens must be involved in the development of GDP’s replacement. It may well be that experts should play more of a role when it comes to sustainability indicators, but when it comes to determining our wellbeing goals, the public should take centre stage. There are plenty of methodologies for doing this, including citizen’s assemblies and deliberative polls. The important thing is that a diverse set of citizens should be given the time and information resources required to discuss and consider the question and that their opinion should make a real difference to the final outcome.
Involving citizens has two key advantages. Firstly, it leads to better outcomes, because it means that a broader set of perspectives are considered, one that better represents society as a whole. More importantly, though, it grants the final outcome much greater legitimacy, meaning that both politicians and the media need to take it more seriously.
But the indicator(s) will only be discussed and communicated if they are understood. And that depends not just on what the indicators are (after all, very few people know what goes into GDP, but we all still talk about it), but how many indicators there are. Why is this important? Well, there are 247 indicators that make up the UN’s Sustainable Development Goals. How are we doing in terms of sustainable development? Who knows? You have to look at 247 points for each country for each year (which actually is not even possible because no country has been able to collect data on all the indicators yet). The UK Measuring National Wellbeing Programme has been running since 2010. Again, how is Britain doing? It’s hard to say because there are 44 indicators. Any attempt to summarise either involves cherry-picking indicators or providing drab and unhelpful summaries such as “15 indicators have gone up, 12 have gone down and 17 have stayed the same”.
We don’t need to replace GDP with a single indicator. Indeed that may be foolhardy because it would involve combining sustainability and wellbeing into a single number, which typically involves implying that they are substitutable; i.e. that it’s okay to damage the planet as long as wellbeing increases enough as a result. My own work on indicators that do this like the Happy Planet Index is more about raising awareness of the issue and creating debate, than a genuine proposal for a replacement for GDP.
But we do need to keep the number of headline indicators limited, such that politicians and the media can remember them and understand the story around them. Anyone who pays even a little attention to current affairs can provide a summary of trends in the three key economic indicators. At the moment, for example in most Western European countries, GDP growth is hovering around zero, inflation is high but falling, and unemployment is relatively low. Three indicators, we can manage. Few people know the exact figures, but what’s important is the general narrative.
Much more than three, however, and most people struggle. This can be understood in terms of cognitive capacity: how many bits of information can a person retain in short-term memory? But it can also be understood in terms of ability to follow stories. Anyone who has been in a meeting which involves breakout groups will recognise the general pattern of forming groups of around four to six people. That’s because it becomes harder to treat group members as individuals as you start to form bigger groups. As workshop facilitator David Gurteen puts it, conversations in groups bigger than that become a series of monologues, rather than dialogues. That’s because there’s a limit to how many different perspectives, or how may stories, we can consider simultaneously.
With that in mind, NEF created a proposal for Five Headline Indicators of National Success for the UK in 2015. The story from that report was that, over the previous four years “wellbeing and health were improving but CO2 emissions and inequality were rising and the percentage of people in good jobs was falling”. That’s manageable – the media can summarise it and people reading the news can understand it. Any more information would require more attention that most people would be willing to give.
The idea was taken up by IPPR three years later, who made their own recommendation for five indicators. Unfortunately, these recommendations have had limited impact because, to be blunt, they lack legitimacy. They are the products of experts in rooms, with no government backing, let alone citizen engagement (although NEF did engage a wide range of civil society organisations).
Excitingly, however, sections of the European Commission have also begun to recognise that GDP will not be replaced (or in their case, complemented) with a large dashboard of indicators. The DG for Economic and Financial Affairs published a discussion paper making this point. Meanwhile, DG Research recently commissioned a study to demonstrate that five indicators are enough to provide a reasonable overview of wellbeing and sustainability issues. The study calls for a public process to choose such indicators.
Returning to my first point, that public process should involve citizens as much as possible. More work could be done to decide whether exactly five is the right number, but between three and six indicators seems reasonable. Once they are chosen, politicians would have the duty to work to improve performance on them, and the media can be expected to understand societal progress in terms of their development over time.
It is time for a small set of indicators chosen by the public to overcome the global hegemony of an indicator created by Western male economists almost a century ago.
