Forget GDP, let's initiate a social divisiveness index instead

In Paris last week, he said, "What we measure affects what we do. If we have the wrong measures, we will strive for the wrong things."

French President Nicolas Sarkozy, saying that the world had been trapped in a "cult of figures", launched a major new report by the Nobel Prize-winning economist Stiglitz and a panel of experts about how to ensure that governments take full account of their citizens' happiness and well-being instead of measuring success by gross domestic product (GDP) alone.

The commission proposed changes to the way GDP is measured, suggesting separate accounting for people's well-being and for the sustainability of a country's economy and natural resources.

Stiglitz and Jean-Paul Fitoussi, co-author of the report, said a more comprehensive method for measuring performance would cut the per capita GDP gap between the US and France by at least half. As it stands now, US per capita GDP is 14 per cent higher than France's.

The commission did not work out the effect of its proposals on different countries, but Stiglitz was quoted by The Financial Times as saying that the changes would bring about "major adjustment".

It's interesting to note that when calculating GDP, the commission called for greater use of net national income (taking into account profits exported or imported) and of household income, which would consider taxes, social benefits and bank interest.

The most significant aspect of the proposals, to me, is the suggestion that we should from now on pay more attention to non-market activities, including leisure. Hard work alone isn't going to be a good measurement of our happiness.

Emphasis is also on the greater use of objective measures of well-being and subjective indicators of happiness, covering income and wealth, health, education, social connections and relationships, the environment, insecurity and, yes, even "political systems".

I am afraid that in the "political systems" category, Thailand, at least in the current state of affairs, would fail - and perhaps fail miserably.

Not surprisingly, the experts admit that measuring "sustainability" is fraught with difficulties. But the report did suggest that one way forward would be to calculate stocks of human and physical capital and natural resources.

Sarkozy - and I suspect he is trying to make "happiness" a new item on France's export list - declared, "For years we proclaimed the financial world a creator of wealth, until we learned one day that it had accumulated so much risk that it plunged us into chaos."

Stiglitz made it clear that looking at GDP without accounting for environmental damage in the figures offers an artificial picture. He said, "A firm would look at its assets and liabilities if it wanted to see if it was better or worse off. Yet, we don't look at any of these things when we talk about the balance sheet of society."

He told The Observer, "By looking at GDP, you didn't know whether what was going on was sustainable - and it obviously wasn't. The second point is that when you add apples and oranges to form GDP, you use prices, and they reflect the relative values that people put on apples and oranges."

The problem with this, he said, is that when there is a big bubble in an economy, as there was in the US and UK over the past decade, the prices of some assets - properties and shares in this case - can move far out of line with reality. That, in turn, creates an illusion of economic success while in fact calamity was just waiting around the corner."

It isn't such a bad idea for the Abhisit government, which has embraced the "sufficiency economy" concept, to publish a range of quality-of-life indicators that include environment, education, health, and, of particular importance under the prevailing circumstances, social relations with friends with whom they don't share political opinions.

To begin with, why not introduce a weekly "Social Divisiveness Index" to monitor the rise and fall of the "degree of unhappiness" among the Thai people? Then perhaps, the GDP growth numbers won't be that important anymore.

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