The annual Journées de l’économie meeting in Lyon proved to be a particularly appropriate forum for this teaching exercise; it consisted of some 50 debates, discussions and conferences aimed at making the economy accessible to as many people as possible. And the OECD proved to be particularly well placed to lead the discussion in the person of Martine Durand, the Organisation’s chief statistician. The OECD is at the forefront of alternative measurements of progress to GDP, particularly through its recent Better Life Initiative. The tangible outcomes of this initiative are the How’s Life? report, published in October 2011, and Your Better Life Index interactive website, launched in May 2011 (see article by Martine Durand).
On 10 November 2011, in the packed auditorium in Lyon, the object of the Journées de l’économie was to explain the latest advances in measuring well-being and to compare approaches. Stefan Lollivier, director of demographic and social statistics at the French National Institute of Statistics and Economic Surveys, briefly described the work carried out jointly with Eurostat to incorporate new indicators into the European Statistical System. This work, like that of the OECD, is based on the Stiglitz-Sen-Fitoussi Commission’s report on measuring economic performance and social progress, which emphasises the multidimensional nature of well-being.
This multidimensional approach, based on indicators that are both objective and subjective, lay at the heart of the discussion, particularly in contrast with the more encompassing notion of happiness. Should we collect objective and subjective information on the different dimensions that influence the situation of individuals and societies? Is it preferable to measure happiness directly, or indeed should we construct a single indicator of subjective well-being? There is no consensus on this issue.
In the case of the developing economies, it is neither possible nor relevant to measure happiness, according to François Bourguignon, director of the Paris School of Economics and former chief economist at the World Bank. Why is this? Simply because “the concept of happiness is extremely indeterminate when the main challenge for most people is to survive”. Moreover, the subjective well-being of individuals and households varies according to countries’ level of development. “For example, while in several African countries an improvement in individual conditions would consist in simply having access to food, housing or health services, in Latin America the aim would rather be to improve food, housing conditions or hospital services.”
Under such conditions it is difficult to envisage a single indicator of happiness which would be valid in all regions of the world. With regard to the often cited “gross national happiness” indicator championed by Bhutan, Mr Bourguignon explained its limitations: “When a Bhutanese representative came to explain how this indicator had been constructed during a conference held at the OECD in October 2011, several major problems were identified in terms of how the various indicators were weighted and aggregated.” The issue of how indicators are aggregated poses a real problem in developing economies, according to the World Bank’s former chief economist: “The attempts that have been made in this area, notably as part of the monitoring of Millennium Development Goals, have not proved satisfactory.”
In contrast, in the developed economies, that is to say in most OECD countries, such a measurement may be relevant. Since the basic needs of most people are satisfied in such economies, it would be easier to measure people’s level of happiness. However, this poses other questions. In particular, how can account be taken of cultural differences? The economist and academic Claudia Senik asked this question when discussing “French unhappiness”, or at any rate the “lesser happiness” expressed by French households in international statistical surveys. “The French, on average, declare themselves to be less happy than the inhabitants of other countries, particularly those comparable to France in terms of their human development index”, which covers income, education and life expectancy. “Living in France reduces the probability of saying that one is happy by 20%,” she added. Such a gap is inexplicable considering the material standard of living in France. It is therefore essential to take account of the cultural dimension of happiness.
Mrs Senik explained that schools undoubtedly played a major role in this area. A teacher, speaking from the audience, stressed this aspect and pointed out that the international comparisons conducted by the OECD, notably through the PISA survey, focused on performance, whereas it was essential to take account of the cultural representations conveyed by school systems.
Far from disregarding such issues, the OECD has adopted an approach that encompasses these various perspectives. The measurements of well-being proposed in the How’s Life? report, and reflected in Your Better Life Index interactive website, cover both objectively quantifiable measurements and more subjective measurements. Objectively quantifiable measurements include air quality (in order to assess the environmental dimension), life expectancy (for health) and average working hours (for the balance between work and family life).
According to the report the measurement of “subjective or experienced well-being” is based on two different criteria: satisfaction with life, and positive and negative affects. The former is the overall assessment that individuals make of their life. The latter, which are more ad hoc, reflect the state of mind relating to particular activities at certain times during the day.
Admittedly the measurements proposed by the OECD are still incomplete, as Martine Durand acknowledges: “In the case of measurements relating to sustainability, for example, we restricted ourselves to environmental sustainability, however in the near future we shall be studying social sustainability, linked to a series of human factors.” However, in seeking to gain as clear a picture as possible of the situations that citizens experience, these measurements already add a wealth of detail to the road map which decision-makers use to guide their policies and improve people’s lives.
Create your own Better Life Index
OECD (2011), How’s Life? Measuring Well-being, Paris.
Durand, M. (2012), "Progress: from compass to global positioning system", in OECD Yearbook 2012, Paris.
©OECD Yearbook 2012