Keynote by Joseph E. Stiglitz at HLEG event "Beyond GDP: What counts for economic & social performance? Understanding different daily life challenges of Europeans", Jointly organised by Bertelsmann Stiftung & the OECD-hosted HLEG

1. GOING BEYOND GDP: MEASURING WHAT
COUNTS FOR ECONOMIC AND SOCIAL
PERFORMANCE
HIGHLIGHTS OF THE HLEG REPORTS
Professor Joseph E. Stiglitz
Bertelsmann Stiftung virtual conference
16 June 2020

2. THE HIGH-LEVEL EXPERT GROUP
• Follow-up to the 2007 Commission on Measurement of Economic Performance and
Social Progress (Stiglitz-Sen-Fitoussi, SSF)
• SSF key message: “GDP is not a measure of well-being. Growth is a means to an end, rather than
end in itself” (Mismeasuring Our Life)
• Need to take into account non-economic factors that shape people’s quality of life; distribution of
outcomes across population groups; sustainability, including depletion of environmental
resources
• Independent group, hosted by OECD, established in 2013 to pursue the ‘Beyond GDP’
agenda undertaken since 2009 nationally and internationally
• Two reports released in November 2019 in Incheon (Korea) at 6th OECD World Forum
on Statistics, Knowledge and Policy:
Chairs’ Summary
Beyond GDP: Measuring What Counts for Economic and Social Performance)
Collection of authored chapters by selected HLEG members
For Good Measure: Advancing Research Beyond GDP 2

3. HLEG membership
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Chairs
Joseph E. Stiglitz, Columbia University
Jean-Paul Fitoussi, Sciences-Po, Paris and
Luiss University, Rome
Martine Durand, OECD
Members
Yann Algan, Sciences-Po, Paris
François Bourguignon, Paris School of Economics
Angus Deaton, Princeton University
Enrico Giovannini, University of Rome Tor Vergata
Jacob Hacker, Yale University
Geoffrey Heal, Columbia University
Ravi Kanbur, Cornell University
Alan Krueger, Princeton University
 Nora Lustig, Tulane University
 Jil Matheson, Former UK National Statistician
 Thomas Piketty, Paris School of Economics
 Walter Radermacher, Former DG Eurostat
 Chiara Saraceno, Honorary fellow, Collegio
Carlo Alberto, Turin
 Arthur Stone, University of Southern California
 Yang Yao, Peking University
Rapporteurs
 Marco Mira d’Ercole, OECD
 Elizabeth Beasley, CEPREMAP, Sciences-Po

4. Two key messages from the HLEG reports
 Measures: What you measure affects what you do. If you measure the
wrong thing, you will do the wrong thing. If you don’t measure something it
becomes neglected, as if the problem did not exist
When measures don’t reflect well citizens perceptions of what is
happening, there can be an erosion of trust
As in SFS, need dashboard—not a single number—to summarize what is
going on
 Policies: Issues of measurement are not only technical, but go to the root
of our democratic system; they will shape whether policy can connect to the
concerns of ordinary people 4

5. Main themes of the HLEG reports
1. Better measuring the effects of the 2008 financial crisis
could have led to better policy response
2. Deepen analysis of themes already in SSF (e.g. inequalities, subjective well-
being, sustainability and begin enquiry into new ones (e.g. inequality of
opportunity, economic insecurity, trust, resilience)
recognising and addressing concerns that weigh heavily in people’s
daily life
3. Encourage use of new well-being metrics in policy decisions
moving beyond identifying “problems”, to anchor well-being
metrics in the design, implementation and evaluation of public
rules
ALL THEMES RELEVANT FOR RESPONSE TO COVID-19 CRISIS
TODAY’S TALK WILL FOCUS ON A FEW OF THEM ONLY
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6. BETTER MEASURING THE EFFECTS OF
THE 2008 FINANCIAL CRISIS
 Reports emphasize the need to pay greater attention to measuring:
• permanent effects of the recession : the “missing wealth”
• balance sheets (liabilities & assets) of all sectors
• impacts of the crisis on more intangible aspects of people’s life (e.g. economic insecurity,
subjective well-being, trust, health, human capital)
If there had been greater awareness of the true costs of austerity, or more broadly,
of an inadequate response to the crisis, perhaps governments would have
responded better
• This is an important lesson for the response to the Covid-19 crisis: governments should
not withdraw their support measures as soon as signs of economic pick-up emerge
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7. Permanent effects of the 2008 financial crisis:
“Missing wealth”?
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The “permanent” effects of the financial crisis exceeded 1 year of GDP

8. DEEPEN RESEARCH AND STATISTICAL EFFORTS
ON PREVIOUS SSF THEMES
Improving existing measures :
A. Inequalities in economic resources
B. Inequalities across population groups
C. Subjective well-being
D. Sustainability and resilience
 The Covid-19 crisis has exacerbated economic inequalities, has affected
people’s well-being and some groups have been disproportionately affected
Sustainability and resilience will need to be strengthened
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9. A. Inequalities in economic resources
• What? Inequalities in earnings, income, consumption, wealth
• Within countries and at the world level
• Integrating economic inequalities in macro-economic statistics (to answer the
question “who benefits from GDP growth?”)
• Where do we stand?
• Issues of timeliness, under-coverage, under-reporting at both ends of income
distribution
• Lack of statistical standards and data for inequalities in consumption and wealth
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10. HLEG recommendations on inequalities
in economic resources
• What should be done?
• Defining a more comprehensive income concept (incl. benefits in kind, including health
services, consumption taxes, capital gains), with metrics produced as “experimental
statistics”
• Systematically assessing scope for underreporting and non-coverage of the rich, allowing
NSOs to use (anonymised) tax records for linking to survey records
• Using all data sources on wealth and income inequality (e.g. surveys, censuses, lists of
large wealth-holders, administrative data on people’s estate at death and on annual
wealth taxes)
• Addressing inconsistencies in international datasets used for research
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11. B. Inequalities across population groups
• What? Inequalities in all well-being outcomes (e.g. not just income, but health, jobs,
skills, social connections, political voice, etc.) between people sharing common
characteristics (e.g. age, gender, ethnicity, place of living, country of birth)
• These shape people’s identity, affect people’s well-being, are a source of discrimination,
political grievances & mass mobilisation
• Concerns about racial inequities are at the source of recent protests in US
• Where do we stand?
• Few comparative measures of the relevant outcomes
• Differences in range of individual characteristics considered in national and
international studies for different outcomes, makes cross country comparisons
more difficult 11

12. Life expectancy for men at age 25 and 65 by education
(gaps, tertiary less lower secondary education )
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Large inequalities in health by education

13. HLEG recommendations on group inequalities
• What should be done?
• Define common set of group categories (e.g. disability, gender, ethnicity, place of living)
implemented throughout the statistical system, and assess broad range of inequalities
(e.g. health, education, political voice) beyond economic ones
• Focus on gender inequalities :
• develop measures of intra-household income inequality through either inclusion of specific
questions in surveys or through more systematic collection of data for all household members
• develop measures of the gender wealth gap by including questions on ownership of key assets and
marital regimes
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14. BEGIN ENQUIRY ON NEW THEMES
 Developing metrics in new fields :
A. Inequality of opportunity
B. Economic insecurity
C. Trust
 The Covid-19 is particularly affecting vulnerable people, e. g. those
economically insecure or with multiple disadvantages, who will require
attention
 Trust in others and in institutions is key for the success of Covid-19
response and recovery phases
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15. A. Inequality of opportunity
The Great Gatsby Curve
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16. B. Economic insecurity
• What? Vulnerability to economic losses, where “economic” is used as descriptor
of the consequences (income losses) rather than of its cause (e.g. sickness,
unemployment, family breakdown)
• Many reforms have shifted risks from firms/governments to households
• With limited savings, large fractions are not able to cope
• Where do we stand?
• No measure (either objective of subjective) widely used and accepted
• Measures consistent with available theory and evidence exist: they could
be produced with existing data, and should be used in policy
• Should use both subjective and objective measures
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17. Economic insecurity
Share of people experiencing an income fall ≥ 25% from one year to the next
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18. HLEG recommendations on economic insecurity
• What should be done?
• Encouraging multi-disciplinary research on concepts (salient risks, available buffers) and
measures (identify causality and confounders)
• Improving the evidence base (panel data; linking panel and administrative data on benefit-
use; incorporate small set of ‘security questions’ in opinion surveys; assess relation
between objective and subjective measures)
• Identifying small number of core metrics (e.g. income shocks, available buffers, perceived
insecurity, “named risks”, e.g. unemployment, disability)
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19. USING WELL-BEING METRICS IN PUBLIC POLICIES
• Anchoring these new well-being indicators
in all phases of the « policy cycle »,
beyond the simple diagnostic
• Several national initiatives
• Italy: Budget Reform Law
• New Zealand: first “well-being budget” in 2019
• Scotland, Finland, Iceland, Wales, Slovenia, Slovakia:
new performance frameworks, national development plans
• United Kingdom: range of instruments for public officials
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• Common goals
 Identifying outcomes, objectives, targets, indicators
 Joining up across government to deliver shared aims
 A management tool and feedback mechanism

20. Relevance of HLEG work for policy response
to COVID-19 Crisis
• Pandemic has shown consequences of
• High level of vulnerability: in the US low level of social protection,—workers going to work who are sick
because (i) they have no paid sick leave; and (ii) have no cash balances—living paycheck to paycheck; in
Europe people in precarious jobs, with no financial buffer, leaving in poor housing conditions, little access to
digital services
• High level of health and other well-being inequalities
• Horizonal inequities fueled social unrest
• Low level of preparedness (lack of stockpiles, lack of planning) and low level of resilience (private sector
couldn’t even produce masks, protective gear)
• Reflecting short-sightedness on part of both government and private sector
• Private sector driven by short term metrics (focusing on not savings from not providing paid sick leave, not having empty
hospital beds)
• Better metrics might have led us to be better prepared. We need a dashboad of indicators
• Covid-19 crisis provides opportunities to apply a well-being lense to the policy response by
focusing on the right things and taking a long-term perspective to build resilience in people and
systems
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