The Main Approaches to Measuring Progress and Measuring Well-

being

Barbara Iasiello& Jon Hall Global Project, OECD

How to Measure Progress?

How to Measure ProgressThree Approaches

1. The Accounting Framework Approach

Extension of traditional economic accounts based on GDP, to capture the environment or social concerns

SESAME Approach

• The SESAME can be defined as a detailed and integrated statistical information system in matrix format, from which a set of core (macro-)indicators for different aspects of well-being can be derived (Keuning, 1997)

• Usually it includes many indicators as: GDP, population size, (un)employment, inequality, education, environmental indicators, etc.

Agriculture, forestry and fishing

Mining and manufacturing

Electricity, gas and water supply

Care and other service activities

ConstructionTrade, hotels, restaurants and

repairTransport, storage and

communication

Finance and business services

Other commercial services

General government

Total

GDP

Paid employment and self employed persons

Low educati

on

Total employm

.

High education

Low educati

on

High educati

on

Female Total

Male

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Source: Keuning, S., Verbruggen, M., European Structural Indicators – a Way Forward. June 2003.

Strengths & Weaknesses

Very powerful tool for analysis

Investment in terms of the amount of data to be collected and the resources needed

How to Measure ProgressThree Approaches

2.The One-Number Approach

Development of composite indicators of progress that combine detailed information into a single measure

The GPI

GDP

Add uncounted benefits (egunpaid work, parenting)

GenuineProgressIndicator

Strengths & Weaknesses

Powerful tool for advocacy

Difficulty in aggregating units measured in different ways – adding apples and oranges, or valuing things like “parenting” in $s

Difficult to interpret the results without stepping back to investigate the components

How to Measure Well-being

Three Approaches

3. The Suite of Indicator Approach

Identification of a set of key indicators covering economic, social and environmental domains

Strengths & Weaknesses

It has the advantage of covering a wide range of topics, without the need of estimating individual weights.

Can be difficult to interpret Can include too much information

Indicators

• Measures should be “unambiguous" that is have a clear good/bad direction of movement

• Important to focus on the big picture• Important to discuss the links

between indicators ….. trade-offs and reinforcements

Progress: Objective and Subjective Components

• Objective components – longevity, income, air quality

The stuff we can measure exactly

Progress: Objective and Subjective Components

• Subjective components – fear, trust, happiness, life satisfaction

Must ask people how they feelBusiness ConfidenceSelf assessed health

Objective and Subjective Assessments Are

Important

Level of Subjective well-being

high low

Objective living conditions

high well-being dissonance

low adaptation deprivation

Measuring Subjective Well-being

Arguments For• Nice organising principle• Public are interested – and a growing

demand• Solid evidence that high subjective

wellbeing correlates with other “hard” aspects of wellbeing e.g. health

Happiness and Health

The Nuns

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Measuring Subjective Well-being

Arguments Against• Difficult to measure • Difficult to find policy relevance for

measures (at least for generalised measures of life satisfaction)

• Doesn’t appear to change a great deal over time (though there is a life course effect)

• Not “appropriate” ground for a statistical office

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A Happy Planet Index

• Launched by nef in July 2006• HDI style rank order of nations• Measure of the “Ecological

efficiency with which human well-being is delivered”

• Over 1,000,000 downloads to date

What HPI measuresHuman system

Ecosystem

Resource

demand

Ecosystem well-being

Human well-being

Culture

Social Capital

Governance

Economy

EducationHealthcar

e

Natural Capital

Biodiversity

CO2 emissions

Soil erosion

Water quality

Air quality

What HPI measures

Human system

Resource

demand

Happy and Long Lives

Resource Use

(divided by)

Human well-being

What HPI measures

Human system

Resource

demand

(Life Sat) * (Life Exp)

Eco Footprint

(divided by)

Human well-being

Measuring Progress to Foster Progress

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The benefitsThe benefits

for citizensfor citizensfor policy makersfor countries

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The benefits – for citizensThe benefits – for citizens

• Promote accountability and enhance citizen engagement…

….improve citizens knowledge giving them the opportunity to improve their decision making processes and to become more aware of the risks and challenges of today’s world

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The benefits – for policy The benefits – for policy makersmakers

• Policy makers can better assess the current situation, make more informed decisions, and measure progress over time and relative to other nations

• Better coordination in government• Data to advocate necessary reforms and

evaluate their impact on societal welfare

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The benefits – for countriesThe benefits – for countries

• By highlighting the issues that genuinely matter to a society, a set of progress measures can help a country best meet the needs of its citizens by focussing attention on the key outcomes

• ‘Sunshine is the best disinfectant’…….transparency has the ability to reduce waste, prevent corruption, and shift resources where they’re truly needed

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Progress Measures Can Help…Progress Measures Can Help…

Promote greater accountability Enhance the quality of public

debate Help countries prioritize

resource allocation

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Progress Measures Can Help…Progress Measures Can Help…

Enhance democracy …

… enhance decision making …

… and so generate progress

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• “Measuring the Progress of Societies is one of the most important roles the OECD can take on”– Angel Gurria, OECD Secretary General

• "World GDP growth has been faster than it has been for a very long time. But people are not particularly happy"– Kemal Dervis, Head of UNDP

• " Progress indicators are a way for people to hold their government’s accountable "– Francois Bourguignon, Chief Economist of the

World Bank 31

Group Exercise

The Secretary General of the League of Arab States has asked your group

to develop a set of indicators of progress.

Your Job is to

Choose a concept related to progress that covers different dimensions – eg poverty, social cohesion, etc. –and explain why it is important for progress.

Discuss what specific aspects of Arabian life need to be included in this concept.

Develop the specific indicators that need to be included in the set of indicators.

Your Job is to

For example… develop indicators of “Safety”. Safety must be defined….

Safety … might be made up of dimensions like crime, defense, road accidents … each dimensions must be measured using an indicator…

Crime … could be the homicide rate, the mugging rate, people in prison.

List the specific indicators you want to include for measuring Safety

You have to

Prepare a five minutes presentation describing your set of indicators and

why it is important for Progress.