Tuesday, August 9, 2011

[EQ] Report by the Commission on the Measurement of Economic Performance and Social Progress

Report by the Commission on the Measurement of Economic Performance and Social Progress


Professor Joseph E. STIGLITZ, Chair, Columbia University

Professor Amartya SEN, Chair Adviser, Harvard University

Professor Jean-Paul FITOUSSI, Institut d'Etudes Politiques de Paris, President of the Observatoire Français des Conjonctures Economiques (OFCE),
Coordinator of the Commission, IEP

Available online PDF [292p.] at: http://bit.ly/qqoIll


“……………statistical indicators are important for designing and assessing policies aiming at advancing the progress of society, as well as for assessing and influencing the functioning of economic markets.

Their role has increased significantly over the last two decades. This reflects improvements in the level of education in the population, increases in the complexity of modern economies and the widespread use of information technology. In the “information society”, access to data, including statistical data, is much easier. More and more people look at statistics to be better informed or to make decisions. To respond to the growing demand for information, the supply of statistics has also increased considerably, covering new domains and phenomena.

…… What we measure affects what we do; and if our measurements are flawed, decisions may be distorted. Choices between promoting GDP and protecting the environment may be false choices, once environmental degradation is appropriately included in our measurement of economic performance. So too, we often draw inferences about what are good policies by looking at what policies have promoted economic growth; but if our metrics of performance are flawed, so too may be the inferences that we draw.

…….However, there often seems to be a marked distance between standard measures of important socio economic variables like economic growth, inflation, unemployment, etc. and widespread perceptions. The standard measures may suggest, for instance that there is less inflation or more growth than individuals perceive to be the case, and the gap is so large and so universal that it cannot be explained by reference to money illusion or to human psychology. In some countries, this gap has undermined confidence in official statistics (for example, in France and in the United Kingdom. only one third of citizens trust official figures, and these countries are not exceptions), with a clear impact on the way in which public discourse about the conditions of the economy and necessary policies takes place.

……… There may be several explanations for the gap between the statistical measurement of socio-economic phenomena and citizen perception of the same phenomena

– The statistical concepts may be correct, but the measurement process may be imperfect.

– In many cases, there are debates about what are the right concepts, and the appropriate use of different concepts.

– When there are large changes in inequality (more generally a change in income distribution) gross domestic product (GDP) or any other aggregate computed per capita may not provide an accurate assessment of the situation in which most people find themselves.

If inequality increases enough relative to the increase in average per capital GDP, most people can be worse off even though average income is increasing – The commonly used statistics may not be capturing some phenomena, which have an increasing impact on the well-being of citizens……….”

– The way in which statistical figures are reported or used may provide a distorted view of the trends of economic phenomena……..”





Chapter 1: Classical GDP Issues

Chapter 2: Quality of Life
Chapter 3: Sustainable Development and Environment


Chapter 1: Classical GDP Issues

Chapter 2: Quality of Life

Chapter 3: Sustainable Development and Environment




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