National Well-being

last person joined: 13 days ago 

Aims to promote discussion and debate on the development of new measures of national well-being and how they can be used to meet the needs of policy and the public. This is a new community in its early stages.

1.  GDP and national well-being

Posted 21 days ago
To Jonathan Athow, Deputy National Statistician, ONS

Dear Jonathan,

Very interesting blog on GDP. While I agree wholeheartedly with your title, that GDP is a worthwhile but incomplete measure, there are many aspects of what you say that I think need to be discussed and explored as widely as possible. It is therefore a tad disappointing that your blog is not presented in a way that invites engagement. So I thought that I would also post this email [here] on the National Well-being community on StatsUserNet, as one way of broadening the discussion. I hope there will be many other opportunities for debate and discussion of how we develop and, crucially, use wider measures of progress, given the universal commitment "to developing broader measures of progress to complement gross domestic product (GDP)" in the UN 2030 Agenda.

It seems to me that the starting point is to understand why there are calls for a new version of GDP, rather than leap to solutions such as extending GDP itself or supplementing GDP with a suite of other measures. The issue seems to be at least some discontent with a single economic goal of maximising GDP growth. Let's put that more neutrally: there are clearly user requirements for official statistics that will help guide policy, commercial and personal decisions taking into account not only economic growth but also environmental and social impacts (ie national well-being). This includes understanding inequalities – recall the prescient riposte to Anand Menon pointing out that the picture he painted in terms of GDP per head was not recognised in other parts of the country, which prompted Andy Haldane's Whose Recovery? speech.

I'm afraid that it is not good enough simply to point to the suite of national well-being measures that ONS is developing and publishing (declaration of interest: I helped set them up). Back to engagement – and Sir Michael Barber's report last November had much to say about the importance of the public sector engaging with users – just putting stuff on your website really doesn't do it. It is fine to come up with satellite accounts and supplementary indicator sets, but they are still presented as that; subsidiary and only assumed to be of interest to those who know they are there. Instead of devoting resources to speeding up the release of GDP, for example, why not seek to meet a wider range of user requirements by showcasing the well-being and sustainable development measures, including GDP?

David Hand and I set out a proposal for a process that includes user engagement in our 2017 ISR paper. One or two people have pointed out that there is little chance of adapting the SNA process to run along the lines we suggest, but I think that misses the point. We envisage national statistics offices taking a broader look at how they meet emerging requirements for wider measures of progress. Any proposals for developments to SNA itself would be handled within that wider framework.

Btw, I am not totally convinced by your point on excluding areas of activity from the national accounts on grounds of lack of accuracy. Now that sex and drugs are counted, as black market activities (and I see Statistics Canada is moving to include cannabis use as legitimate consumption), there needs to be a more nuanced understanding of the quality of national accounts data.

Finally, in terms of the scope for changing GDP itself, your argument does come over as somewhat circular: we can't extend the production boundary, for example, because we've always defined it like that. But the activities currently within scope are far from only market transactions. What about all the public services already included? You have no market prices for most of them. And when activities move across the production boundary these days they are considerably more important to the general public than whether a national accountant reduces GDP by marrying his housekeeper. Think for example about the increasing value of care in the community delivered in the community. There must be scope for reviewing the production boundary significantly.

I hope this helps you appreciate that there are significant issues involving user engagement as well as methodological developments around measures of national well-being progress. I look forward to hearing how ONS is taking all of these issues forward, including by engaging with the many stakeholders in this debate.

Yours sincerely,
Paul

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Paul Allin
Chair, Statistics User Forum
Visiting Professor
Department of Mathematics
Imperial College London
p.allin@imperial.ac.uk
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2.  RE: GDP and national well-being

Posted 13 days ago

Thanks for these comments. I think there are some very good points raised.

I and others in the ONS have spent a long time listening to the debate about GDP and well-being – the recent Indigo Prize competition was a great way of seeing the issues, challenges and suggestions. Well-being is clearly about more than the market economy that GDP measures. We have invested heavily in Sustainable Development Goals and other developments such as natural capital. In fact, we are probably a world leader in development of natural capital – something we are proud about and certainly like to shout about when we have the chance.

I want to reassure you and others that we spend a lot of time engaging with users. On the economic statistics side, our users span a vast range, from the Bank of England and city economists who want to understand the fine detail of the UK's economy, right through to the interested citizen. There is a strong demand for better economic statistics, including GDP.

So I don't think it is improved GDP or these wider measures, we need both. And it is certainly something that we in ONS are working on.

I also agree with you on National Accounts and the System of National Accounts (SNA). The National Accounts framework is helpful for ensuring rigour and the SNA promotes international comparability, which is key. But we should not be prisoners of these systems, and times when it makes sense to publish wider statistics and analysis, we should do so. One example is publishing wider statistics on intangible capital, only some of which are currently capitalised in the National Accounts.

I would, however, disagree on the National Accounts boundary. I see two key reasons for the current boundary: it is (broadly) coherent and produces a GDP that is useful for its current purposes of economic and fiscal policy. There are of course challenges. Public services are tricky as often there is no market for the output, but there are markets for the inputs such as labour.

Underpinning your comments is a clear desire for a structured framework for relating various elements of well being. While your and David's paper is an important contribution, this is still a live area for discussion. There are numerous options here. For example, some might say that sustainable development goals provide a good structure, but others would disagree. At the moment our focus is on doing the underpinning work that ensure we have a strong set of statistics, flexible enough to meet a variety of user needs and possible frameworks.



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Jonathan Athow, Deputy National Statistician, Economic Statistics, ONS
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