Progress Australia: are things improving?

Charlie Nelson
January 2012

In February 2008, the President of the French Republic, Nicholas Sarkozy, created a commission to investigate how to improve the current state of information about the economy and society.  The aims were to identify the limits of GDP as an indicator of economic performance and social progress; to consider what additional information might be required for the production of more relevant indicators of social progress; to assess the feasibility of alternative measurement tools, and to consider how to present the statistical information in an appropriate way.

The commission’s report (Commission on the Measurement of Economic Performance and Social Progress, headed by Professor Joseph E. Stiglitz, Professor Amartya Sen, and Professor Jean-Paul Fitoussi: www.stiglitz-sen-fitoussi.fr) provides some compelling arguments for changing the way we measure progress:

  • GDP is an aggregate measure and provides no insight into the distribution of income and wealth.  It is quite possible for GDP per capita to rise while most people are becoming worse off.
  • GDP and other commonly used official statistics may not measure factors which are important to the wellbeing of citizens.  For example, it is possible for the health system of a country to deteriorate even as GDP increases.
  • GDP is an inadequate metric to gauge wellbeing over time, particularly with regard to environmental sustainability.
  • The global economic crisis of 2008 and 2009 has highlighted inadequacies of current economic measurement systems which did not signal that the seemingly strong global economic performance between 2004 and 2007 may have posed some threat to future economic growth.

Several countries have moved in the direction of setting up sets of measures of progress which go beyond GDP.

Bhutan, for example explicitly sets out to maximise gross national happiness rather than gross domestic product.

Canada has an Institute of Wellbeing (“It’s about our wellbeing, not just our economy”, www.ciw.ca) and some other countries have followed this lead.  The Canadian Institute of Wellbeing was established in 2009, following a range of recommendations and roundtables from 1999.

In 1998, Australia's CSIRO published a book edited by Richard Eckersley, titled "Measuring Progress: is life getting better?"  The Australian Bureau of Statistics  now regularly publishes a diverse set of progress indicators - http://www.abs.gov.au/ausstats/abs@.nsf/mf/1370.0.55.001?OpenDocument.

I will be writing more on this theme in the near future.  This will include what we need progress indicators to inform us about and links to some indicators.

Australia's perceived financial wellbeing displays an upward trend.

 

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