Take gross domestic product, or GDP. This is the generally accepted way to measure economic growth (or lack of it), but it provides little if any insight into overall levels of life satisfaction. Some activities which increase GDP correspond to a reduction in peoples’ well-being (as in the case of higher transport costs due to congestion and long commutes). Also, economic activities such as child care and neighbourly help undoubtedly contribute to well-being but are not captured by GDP.
For years, policymakers (and many economists) have hunted for broader measures of well-being. One major example was the Stiglitz Commission, established by French President Nicolas Sarkozy in 2008, which the OECD was involved in and which laid out several possible ways forward (see “Progress, what progress?” by Joseph Stiglitz).
How’s Life? is the first substantial report from the OECD to emerge from this work, by analysing and discussing the ways well-being and progress can be measured. Using factors ranging from quality of jobs to environment, it provides a concrete base for the conceptual issues raised since the OECD’s Better Life Initiative was launched in May 2011 (see www.oecdbetterlifeindex.org). For instance, indicators in How’s Life? include those which policy can influence, such as life expectancy or education, but also those which lie beyond normal policymaking, such as life satisfaction or social ties. The report discusses tricky issues, such as how to be objective in comparing highly subjective measures, and comparing well-being across very different countries, particularly when it comes to subjective indicators such as perceived air quality or trust in the justice system. These indicators are not easily comparable, despite influencing people’s life satisfaction. Better policies require a solid understanding of what makes better lives, and How’s Life? is a key link in the learning process; it takes stock of the quality of existing well-being measures, while setting the statistical agenda for improving these indicators in the years ahead.
See the web page of the OECD conference at which How's Life? was launched - Two years after the Stiglitz-Sen-Fitoussi report: What well-being and sustainability measures?
©OECD Observer No 286 Q3 2011