One index to rule them all

July 2nd, 2012 at 4:00 pm by David Farrar

Philip Booth blogs at the IEA:

The held a forum this week entitled: ‘Beyond GDP: Measuring the Future We Want’. What they actually mean, of course, is ‘measuring the future the UN wants’. The best way to ensure that we get the future we (the people) want is to have a free market, governed under the rule of law, with good protection for property rights (including, where appropriate, property rights for environmental goods). The seven billion people in the world all want a rather different future from each other. We can only achieve those different aspirations if we are free.

That is not to say that an argument cannot be made for the subsidisation of, for example, education and health care for the poor and for other forms of assistance through government. However, the success of the human race as a whole cannot and should not be measured by some kind of unified aggregate index.

Specifically, has proposed that the UN develop an index that combines: ‘Equity, dignity, happiness, sustainability’ arguing that ‘these are all fundamental to our lives but absent in the .’ Just because something is fundamental to our lives does not mean that we need to measure it and combine it with other variables into a single index measure. Relationships are fundamental to our lives, but do we need to measure the success of the relationships of seven billion people and combine that measure with other data into some kind of aggregate index? Indeed, it is interesting that the best conditions for  growth in the history of the UK were created before we even started measuring .

It is just about possible, nevertheless, to make a coherent case for measuring GDP. GDP does, at least, make a reasonably rigorous allowance for trade-offs that different people make in their everyday lives. If I give up £1 worth of apples to buy £1 worth of oranges and Mark Littlewood does the opposite, it can (within certain bounds of reasonableness) be said that we both have £1 of utility from the transaction. Austrian arguments can certainly be made regarding the undesirability of aggregating data and the fact that all transactions involve consumer surplus, but there is some reasonableness and consistency there.

We can also look at other statistics such as working hours, travel time, leisure time, carbon footprint (if it is thought necessary), and so on, to obtain a more comprehensive picture if we wish. However, once we try to produce an aggregate index of everything that is important, the index will lose all meaning. How can we trade off a small increase in reported happiness for somebody in Zambia for an extra £500 a year of national income per head in New Zealand? How can we trade off a tiny change in the Gini coefficient in Rwanda with a small change in the stability of marriages in India, and so on? These things have completely different values to different people.

Even trying to track one of these datasets is problematic. As the ’s monographs on happiness economics showed, well-being measures are suspect. There is no clear indication of a relationship between reported well-being and almost any other reasonable indicator of social progress.

Overall, we have the biggest folly imaginable: the body that some would desire to be a world government attempting to measure in a single index number everything that matters to everybody.

GDP does record economic activity only, and that is not everything – absolutely. But trying to come up with one master index will never work, because as the IEA states, we all value different things.

Tags: , , , ,

35 Responses to “One index to rule them all”

  1. scrubone (3,044 comments) says:

    I’ve always thought that stats, if averaged widely enough, are meaningless.

    For example, someone once suggested that a large new house in Dunedin shouldn’t be built because of world-wide water shortages. Yet Dunedin has no real problem with water shortages.

    Come to think of it, I recall a few years ago when obese people started outnumbering the malnurished. But the fact there’s enough food to make millions of people fat doesn’t help the hungry unless that food is actually transfered to them.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. Harriet (4,495 comments) says:

    Fuck me – naval gazing in NZ achieved fuck all…..and she now wants every country to partake in this crap….and then once they all recieve the results about where they are on a ‘scale’….decisions can then be made to ‘correct’ their citizens wayward behaviour….. so the citizens can then proceed cautiously through life…..maintaining Helen’s outlook on the way things ought to be !

    Well……FUCK THAT !

    Helen is as boring as all fuck.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Manolo (13,315 comments) says:

    Helen Clark is being truthful to her communist roots. Do not let that woman ever come back.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. RRM (9,420 comments) says:

    I love watching the way you lot twitch and convulse and start speaking in tongues whenever anyone mentions Helen Clark. It’s a bit like watching a dog masturbate. Disgusting, yet compelling :-)

    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark
    Helen Clark :lol:

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. mikenmild (10,611 comments) says:

    For someone who does her best to help everyone, she sure comes in for a lot of hating.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. thedavincimode (6,519 comments) says:

    Its really a great idea and could become a vital tool. Once they roll this out, we’ll all know for sure how well the people eating dust in Northern Africa are doing.

    RRM

    That’s a bit uncalled for. Please don’t do it again.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Monique Watson (1,062 comments) says:

    She comes in for a lot of “hating” because she’s pushing a religion not common sense. Her brand of socialism is cultish and it’s been dressed up enough to give it appeal to the masses. It’s a damaging message that causes disunity.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. orewa1 (428 comments) says:

    In the final analysis the only thing that matters is people’s ability to live happy, contented, fulfilling lives. How can you measure that? And why bother?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Richard29 (377 comments) says:

    GDP is a bad measure of wellbeing – most economists recognise that.

    Activities like burglary are great for GDP – items are taken and sold on the black market injecting cash into the economy, insurance payouts provide for purchases of new items and premiums will go up which is great for the banks – a single burglar can generate hundreds of thousands of dollars of economic activity. But most people wouldn;t see this as a great thing. The Greens have been pushing this point for a while – oil spills are also great for GDP because of the activity they generate.

    I think it’s great that HC is looking at other measures… But some of the indexes including things like ‘happiness’ are a bit bogus given the subjectivity of it all.

    Personally I think something like this index of wealth is probably a good start for a next measure after GDP:
    http://www.economist.com/node/21557732

    The key challenge is not coming up with a better measure – but coming up with a measure that is relatively objective, where data is available and that everybody can agree to use.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. Maaik (33 comments) says:

    We are all supposedly committed to democracy. So why don’t we use a democratic system to measure this most important quality.

    Simply count the number of people who move (or want to move) to a particular country. That number, expressed as a percentage of people who have the option of performing the move, should show democratically which countries are the most desirable.

    Silly methods using intangibles will always be open to rorting. The “happy planet index” is a good example. How many people are trying to flee the USA, Hong Kong and Australia, and trying to enter Costa Rica, Vietnam and Colombia?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. Manolo (13,315 comments) says:

    For someone who does her best to help everyone, she sure comes in for a lot of hating.

    The first part of your apologetic statement is highly debatable, the second one deserved.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. bhudson (4,734 comments) says:

    GDP is a bad measure of wellbeing

    GDP isn’t a measure of wellbeing.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. mikenmild (10,611 comments) says:

    GDP has come to be seen as the most important measure, though, when there are other things that are arguably of more importance than relative wealth.
    I’d imagine that the government would be keen to explore this – there may well be indices that one could use to demonstrate that we are, in fact, ‘catching up with Australia.’

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. krazykiwi (9,189 comments) says:

    We are all supposedly committed to democracy

    A reasonable assertion. I certainly am. Not so sure the UN though. When did you or I elect the UN leaders who now presume to rule us?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. bhudson (4,734 comments) says:

    Activities like burglary are great for GDP – items are taken and sold on the black market injecting cash into the economy

    1. Items sold on the black market are, by definition, not included in GDP as they cannot be captured and measured [although occasionally the crims are]

    2. The resale of burgled items does not inject cash into the economy – it merely provides a transaction to move some of the existing cash into another set of hands

    The implications of insurance claims are true to a point – the purchase of replacement items will be captured and counted. With a current GDP of approx $180bn per annum, the insurance impacts on GDP resulting from burglaries are not hugely distortionary.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. krazykiwi (9,189 comments) says:

    As a general rule, anything the UN wants will be good for them, and bad for the rest of us. 

    Their leadership is piled high with self-aggrandizing, would-be dictators who, having secured their own promotions from menial national roles, imagine themselves at at altogether larger trough directing the lives of the worlds little people – ie anyone other than themselves.

    The UN is a very dangerous organisation, one hell bent on control and committed to non-democratic global government. Time we abandoned it.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. jims_whare (398 comments) says:

    All Ms Clark is attempting to do is apply the old truism – If its measurable then it is taxable.

    She has always been for a world wide tax – this is all part of it – her greed & desire for control and power knows no bounds…

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. Mr_Blobby (106 comments) says:

    How are we going to rank ourselves against the rest of the world? When we can’t even agree on how to even start ranking our schools.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. expat (4,048 comments) says:

    @ rrm – er so you know about masturbating dogs eh, that’s way disturbing.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. burt (7,791 comments) says:

    I stopped reading the moment I got to: Specifically, Helen Clark …..

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. East Wellington Superhero (1,151 comments) says:

    The reason why people are in poverty (and I don’t mean the “I can’t afford a cellphone” Western ‘poor’) overseas is because a) corrupt leadership b) and a lack of (the right) education. And while hand-wringing white-guilt panty-waist academics pontificate about capitalism and sustainability and all sorts of other crap that means nothing to a child with no food, children with no food suffer excruciating physical and emotional pain. And then die. If a child from the Sudan went to a Stage-3 sustainability lecture at Auckland University they would despair because a) they don’t have any food to offer, and b) they are so far off the mark and just talking to an audience of themselves about why they don’t like the rich people of which none of them are.

    My solution. Send in the Marines. Take the locals’ weapons off them for a generation. Make them apologise to each and carry out symbolic acts of restitution (get them to build together theatres, parks, roads, and buildings for hospitals), teach them the sacredness of human life, send them to Western schools to learn history, art history, English and maths, and ban their pagan religions that are irrational and often anti-humanistic. Then thirty years later you’ll be better off than you are now.

    Or course the Victoria University brigade would be aghast at such suggestions. Aghast! ‘How brutish!’ ‘That’s just neo-colonisation’. Well no shit you fucktards! How do you think New Zealand escaped the savagery it once experience? Through UNDP survey definitions and giving money to corrupt leaders? No, by an enforced a rule of law and banning pagan practices.

    Indeed, there will be problems. I’m not saying there wouldn’t be. Militaries, and all humans in fact (except academics and UN officials ;) ), are imperfect. However, clearly, the current approach of appeasing bad guys and not wanting to upset the self-conscious white people of the Western middle-classes, is more important than helping starving children.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. speters (108 comments) says:

    East Wellington Superhero is right – we just need to invade and teach those in poverty the western way. After all, western civilisation is booming, colonisation worked so well for Africa in the past, and those pagan religions encourage war, unlike Christianity which is all about acceptance and peace….

    Also, neocolonialism doesn’t generally involve the Marines.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. Tom Jackson (2,458 comments) says:

    The seven billion people in the world all want a rather different future from each other.

    Nope. They want a somewhat different future from each other. Human beings are for the most part quite similar. Wanting a very rough measure of human welfare in those terms is not unreasonable, and we have known since The ancient Greeks that such a measure will be pretty rough. Yes, it will be hard to work it out. No, that does not mean we shouldn’t try it.

    Add the kook Austrian economics (taken seriously by no reputable economists) and you have a somewhat worthless article. Don’t you Tories have anyone good? Most of the stuff you have is only a step above David Icke and his lizard people. no wonder the left control the universities.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  24. mikenmild (10,611 comments) says:

    “We have to invade Africa to save Africa”

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  25. bhudson (4,734 comments) says:

    no wonder the left control the universities.

    Some people think the left control the universities because the right are out working in the real world.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  26. mister nui (961 comments) says:

    Well, speters, colonialism actually did work for Africa, it is when the natives jacked up and the colonialists left, that the whole continent went to shit.

    Why not read some history about the Belgian Congo for starters. Yes, colonialism caused a number of problems, but it didn’t kill anywhere the numbers that the dictators and militia that took over killed.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  27. slijmbal (1,210 comments) says:

    AGW must have failed as a reason to impose socialism otherwise why create a new mechanism?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  28. OECD rank 22 kiwi (2,810 comments) says:

    The UNDP is a total irrelevance to New Zealand. It’s not the World Trade Organisation.

    All the UNDP does is maintain poverty in Africa, in that sense “Mission Accomplished”.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  29. Bogusnews (441 comments) says:

    I think Michael Bassett called it right in one of his last articles. He mentioned HC has never had any interest in economic fundamentals but was instead nick names “the queen of the mushies.” He also mentioned she left NZ with her agenda’s intact and even though they are useless, she would push them onto the rest of the world if she could.

    It’s a shame that politicians get a bit old for politics – well, some anyway. I wish HC had gotten much older much sooner.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  30. Manolo (13,315 comments) says:

    “We have to invade Africa to save Africa”

    A neutron bomb is a better alternative. :-)
    Vast areas and many countries of the continent are beyond help.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  31. Yoza (1,521 comments) says:

    From the offending UN document: “The “Rio Principles” adopted at the 1992 Earth Summit in Rio de Janeiro emphasized that human beings should be “at the centre of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature”…”

    The extreme-right, who regularly comment on this blog, expose themselves as frothing zealots by denouncing, as some kind of abomination, the aspiration of adopting common human decency as a founding principle of a civilised society.

    The racist crap about Africa is white supremacy at its ugliest.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  32. mikenmild (10,611 comments) says:

    But the haters firmly believe that Africa enjoyed peace and prosperity under European rule.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  33. hj (6,330 comments) says:

    One index might not be workable but what many of you object to here is looking at the idea of limits and the fact that by our large share of something we disadvantage others. Greed is good… for now.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  34. hj (6,330 comments) says:

    Note how nostrils flair at the notion of climate change and how we should build more roads despite the decline in availability of liquid fuels. When the land based economy plateaus we bring in more labour, build houses, roads, schools and when rates rise we (you) blame it on “land supply”. You can’t measure the life-style of the generations of NZ’r past compared to todays cross leased or cookie-cutter subdivision: just look at GDP and smile.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  35. hj (6,330 comments) says:

    Sustainability (etc): “they don’t like it up’em” (especially the chaps who live around Success Way Omaha Beach).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.