OECD and ProgressBeyond GDP

GDP is an important economic indicator that measures output.

But it doesn’t give a full picture of social progress and well-beingBut it is not sufficient to measure

If GDP per capita rises, itmeanswe’re all gettingricher, right?

Wrong. GDP per capita isjust GDP divided by the size of the population. It doesn’t tell us what people are actuallyearning or if that’srising.

Equally, GDP leaves out somegoodthings …

Raisingchildren, cooking dinner or tidying up may or may not be counted in GDP depending on whether they’re done in the home, by the state or by a firm.

GDP includes how muchwe’respending on thingslikeeducation, the police and health…

But itisn’tdesigned to measure the outcomesof all thatspending – are ourkids gettingsmarter, ourstreetssafer, ourhospitals more effective?

Badthingscanbegoodfor GDP:Natural disasterskill and maim millions …

But all thatcleaning up afterwardsmeansextra economicactivity, whichisgood for GDP.

GDP is a good economicmeasure …

… but not so good for measuringprogess, well-beingor happiness.

Relying on GDP alonewouldbelikedriving a car onlylookingat the speedometer…

Relying on GDP alonewouldbelikedriving a car onlylookingat the speedometer…But otherindicators are necesary to assess the success of a policy.

OECD work onmeasuringprogressOECD has taken part in the Stiglitz-Sen-FitoussiCommission on the Measurement of Economic Performance and Social Progress

OECD producesmany comparable indicatorsthatcan help assessingprogress.

GDP per capitaTakeinequality.This map shows GDP per capita for countries in Western Europe.

GDP per capitaTakeinequality.This map shows GDP per capita for countries in Western Europe.But whenwe break down those countries by region ….

Other patterns emerge:Differenceswithin countries canbebiggerthanthosebetweencountriesSource:OECD Regional eXplorerhttp://stats.oecd.org/OECDregionalstatistics/ and OECD Factbook, http://stats.oecd.org/oecdfactbook/

Differences in incomecanbeeven more striking …

Source:OECD(2008), GrowingUnequal, chart 1.6Data: http://dx.doi.org/10.1787/420721018310

Again, differencesacross countries are lesserSource:OECD(2008), GrowingUnequal, chart 1.6Data: http://dx.doi.org/10.1787/420721018310

Again, differencesacross countries are lesserthandifferenceswithin a country.Source:OECD(2008), GrowingUnequal, chart 1.6Data: http://dx.doi.org/10.1787/420721018310

In most OECD countries, incomeinequalityisrising…Source:OECD(2008), GrowingUnequal, chart 1.5Data: http://dx.doi.org/10.1787/420718178732

OECD has an extensive range of indicators,such as PISA, thatmeasureeducationoutcomes…thingslikehowwellstudents are doing, and whetherthey’rebeingheld back by poverty.

Equally, students in some countries do much better in the OECD’s PISA tests. Source:OECD(2009), Society at a Glance, chart SS.4.1.Data: http://dx.doi.org/10.1787/550180640382

Some countries have much higher percentages of young people graduating from university-type education Source:OECD(2009), OECD FactbookData: http://dx.doi.org/10.1787/537572781005

Some countries have much higher percentages of young people graduating from university-type education Source:OECD(2009), OECD FactbookData: http://dx.doi.org/10.1787/537572781005

OECD also measures the outcome of health services.

Source:OECD(2009), Health at a Glance, Chart 1.1.1.Data: http://dx.doi.org/10.1787/717383404708

Life expectancy has increased by 10 yearssince 1960…Source:OECD(2009), Health at a Glance, Chart 1.1.1.Data: http://dx.doi.org/10.1787/717383404708

Life expectancy has increased by 10 yearssince 1960…The gap between countries is a thirdof whatitwasSource:OECD(2009), Health at a Glance, Chart 1.1.1.Data: http://dx.doi.org/10.1787/717383404708

Potentialyears of life lostis the amount of time that people who die before 70 would have livedif theyhad not diedprematurely. Prematuremortality has halved in OECD since 1970.MexicoPortugalUnited StatesOECDSwedenSource:OECD(2009), Health at a Glance, chart 1.3.2.Data: http://dx.doi.org/10.1787/717458111254

OECD canalsocompare outcomes of law-enforcementservices.

Source:OECD(2009), Society at a Glance, Table CO.3.2.Data: http://dx.doi.org/10.1787/550717741440

EnvironmentdashboardOECD statistics examine not onlyenvironmental capital –clean water, forests, animal species and so on … but also the factorsthat are threateningthem – greenhousegasemissions, pollution, urbanisation.

For instance, OECD and itssisteragency IEA measure CO2emissionsSource:IEA(2009), CO2 Emissionsfrom Fuel Combustion

But alsoresources, such as threatenedspeciesSource:OECD(2008), OECD Environmental Data Compendium, table 1.A.

Clearly, wecan’tassesspeople’squality of life just by lookingatwhatthe economyisproducing (whichiswhat GDP measures).

Weneed to consider a muchwider range of indicators, someobjective (how long are people living?) and somesubjective(do youfeel happy?)

Measuringleisure time is an example of an objective measure of well-being…Source:OECD(2009), Society at a Glance, chart 2.3Data: http://dx.doi.org/10.1787/548528164155

While polling people on life satisfaction is a subjectiveindicator.Source:OECD(2009), Society at a Glance, chart CO.1.1 and CO.2.1.Data: http://dx.doi.org/10.1787/550664800231Data: http://dx.doi.org/10.1787/550708264007

We’ve made a good start on measuringprogress …

We’ve made a good start on measuringprogress …but westill have a lot more to do.

For further information:www.oecdilibrary.orgOECD Factbool 2009Society at a Glance 2009GrowingUnequal?OECD iLibrary, - all OECD publicationsHealthat a Glance 2009OECD Environmental OutlookSustainableDevelopmentDoingBetter for Children

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