France to add happiness to GDP
By Ben Hall in Paris
President Nicolas Sarkozy on Monday said France would take the lead in
implementing new indicators of economic performance incorporating measures of
"well-being" and environmental degradation drawn up by a panel of international
economists.
Mr Sarkozy said France's statistics agency INSEE would begin work to
incorporate the changes into its national accounts.
A commission led by Joseph Stiglitz, the Nobel-prize winning US economist,
proposed a raft of changes to turn gross domestic product into a more accurate
measure of economic activity.
It also drew up proposals for additional indicators, to measure the happiness
and well-being of citizens and to gauge the environmental and economic
sustainability of a country's output.
One effect of the new accounting system would be to reduce the gap in GDP per
capita between the US and France.
Two proposed reforms – measuring healthcare by outcomes for patients rather
than financial inputs and reflecting the true value of France's more generous
social safety net and unemployment insurance – would alone reduce the per
capita GDP gap between the US and France by half, said Mr Stiglitz and fellow
author Jean-Paul Fitoussi, professor of economics at Paris's Sciences Po.
The commission – which included three other Nobel prize-winning economists,
including Amartya Sen – had a central message: while GDP is an important
measure of market activity, it has been used much more widely as a measure of
well-being, when it is not.
The commission concluded that as currently formulated, GDP no longer reflected
structural changes to the economy, such as globalisation of production and the
rise of services, and failed to properly account for government services, or
activities carried out in the home.
It called for greater of measures of net national income (taking into account
profits exported abroad or imported from abroad) and of household income which
would take into account taxes and social benefits and bank interest. It also
called for greater prominence of income distribution and less reliance on
averages. Finally, it called for greater use of measures of non-market
activities, including leisure.
In order to measure well-being, it called for a "dashboard" of indicators
ranging from income and wealth, to health, education, social connections and
relationships, the environment and insecurity.
The commission found that measuring sustainability was more fraught with
technical difficulties, but it suggested one way forward was to calculate
stocks of human and physical capital and natural resources, measures that would
depreciate when stocks were depleted.
Mr Sarkozy set up the commission 18 months ago in an attempt to come up with
figures of national output that would better reflect new challenges, such as
environmental degradation, while providing a broader picture of social
well-being.
Launching the report of the Stiglitz commission in Paris, Mr Sarkozy said
national accounting systems now longer reflected peoples' aspirations, values
or experience, creating a source of distrust between citizens and governments.
"The world over, citizens think we are lying to them, that the figures are
wrong, that they are manipulated. And they have reasons to think like that."
Mr Sarkozy said the world had become trapped in a "religion of figures" whereas
it needed to re-assess its priorities, a need underlined by the financial
crisis.
Although he did not mention the US, Mr Sarkozy suggested that an overriding
focus on GDP had helped propagate an Anglo-American vision of deregulated
markets as the basis of faster economic growth.
"It was an essential part of the vision of the economy and society, of an
ideological system that spread across the world so that questioning it seemed
far too enormous an endeavour so nobody seriously imagined doing so."
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