So How Do We Measure Quality of Life????

I’ve kept a copy of some pages of the International Herald Tribune from my visit to Japan a couple of months ago. The article, on May 16, 2010, was titled: Challenging the king of economic statistics. The article described the sacred cow of GDP, I’ll just quote a bit of it:

High-G.D.P. Man has a long commute to work and drives an automobile that gets poor gas mileage, requiring him to spend a lot on fuel. The morning traffic and its stresses are not too good for his car (which he replaces every few years) or his cardiovascular health (which he treats with expensive pharmaceuticals and medical procedures).

High-G.D.P. Man works hard, spends hard. He loves going to bars and restaurants and adores his big house, which he protects with a state-of-the-art security system. High-G.D.P. Man and his wife pay for a sitter for their children and a nursing home for their aging parents. They do not have time for housework so they employ a full-time housekeeper. The do not have time to cook much, so they usually order in. They are too busy to take long vacations.

All those things — cooking, cleaning, home care, vacations and so forth — the the kind of activity that keep Low-G.D.P. Man and his wife busy. High-G.D.P. Man likes his washer and dryer; Low-G.D.P. Man does not mind hanging his laundry on a clothesline. High-G.D.P. Man buys bags of prewashed salad at the grocery store; Low-G.D.P. Man grows vegetables in his garden.

When High-G.D.P. Man wants a book, he buys it; Low-G.D.P. Man checks it out of the library. High-G.D.P. Man wants to get in shape, he joins a gym; Low-G.D.P. Man digs out an old pair of Nikes and runs through the neighborhood.

By economic measures, there is no doubt. High-G.D.P. Man is superior to Low-G.D.P. Man. hat we cannot really say is whether his life is any better…

The article goes on to say that Joseph Stiglitz, a Nobel laureate from the University of Chicago and his colleagues have concluded that assessing a population’s quality of life would require metrics from at least seven categories: health, education, environment, employment, material well-being, interpersonal connectedness and political engagement. They also decided that any country that was serious about progress should start measuring its “equity” — that is, the distribution of material wealth and other social goods…

The fact that author Jon Gertner continually uses “Man” grates on me quite a bit, but I think what he points out is a very useful perspective.  Now, add to this conundrum an article from Michael Synder of the Business Insider:  The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it.  This thoughtful article simply points out how ill-distributed wealth is in the U.S..  Some of the statistics from the article are startling:

• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
• 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
• 36 percent of Americans say that they don’t contribute anything to retirement savings.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.

In other words, G.D.P. further fails as a measure of progress since most of us don’t have enough money to succeed that way anyway! Our world is changing so rapidly we’re like frogs in boiling water.

In the last week as well, there is finally some public discussion about deflation.  Close friend and colleague Robert Theobald, a British Socioeconomist was warning 12 years ago that deflation was the real issue to be concerned about, not inflation.  That’s certainly been the case in Japan for the last decade where falling prices have taken people and the economy into completely uncharted territory.  This article by Paul Krugman:  CAN DEFLATION BE PREVENTED? gives a good overview of this new situation.

What seems to be true is that we’re entering a deflationary period with an increasing separation between those who have monetary wealth and those who do not with a system that measures progress by how much we spend and consume.  Seems like it is time to take Butan’s inquiry into Gross National Happiness seriously!

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  1. Many of the learning centers who have been part of the Berkana Exchange are working with to live meaningful lives which are far outside the parameters of G.D.P. I was just reading this morning about the work of my dear friends Sarah and Maria at their learning center in Greece — Azladitisa Avatakia. You might want to have a look at their blog:

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