Opinion Measuring wellbeing still in the too-hard basket

OPINION: The danger is that national statistics end up measuring what it is easiest rather than that which is important, writes Peter Shergold in the National Times.

Peter shergold

OPINION: It was in May 1968 that Robert Kennedy, with characteristically brilliant oratory, identified the abject failure of governments to measure the quality of life afforded their people.

The traditional statistic – per capita Gross Domestic Product (GDP) – ''does not allow for the health of our children, the quality of their education, or the joy of their play; it does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials . . . it measures everything, in short, except that which makes life worthwhile.''

Listen to the speech on YouTube:  it will raise the hairs on the back of your neck.

Two generations on, governments are struggling to tackle Kennedy's challenge.

As not-for-profits increasingly seek to measure social returns on investment, and companies strive to measure their impact on society, spare a thought for the world's statisticians.

Frustrated with the shortfalls of GDP as an indicator of wellbeing, they are attempting to find alternative means to measure progress in the quality of people's lives.

It's not a moment too soon.  Democracy is under challenge.  Levels of trust in politicians are worryingly low.

The public lacks confidence in government statistics.  In France and Britain, for instance, only one-third of citizens believe official figures, according to the Commission on the Measurement of Economic Performance and Social Progress, a French initiative, led by renowned American economist Joseph Stiglitz.

The commission concluded that for many purposes there were better economic statistics for measuring wellbeing than a measure of production: levels of real household income, for example, or the extent of income inequality.

It is not that GDP is a wrong measure but that it is often inappropriate as a measure of what people care about. In many instances data on social or environmental wellbeing is more relevant.

Not surprisingly, there is a renewed sense of urgency among government statisticians.  In May this year the OECD, as part of its 50th anniversary celebrations, launched the Better Life Index.

The Better Life Index seeks to respond to the commission's challenge.  It measures 11 dimensions, with 1-3 indicators in each:  housing, income, jobs, education, the environment, governance, health, life satisfaction, safety and work-life balance.

Each visitor can weight the variables online as they want and share their views with others via Twitter or Facebook.  This is statistics in the age of social media.

When all criteria are rated equally Australia ranks highly on the index with only Canada scoring better. We perform particularly well in the community category. As a result, some 75 per cent of Australians are satisfied with their lives compared to just 59 per cent for the OECD as a whole.

The United Nations is also actively seeking to move beyond traditional measures of national wealth.

The UN Development Program argues that ''an excessive obsession with the creation of material wealth can obscure the ultimate objective of enriching human lives''.

Seeking to redress that defect, it has recently issued its 2011 Human Development Report. It creates a composite index by measuring three dimensions – health, education and living standards.

Now I know that your ethical self will recognise the dangers of putting such data into league tables. But I also know that your inquisitive self wants to know how Australia performs.

The answer is that of 269 countries (47 developed nations) we rank second after Norway, performing slightly better than the Netherlands, the US, New Zealand and Canada.

In short, the more comprehensive statistical metrics suggest that Australia provides a better quality of life than measures of GDP indicate.

But how do we judge ourselves? The Australian Bureau of Statistics (ABS) has been on the job since 2002. The most recent Measures of Australia's Progress (MAP), for 2010, has just been released.

MAP measures economic performance, social wellbeing and the environment.  The indices are constantly being developed and improved – the 2010 version, for example, includes for the first time an indicator of low-income rental affordability.

The MAP dashboard is a very powerful visual tool that helps us assess the extent to which life in Australia is getting better.

On most indicators – health, education, work, income, wealth and economic well-being – things are improving.

On some – crime, housing or productivity – there's been no significant movement over a decade.

On others – biodiversity and atmospheric pollution – indicators suggest that things have become worse.

It's a good start but the truth is that the attempt to measure the quality of life over time and between nations is still in its infancy. Thorny problems bedevil the task.

Is it appropriate for economic and environmental indicators to be traded off?

Should we balance statistics of current wellbeing (both economic and societal) with measures that might indicate future sustainability (such as levels of indebtedness or environmental degradation)?

In spite of the statistical efforts there remain weaknesses in the measurement of some of those essential ingredients of national progress that continue to inspire people around the world.

Democratic engagement, participatory citizenship, protection from the arbitrary exercise of executive power and freedom of speech are aspects of life for which people are willing to risk their lives.

The danger is that national statistics end up measuring what it is easiest to measure rather than that which is important.

Peter Shergold is Macquarie Group Foundation Professor at UNSW’s Centre for Social Impact and Chancellor of UWS.