The WRM onion – what really matters in Wellbeing and BeyondGDP

happy onion catThe Brainpool final conference in Paris went off very well; plenty of agreement about the important things, but plenty of debate about how to do these important things best. I had a few ideas bubbling under before I went and the conference helped them to crystallise. Here is a quick run through what is at the front of my mind at the moment on these issues.

‘Wellbeing’, ‘Happiness’, ‘BeyondGDP’, ‘GDP+’: all of these terms are not quite right or, at best, misleading or ugly ways of saying what the concern is. The concern being about having a focus not solely on GDP in the many areas where there is solely a focus on GDP. A phrase was spoken at the Conference (possibly from Mikael Jungner from Finland) which I think sums it all up –

What Really Matters” (or what I will now call ‘WRM‘)

The beauty of this term is that it fits what I see as a multilevel, yet consistent, way of approaching policy analysis and impact assessment. Particularly, WRM allows a series of interlinked assessments to be made which in aggregate can produce a coherent view on social value.

On the other hand, WRM is not inconsistent with the other side of the ‘composite/single’ indicator argument that we saw in Paris. Gus O’Donnell was very forthright in his promotion of a single personal assessment ‘wellbeing’ measure sitting atop the thinking in this area. And if, indeed, it turns out that ‘wellbeing’ is WRM then we have lost nothing by using such a conception, and indeed have possibly gained something by revealing why we are using the measure we are.

In some cases, with a WRM view, GDP (modified or not) will be an appropriate measure – it may well be that in certain situations GDP is concluded, through participatory approaches, to be ‘what really matters’.

But it will be also obvious when GDP, or any kind of monetisation of difficult to measure elements of ‘the economy’ (whatever that is…), are inappropriate. Through WRM we will see that any approach that requires complex and difficult to calculate methodologies to turn human experience into a monetary value is unlikely to be a good reflection of ‘what really matters’. Indeed, I have a set of objections (or at least strong caveats) to monetising any kind of social value or wellbeing measure. This is because the currency into which other measures are being translated is not transferable equally across the population. Turning measures that are ‘consistent and coherent’, but noticeably different, into monetary values disguises their incompatibility but also deceives us in thinking that money is a unifying measure. But it is clear that any named monetary amount does not mean the same to me as it does to an Australian tycoon or a farmer in Cameroon.

So, on the two sides of the ‘single/composite’ debate there are problems. Wellbeing, self reported, is an individualistic methodological approach, which seems somewhat to miss the point if, as I think, we are trying to assess social value. One would like to assume that social value is not just the aggregation of individuals’ assessments of their own state of mind.

The ‘composite’ model for indicators is also fraught with problems; not least on ‘who decides’ about the weighting of the indicators that go into the final measure.

My (currently, in development) preferred approach can be derived from thinking about ‘what really matters’ as there are two obvious conclusions that leap out from such a phrase:

  • WRM is most likely different in different circumstances, different places at different times and
  • you should ask people ‘what really matters’.

So for now I will leave you with the image of a WRM onion, where the people who are most locally impacted by some issue are at the centre of the onion and, by moving out layer by layer, we produce by means of participatory methods a coherent, but varying, set of assessments of WRM.

Then, once the WRM-onion is complete, it will comprise a view of social value which is the best we can achieve. We must then hand the WRM-onion over to the political decision maker, because, after all, we are not getting rid of democracy. Yet.

 

 

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My top five things to like about GDP

I am hoping to get a post together synthesising thoughts about BeyondGDP, monetisation and composite/multiple indices. This should come before I pop over to Paris for the BRAINPOoL final conference on Monday next week. Following my recent post on the ten things I dislike most about GDP I thought, that in the interests of fairness, I would list five things I like about it.

1. It is well defined – we know what it is and, if it changes, that is well documented – and by extension, its weaknesses and exclusions are clear and evdient

2. It really means something – stuff that is created, or things that are done, and sold, at the prices actually attracted.

3. It is not derived in some intangible and implicit way – we do not research people’s ‘willingness to pay’: they actually did pay!!

4. It’s extensible and arguable – everyone can join in the extension game and it gives a fixed point to go forward from; hence ‘BeyondGDP’

5. It keeps people like me employed  : )

So you can see, that in a bounded sense, I love GDP – so much, that once upon a time I wrote quite a lot of Section V in this document EAA/EAF rev1.1 : a tiny part of the shoulders upon which the GDP giant is built. If you are brave enough to read it, you’ll see how it illustrates quite well the things I like, as listed above!

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Book review: ‘How numbers rule the world’

Peanuts cartoon about mathematics

My review of Lorenzo Fioramonti’s new book ‘How numbers rule the world’ has just been published on the LSE review of books blog. My review (and to some extent the book) is an intriguing mixture of power, ignorance,  psychopaths, hard sums, morality and polemic. Which makes it strange that this cartoon is particularly apt.

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My top ten things to dislike about GDP

Several web-sources that I keep an eye on have recently been buzzing about GDP, and its potential replacements. So, I feel prompted to do another top-ten. This time it’s the top-ten things that I dislike most about GDP. And this is from someone who has done a lot of methodological development on the underlying detail of this measure. Beautiful work it was too that I did, but what is the point in further refining a fundamentally flawed measure?

Here we go…

  • it says nothing about distribution

– probably the worst thing about GDP, but, ironically it is also a failure for many of the alternatives which measure society.

  • it doesn’t value unpaid work…
  • …and so it is gender and age biased…

and as a result destroys communities and doesn’t value intimacy

  • … and thus promotes the wrong kind of development at the wrong speed.
  • it ignores the use of irreplaceable resources…
  • …including social capital.
  • it values making silk-purses out of sows’ ears and undervalues social goods

meaning that a country can move forward by marketing cheap t-shirts as expensive designer goods instead of investing in, say, public education

  • its relationship to any kind of well-being is proven to be poor
  • “the tragedy is, the things we can measure well don’t matter, the things that matter, we can’t measure well” – name that quote!
  • people know its faults but still insist on using it as a yardstick and comparator – even in writing ‘golden rules’.
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My top ten in heterodox economics

Just inspired by the news about the alternative PPE being launched by Goldsmiths (http://www.gold.ac.uk/academics/montgomeriejohnna-expertcomment-financialcrisis.php), here is my top ten of heterodox economics. I’m sure everyone will disagree, possibly about if any are truly heterodox. Good! I am still astounded by what most politicians see as heterodox economics, let’s start with the easy stuff.

1. Zero growth

A lovely idea, safe, clean, easy and macroeconomically proven to get your washing cleaner. And makes redistribution seem normal rather than something that you to have to cough at the same time as you say it.

2. Capabilities approach

Amartya Sen’s lovely way of thinking about ‘people and stuff’ (as I like to call economics) in terms of ‘doing and being’. Opens the door to a thousand heterodox flowers and their potential blooming.

3. Complexity/non-linearity

Once you start down this particular road you will spend half your time wishing you hadn’t and the other half wishing for more powerful computers and fancier software!

4. Behavioural approaches

Probably the easiest way of convincing people that almost every outcome from the general Equilibrium Model should be at best thoroughly tested against reality and at worst chucked away. I particularly like cognitive biases, because I just read about them : )

5. Happiness

An idea whose time has come. Exam question: is any current happiness measure worse than GDP?

6. Rejecting pareto

Of course, in theory, any pareto gain can be redistributed, so why not do it? I just can’t face answering the question – it’s too obvious.

7. Non-independence of preferences

You see that group of lemmings/wilderbeest/geese… that’s you that is, but in your economic decisions. Will someone please tell the invisible-hand that simple fact.

8. Rubbish measurement

Let’s embrace our rubbish measurement. Our brains are great (producing theories), our computers are incredible (producing number crunching) our articulation is great (saying things in impressive ways) – but come on, our ability to measure the things that matter is still, and will probably always be, hopeless. So let’s build that straight into our analysis.

9. Evolution

My personal theory is that there is more than enough randomness in most of the things we do that evolutionary natural-selection can be as much of an influence in decision-making and system-change as human agency is. Complicated isn’t it… that’s why I love the evolutionary stuff.

10. Morality

I can’t quite decide whether I want more of it or less of it – perhaps that depends if you agree with me or not. But we certainly should think about it more. 

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The value of academic blogging

I’m somewhat sceptical about what Pat Dunleavy has to say here: http://blogs.lse.ac.uk/impactofsocialsciences/2012/02/24/five-minutes-patrick-dunleavy-chris-gilson/

If only because I know that, especially in the world of Public Administration and British politics, what you can learn from spending 15 minutes being mutually indiscreet with Prof Dunleavy would be hard to replicate in a blog!

Still – good advice and if anyone can make a real success of the medium then Patrick will.

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What do government economists do?

http://notthetreasuryview.blogspot.com/2012/01/british-jobs-and-foreign-workers-todays.html

Jonathan, a former boss of mine, makes interesting reading. His ‘best thing I did in government’ is great. However, the list of things that economists in government is lacking one main thing that he should be as aware of as I am: sometimes government economists get out and about and take a very unique perspective with them that they can share with the outside world.

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