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Regrettables

by Jerome a Paris Wed Sep 20th, 2006 at 08:54:54 AM EST

Take a look at this fascinating note from the research team of Deutsche Bank, the well known hippies: Measures of well-being - There is more to it than GDP (pdf, 10 pages)

GDP only measures the market value of all final goods and services produced within a country in a given period. It is the most widely followed metric for assessing an economy’s performance. However, GDP includes many items that do not help well-being: depreciation, income going to foreigners, and regrettables like security expenditure.


Economic well-being is a broader concept, but still restricted to material aspects. It is influenced by parts of GDP, by non-market activity, leisure and wealth. Unemployment and income inequality tend to reduce economic well-being. The Centre for the Study of Living Standards sees the highest economic well-being in Norway, France and Belgium.

Individual living conditions also include non-material aspects such as health, life expectancy, education and the state of the environment. The Weighted Index of Social Progress sees Sweden, Denmark and Norway on top, while the Happy Planet Index sees Colombia and Costa Rica among the leaders.

Happiness, as the ultimate goal, requires the most encompassing measure. This happiness depends primarily on family, friends, work satisfaction and activities. Income does not play a major role.

The note is a quick and easy read, and an excellent introduction to the whole topic of alternative ways to measure things, and I can only encourage you to read it all.

I've focused the title of the story on one concept which I find quite enlightening and which might be the easiest to measure: that of "regrettables":

GDP includes many items that do not boost human wellbeing. If a hurricane or an earthquake destroys an entire region, the reconstruction effort is counted as a boost to GDP – even if it only replaces something that was there not long before. Likewise, expenditure on crime prevention and security adds significantly to GDP in many countries – but only restores a safe environment. Medical expenditure as a result of air and noise pollution also adds to GDP as do diet classes, antidepressants and a sizeable list of other items. However, taken to the extreme this line of reasoning would imply that basic food and clothing also should not be included. This again highlights some of the arbitrariness of the different measures.

The question could be: how much of our activity is fighting entropy, and how much of that can be counted as worthwhile? Or, to open up the wider debate: how much do we need to run to stay in the same place, and how much of that "speed" can be counted as performance?

Display:
this graph on the front page:

to avoid the most immediate reactions of anti-Americanism, but it should be okay down here...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 09:04:04 AM EST
Our politicians do not have to worry, what ever they do, the life satisfaction/happiness stays flat !!

F***ing people.

btw, it should be interesting to draw the french' life satisfaction line from US1980=100, these people are so cranky ;-)

by fredouil (fredouil@gmailgmailgmail.com) on Wed Sep 20th, 2006 at 09:36:20 AM EST
[ Parent ]
As an American, I don't know why an American should be defensive about this (though invariably some people act as though any critique of the American model is next to evil...). What is interesting is that we have had a number of conversations around here in the last year about alternatives to GDP as a measure of success, and...irony of ironies...it is a bank that presents us an interesting alternative modeal. I like it. How can we get this...or something close to this...to become the coiin of the realm?? Well, I guess by talking about it, to start with...great catch!!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Wed Sep 20th, 2006 at 09:13:14 AM EST
Medical expenditure as a result of air and noise pollution also adds to GDP as do diet classes, antidepressants and a sizeable list of other items.

And broken toilets.  Unless, perhaps, you're French?

Truth unfolds in time through a communal process.

by marco on Wed Sep 20th, 2006 at 09:16:17 AM EST
The question could be: how much of our activity is fighting entropy, and how much of that can be counted as worthwhile?
100% of our worthwhile activity is fighting entropy.

Those whom the Gods wish to destroy They first make mad. — Euripides
by Migeru (migeru at eurotrib dot com) on Wed Sep 20th, 2006 at 09:21:12 AM EST
OK. What I meant was fighting destruction (rapid disorder: catastrophe, wars, etc...) as opposed to fighting decay (normal wear and tear and normal needs)

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 10:11:31 AM EST
[ Parent ]
I didn't say 100% of our entropy fighting is worthwhile, though. Building something new is an entropy-reducing activity just like fighting decay.

A little more contentious might be the observation that distinguishing between "normal" and "catastrophic" decay requires drawing an arbitrary line.

Those whom the Gods wish to destroy They first make mad. — Euripides

by Migeru (migeru at eurotrib dot com) on Wed Sep 20th, 2006 at 10:18:29 AM EST
[ Parent ]
Interesting representation.

It serves to emphasise the sheer insanity of a system which measures an Economy not upon "Value" but upon "Claims over Value" issued by credit institutions.

AntiMatter instead of Matter

Value is - unlike Price - indefinable - or better, definable only in relative terms - and comes in many forms, of which perhaps the most important are:
(a) "Emotional Value" - at its most basic, the need to love and to be loved, but extending into the concept of Society;
(b) "Spiritual Value" - who am I? Why am I here? Questions in relation to God and the relationship with the eternal.

We must re-base, or reverse the polarity, of our current system so that it is no longer based upon a Deficit.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Sep 20th, 2006 at 09:29:09 AM EST
did you ever read stirling newberry on dkos or bopnews, chris, you remind me a bit of him, really articulate and lucid.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Wed Sep 20th, 2006 at 12:02:41 PM EST
[ Parent ]
Great report.  Lots of quotable parts.

Boosting happiness or life satisfaction is not easy. Psychologists,
philosophers, economists and many others have explored this
question intensively over recent years. According to Lyubomirsky et
al. (2005) a part of happiness appears to be genetically determined
(around 50%), another part determined by happiness-relevant activities
(40%) and the remainder by circumstances (income, climate,
environment, stable democracy etc.).

"50% of happiness is genetically determined"...Half of my (possibility for) happiness is reliant on genes?  (Is that a misreading?)  I don't know what that means or implies.  (It sounds a lot.)

Happiness-boosting
activities

Start a new exercise program
Be kind to others
Foster intimate relationships
Count your blessings
See things in a positive light
Set yourself meaningful goals
Work in a challenging job
Add variety to your life
Develop your personality

Table 15
shows how much individuals value certain activities and how much
time they spend on them: socialising after work, for example, has a
net average value of 4.12 (on a scale of 0 to 6) and people spend
more than one hour daily on it. Commuting to work and working
itself rank at the bottom of this list
.

(My emphasis.)

At the end we get:

Some of the policy conclusions drawn by researchers in the happiness
field differ significantly from those in standard economics.

1. Measure well-being. To know what is important and to be able
to influence it, societies have to measure well-being, happiness
and their components.
2. Reduce unemployment. Unemployment has a major negative
effect on well-being both for those directly affected and for all
other citizens.
3. Foster happiness-boosting use of time. People tend to work
too much because they overestimate the impact of income on
happiness. Taxing income improves work-life balances, although
it is unlikely that the optimal tax rate lies above those in continental
Europe.
4. Strengthen civil society and active citizenship, participation
and engagement. Foster interaction among friends and family;
contain geographic relocation, which hurts social interaction with
friends and neighbours.
5. Limit materialistic advertisement. Research shows that people
who watch a lot of TV feel poorer. Comparison with the pretty,
successful and happy but artificial individuals in commercials
makes one's own weaknesses visible - especially for children
and teenagers. Sweden has banned advertisements targeted at
children below 12 years of age.
6. Focus the health sector on complete health. The WHO defines
health as "a state of complete physical, mental and social
well-being and not merely the absence of disease or infirmity".
This includes a stronger focus on mental illness and on longevity.

Could anyone from Sweden report back on number 5?  Have studies been undertaken?  

(I wonder if Sweden has seen a drop in the sale of certain types of toys and food products?  I'm thinking of plastic toys, sweets, and fizzy pop.)

Great find, Jerome.  Thanks.

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Wed Sep 20th, 2006 at 09:33:09 AM EST
Table 15 shows how much individuals value certain activities and how much time they spend on them: socialising after work, for example, has a net average value of 4.12 (on a scale of 0 to 6) and people spend more than one hour daily on it. Commuting to work and working itself rank at the bottom of this list.
Actually, I have observed when I bike home from work I am much less grumpy than when I take the tube, especially if I take the tube at rush hour. When I was forced to walk home for 2 hours on 7/7 I actually felt great on arrival.

Those whom the Gods wish to destroy They first make mad. — Euripides
by Migeru (migeru at eurotrib dot com) on Wed Sep 20th, 2006 at 09:52:58 AM EST
[ Parent ]
If commuting time isn't totally wasted - like if you're driving or stuck on overcrowded transport - it's much less stressful. If you can read or whatever it's much easier to deal with.
by Colman (colman at eurotrib.com) on Wed Sep 20th, 2006 at 10:02:03 AM EST
[ Parent ]
I actually enjoy my commute. I get to walk 15 minute each way, plus have 15 minutes in the metro, the most convenient place to read the papers every day (Economist in the morning, Le Monde in the evening).

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 10:09:17 AM EST
[ Parent ]
These data seem to be designed to make the US look as bad as possible . . .  ;)
by TGeraghty on Wed Sep 20th, 2006 at 11:04:44 AM EST
[ Parent ]
It has been a while I saw something about this, but I generated the same sort of mild disbelief when I reported on some similar findings last year. Kcurie disagrees though...
by Nomad on Wed Sep 20th, 2006 at 10:10:49 AM EST
[ Parent ]
It is interesting how little attention is paid to religion in all the studies. Praying was listed in the Texas survey.

Given the rise of the religious right in the US and Muslim fundamentalism elsewhere, the lack of any measure to see whether this is adding to happiness or not seems a big oversight.

Looking at the behavior of these groups their increased religious participation seems only to make them angry and dissatisfied with their societies.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Wed Sep 20th, 2006 at 10:25:44 AM EST
Looking at the behavior of these groups their increased religious participation seems only to make them angry and dissatisfied with their societies.

Cause or effect?
by Colman (colman at eurotrib.com) on Wed Sep 20th, 2006 at 10:26:32 AM EST
[ Parent ]
This is the best piece of writing on this subject I've seen, presenting a good case for relativising GDP, and showing the other metrics that are proposed by different bodies, think tanks, etc.

First-rate!

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Sep 20th, 2006 at 10:28:17 AM EST
Wonder what kind of response this wold get on DKos?

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Wed Sep 20th, 2006 at 10:38:51 AM EST
You'll know today.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Sep 20th, 2006 at 10:49:21 AM EST
[ Parent ]
The only reason this American would complain about such a chart is that it is framed in terms of France versus the U.S.A. In fact, France and the U.S.A. are a lot more alike than many pairs of countries, and this sort of discussion is simply fraternal bickering.

If you really want to do a comparison, do it with Ghana, or Peru, or Indonesia. There are happy people in the poorest places in India and Africa. Does this mean that we should simply all become monks?

Besides, who ever proposed the equation GDP = happiness. Attempts to increase GDP are simply that, attempts to increase GDP. If you want to increase happiness, then define a metric and figure out how to improve it.

by asdf on Wed Sep 20th, 2006 at 11:52:58 AM EST
I've focused the title of the story on one concept which I find quite enlightening and which might be the easiest to measure: that of "regrettables":
GDP includes many items that do not boost human wellbeing. If a hurricane or an earthquake destroys an entire region, the reconstruction effort is counted as a boost to GDP - even if it only replaces something that was there not long before.
Not only that. The spending will often go at the cost of wealth.

The chart shown does cut some corners in assuming that happiness is the greatest good. This hints at a utilitarian approach, which is largely discredited in moral philosophy.

by nanne (zwaerdenmaecker@gmail.com) on Wed Sep 20th, 2006 at 06:17:58 PM EST


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