the Stiglitz Commission a short presentation

1. the Stiglitz Commissiona short presentation Louis de Gimel, Insee UNECE-EUROSTAT-OCDE task force for measuring sustainable development Geneva 23-24 september 2009

2. Plan The Stiglitz Commission: Measurement of economic performance and social progress 1.Measurement of sustainable devpt 1.1 two main results/recommandations 1.2 Quantifying sustainability : the main stumbling blocks Literature, appropriate prices, from theory to practice 2. Others fields: main recommendations II.1 GT1 classic GDP issues II.2 GT2 quality of life, well-being: Objective and subjective dimensions

3. 1.1 SD : Two main results /recommendations • A clear distinction between current well-being and sustainability Sustainability has to deal with the future • See problems with a composite indicator combining the two aspects • Necessity of a sub-dashboard about sustainability inside large dashboards.

4. 1.1 SD : Two main results /recommendations • A quite good convergence with the TF SD 2008 report • Theoretical roots for the wealth approach Indicators interpretable as variations of “stocks” Consistent with the Brundtland definition • A monetary index but only for economic aspects of sustainability (see rec 11) • Need for a separate set of well chosen (and limited) environmental physical indicators (see rec 12)Measuring the proximity to dangerous level of damage

5. 1.2 Quantifying Sustainability Across the report, analysis of the main productions in the SD measurement literature (with pros and cons) -Dashboards :Useful but ...heterogeneity -Composite indices :Confusion, arbitrary weights -Adjusted GDP’s (green GDP): for what purpose ? Only current consumption without env. impoversishment -Footprints: an env. indicator and not a SD index Rather a carbon footprint than “the ecological footprint” -ANS : what is counted and with what kind of prices ? what about global goods and global nature of sustainability?

6. 1.2 Quantifying Sustainabilitythe crumbling blocks A purpose: clarifying the debate to avoid the existing confusion What do we want to measure ? How should we do it under ideal conditions ? Why is it so difficult in practice ? -Sustainability = transmitting a « sufficient » stock of resources to next periods or next cohorts - How much is « sufficient » ? dw >0 - Summarising SD in one number: is it realistic ?

7. 1.2 the crumbling blocks: looking for appropriate prices Intheory, 3 steps in the « extended wealth » framework • Step 1 : Identifying the types of relevant assets ANS list and..... social capital, a larger set of environmental assets ? • Step 2 : measure net changes in stocks for each asset • Step 3 : weight them with appropriate prices If current asset prices do not reveal all futures preferences/ scarcities calculate “accounting prices” based on modelling • Eco-environmental developments • How thy affect well-being

8. 1.2 the crumbling blocks: In theory and .... in practice (1) It works in theory see simulations in the technical report Butit needs prefect predictions And the future is fundamentallyuncertain See debates about long term env. changes: related to beliefs about future eco-env scenarios. Possibility to use scenarios and to compile stress testsbut how to quantify extreme valuations of env. assets?

9. 1.2 the crumbling blocks: In theory and .... in practice (2) • Uncertainty is also normative: What is to be sustained? Will the future generations be more sensitive than us to env. goods scarcity ? What kind of aggregation for the individual preferences? • The global dimension Difference between national and global sustainability when damages are unequally distributed • A need for an index about global responsibility

10. 1.2 the crumbling blocks: In theory and .... in practice (3) More insights Theoretically compatibility with strong sustainability view If prices of critical natural assets are correctly predicted Backyards • Interest for works about human capital evaluation (appendix 2) • How much does the C02 emission evaluation count for ? • Distinction between sustainability and policy advice (append3) (with cost-benefit analysis see Stern report) NB: In that case the discount rate value doesn’t change sustainability but only how much in advance it is anticipated.

11. 2 Other main messages of the whole Commission • Better measures of economic performance in a complex economy • Capturing quality change: a challenge • Services provided by governments (collective and individual ones) and their productivity • To shift emphasis of the measurement system from production to people’s well-being

12. 2 Other main messages GT1 classic GDP issues • For well being, income and consumption rather than GDP • Emphasise the household perspective In kind services provided by government An effort for reconciliation between sources • Income and consumption jointly with wealth Availability of balance sheets for countries • Give more prominence to distributions(income, wealth..):Median, Bottom and top of distributions, links • Include measures of non market activities Time spent surveys, Accounts of household activities, amount of leisure

13. 2 Other main messages GT2: Quality of life, Well being (1) A very large program with Objective and subjective dimensions of well being • Improve measures of objective conditions and capabilities Material living standards, health, education, personal activities including work, factors shaping personal and economic security, environnemental conditions,social connections, political voice • Inequalities in comprehensive way Across people, social groups, genders, generations • Links between various quality of life domains At the individual level With dedicated surveys used when designing policies Attention to cumulative effects and disadvantaged people

14. 2 Other main messages GT2: Quality of life, Well being (2) Other recommendations for statistical offices: • Provide data needed for aggregated indexes • Incorporate in surveys subjective evaluation questions .... with objective ones and activities Capture people life’s evaluation, hedonic experiences, priorities

15. je vous remercie de votre attention Louis de Gimel, Insee