Monday, October 19, 2009

Measuring well-being/ Mésurer le bien-être

The debate over the use of alternative indicators is staring to gain substantial ground. As a post-grad student, we covered the basic principles of measurement as is practised in environmental and ecological economics. The classic work of Herman Daly, exemplified in his 1989 book For the Common Good, elevated the issue to a higher order. But it wasn't until Nicholas Sarkozy, President of France, established the International Commission on the Measurement of Economic Performance and Social Progress that this debate had infiltrated the public policy debate at a higher level.
The European Commission held a conference in 2007 to discuss Beyond GDP which aims to continue work on measuring well-being beyond the GDP notion. Adequate indicators are needed to address global challenges such as climate change, poverty, resource depletion and health. The Canadian Index of Well-being is far from producing the same results as in Europe but has nonetheless also entered the public domain, albeit at a slower pace.
The Financial Times published an opinion in September by Joseph Stiglitz entitled Towards a better measure of well-being. Stiglitz notes that "no good accountant would ignore the depreciation of a company's capital, but the standards GDP measure not only does that but also takes no account of resource depletion and environmental degradation. Our increased awareness of the scarcity value of environmental resources makes this lacuna especially troubling".
GDP --Gross Domestic Product -- is widely used by economists to measure individual countries' economic performance. However, its value as an indicator for the standard of living is considered to be limited. GDP also does not show how a country's wealth is distributed. This indicator was created in the wake of the 1930s great depression and experts agree that it alone cannot reflect the economic performance of modern society.
The United Nations has developed an alternative measurement called the Human Development Index which measures life expectancy, literacy, education and the standards of living for countries worldwide and in which GDP is a contributing factor in the calculation. WWF's Ecological Footprint measures human demands on nature thus it attempts to include the environmental distortions that the latter does not measure.
Moving towards a low-carbon economy, preserving biodiversity, promoting resource efficiency and achieving social cohesion are today as important as economic growth.

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