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## The Stiglitz Report

CMEPSP, with the problem consciousness that “existing indicators as represented by GDP may not be able to capture the actual state of the economic society,” set up the three themes of “Classical GDP Issues,” “Quality of Life” and “Sustainable Development and Environment” for consideration from the standpoint that it is necessary to have a method to measure both economic performance and social progress more appropriately. The Commission’s report put together in September 2009 set forth the following recommendations on 12 elements that it believes are needed concerning a future indicator or a group of indicators.

1. Classical GDP Issues - From production to well-being

(1) When evaluating material well-being, look at measures of household income and consumption rather than GDP, a measure of production;

(2) When looking at household income and consumption to evaluate well-being, take account of taxes and other payments while household income and consumption should also reflect in-kind services provided by government, such as subsidized health care and educational services;

(3) Consider income and consumption jointly with wealth, as sustainability is measured by what is carried over into the future (physical, natural, human and social capital);

(4) Average income, consumption and wealth do not tell the whole story about living standards, as, for example, a rise in average income could be unequally shared across groups. Average measures of income, consumption and wealth should be accompanied by indicators that reflect their distribution;

(5) Broaden income measures to non-market activities, such as services produced in households;

### 2. Quality of life

(6) Quality of life depends on people’s objective conditions and capabilities. Steps should be taken to improve measures of people’s health, education, personal activities and environmental conditions. In particular, substantial effort should be devoted to developing and implementing robust, reliable measures of social connections, political voice, and insecurity that can be shown to predict life satisfaction;

(7) Quality-of-life indicators in all the dimensions covered should assess inequalities in a comprehensive way;

(8) The loss of quality of life of a person who is poor and also sick may far exceed the simple sum of the losses of quality of life of a person who is poor but healthy and a person who is sick but not poor. Thus, surveys should be designed to assess the links between various quality-of-life domains for each person, and this information should be used when designing policies in various fields;

(9) Statistical offices should provide the information needed to aggregate across quality-of-life dimensions, allowing the construction of different indexes;

(10) Measures of both objective and subjective well-being provide key information about people’s quality of life. Statistical offices should incorporate questions to capture people’s life evaluations, hedonic experiences and priorities in their own survey;

### 3. Sustainable development and the environment

(11) The assessment of sustainability is complementary to the question of current well-being, and must be examined separately. Sustainability assessment requires a well-identified dashboard of indicators that inform us about the change in quantities and qualities of natural resources, and of human, social and physical capital. A monetary index of sustainability has its place in such a dashboard but, under the current state of the art, it should remain essentially focused on economic aspects of sustainability; and

(12) The environmental aspects of sustainability deserve a separate follow-up based on a well-chosen set of physical indicators. In particular, there is a need for a clear indicator of our proximity to dangerous levels of environmental damage