Measuring Up

I’ve become increasingly fascinated by our human obsession with measurement, and the ways in which measuring something affects–and often distorts–our ability to understand it.

There’s polling, of course, for the political among us. Despite the admonitions of the pollsters themselves, we far too often see the “snapshots” they provide– not to mention the selected populations they quiz and the often-ambiguous questions they ask–as descriptive of the whole of America’s electorate and thus predictive of the future.

In education, legislators have embraced subject-matter testing without considering the way it distorts what happens in the classroom. Subjects that will be tested get extra time and attention; subjects that are of equal (or often superior) importance, like civics, get short shrift because they aren’t tested. (And don’t get me started on the mistaken belief that students’ test rresults measure teacher competence…)

Scientists know that the very act of testing something  can change the results. Scholars also remind us that drawing unwarranted conclusions from what we have chosen to test can lead us astray. Which brings me to a Guardian column by Joseph Stiglitz, one of my favorite economists.

The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

Stiglitz proceeds to point out problems with relying on GDP–long the standard measure of economic performance–to measure a country’s economic performance. (GDP is the sum of the value of goods and services produced within a country over a given period.)

As Stiglitz notes, GDP metrics don’t fully reflect impacts of things like Europe’s austerity measures on long-term standards of living.

Nor do our standard GDP measures provide us with the guidance we need to address the inequality crisis. So what if GDP goes up, if most citizens are worse off? In the first three years of the so-called recovery from the financial crisis, about 91% of the gains went to the top 1%. No wonder that many people doubted the claims of politicians who were then saying the economy was well on the way to a robust recovery.

For a long time I have been concerned with this problem – the gap between what our metrics show and what they need to show. During the Clinton administration, when I served as a member and then chairman of the Council of Economic Advisers, I grew increasingly worried about how our main economic measures failed to take into account environmental degradation and resource depletion. If our economy seems to be growing but that growth is not sustainable because we are destroying the environment and using up scarce natural resources, our statistics should warn us. But because GDP didn’t include resource depletion and environmental degradation, we typically get an excessively rosy picture.

In other words, Stiglitz is telling us that there is something fundamentally wrong with how we measure economic performance and social progress.

Getting the measure right – or at least a lot better – is crucially important, especially in our metrics- and performance-oriented society. If we measure the wrong thing, we will do the wrong thing. If our measures tell us everything is fine when it really isn’t, we will be complacent.

A recent article in Time suggests that other nations are coming around to Stiglitz’ view.

New Zealand became the first nation to formally drop gross domestic product (GDP) as its main measure of economic success. The government of Prime Minister Jacinda Ardern said the budget would aim not at maximizing GDP but instead at maximizing well-being.

Apart from schools, hospitals and roads, whose budgets would be allocated in the normal way, resources would be distributed according to their impact on five government priorities: mental health, child well-being, the inequalities of indigenous people, building a nation adapted to the digital age and fashioning a low-emission economy.

Shades of Bhutan’s “Gross National Happiness” index!

Stiglitz says it is now possible to construct much more accurate measures of an economy’s health.. I think it is fair to say that we should adopt those measures–but only after we subject them to a rigorous analysis to assure ourselves that the elements being measured are the ones that should be measured, the ones that will give us a more accurate understanding of ecological and economic (and inevitably social and political) reality.

What we choose to measure will tell us what we really value.

 

 

21 thoughts on “Measuring Up

  1. “And can democracies thrive if our economies fail to deliver shared prosperity?”

    No! If the Corporate Oligarchs continue stealing money from the world’s economy via low wages they will eventually have no market for their products. They and their fellow Oligarchs keep hiding their profits in the Cayman Islands and Switzerland to avoid paying taxes, with no intention or need to spend any of it.

    When they finish creating their dream of a complete Owner/Slave world economy there will be no middle class left to pay the taxes needed to run the governments that provide their police protection and roads to transport their goods, etc.

    The speed of the Oligarch’s goal of complete ownership has been increasing exponentially in the prior ten years as they continue purchasing the governing members of their countries. Finding people in government who are willing to sell both their souls and their fellow citizens’ lives has been an easy and inexpensive task.

  2. The social unrest occurring around the world, especially in South America, Africa, Asia and the Middle East should be fair warning that a change is coming whether wanted or not by the power structures in place.

    Listening to daily BBC reports of armed conflicts, demonstrations and riots in Venezuela, Bolivia, Ecuador, Peru, Brazil, Columbia, India, Pakistan, Hong Kong, all over Central and South Africa, Lebanon, Palestine, Israel, Syria, Iraq, Iran, Turkey, the list goes on and on and on, it seems the world is moving at an alarming rate to the next worldwide conflict. Inequality of every kind, competition for dwindling resources as vital as clean air and water, let alone fossil fuels, the continued rise of dictators/nationalists/authoritarians with oligarchs fully support are just the latest in a long historical line of opposed ideologies/religious beliefs driving tribalism. All of this is happening while the wealth continues to flow to the top.

    Peace is a fragile and elusive condition. The physical world we occupy is rapidly changing right under our feet and over our land, air and waters. Will we as a species adapt and survive or follow the scientific and logical conclusions that history proves will end in our demise?

    Recognizing the big picture while our noses are buried in the things in our hands may be entertaining/distracting in the short term, but what about tomorrow and tomorrow and tomorrow? Some of our children have already seen their probable future and are frightened and angry, thus the conflicts listed above.

    Thoughts and prayers aren’t cutting it. What next?

  3. It may have been Stiglitz who used the following example that I saw once. If you plow a field to harvest bushels of wheat, the value of that crop is added to the GDP, but the cost of the soil that was eroded due to the plowing is not subtracted. Even today, with “no-till” farming and little soil erosion, the cost to areas neighboring the fields due to the herbicides you spread on the fields, is not considered. So, the GDP is a greatly distorted measure. It overpredicts.

  4. Kudos to New Zealand for actually trying something new and different. Even if it turns out not to be accurate, would it be better to just continue going forward with a measure we know isn’t working?

  5. I would like to hasten to point out that it was none other than George W. Bush who fostered this “evaluation” pogrom (NO, I spelled it correctly) in order to measure teacher performance. He brought this out when he was governor of Texas. In Texas, unions in general and teachers unions in particular are anathema to the Republican politics that operates the Texas government for big oil, big insurance and big real estate.

    His “No Child Left Behind” smoke screen produced the usual Republican-bred corruption: The Houston School District superintendent decided to hold back troubled students in ninth grade where there was no testing. This allowed overall test scores to soar, thus “confirming” Bush’s idea. Oh, those underachieving students were then promoted past grades 10 and 11 where testing occurred and allowed to become graduating seniors.

    That superintendent’s reward? Secretary of Education when Bush became President. Incidentally, the cost of those school tests in Texas cost the Texas taxpayers $100 million per year. I’ve seen the contract. Diane Ravitch, Bush’s first NCLB guru eventually quit in disgust when she saw what a sham it was. She’s written a couple books on the subject that all condemn high-stakes testing in schools.

    Once again Republicans come to the rescue of what’s best for citizens.

  6. Back in 1975, I graduated from College with a Bachelor’s Degree in Finance. Financial Analysts examined publicly traded companies statements and offered their opinions on the financial wellness of these companies.

    At some point in the 1980’s and 1990’s the idea of “Lean and Mean” took hold. Layoff’s, and outsourcing, off shoring were all good things as it increased profits. You could make profits shifting money from one pocket to another. Enron until it collapsed was a high rider.

    Bill Clinton led the way with his Neo-Liberal Policies. What was good for Wall Street was good for America.

    Back as far as I can remember news anchors, even in the day of Walter Cronkite reported on Dow Jones Industrial Average. Today, the “Dow” along with other Financial Indexes are the Gold Standard reported on as indicators of prosperity.

    The Occupy Movement revealed that all was not right, inequality reigned supreme. Demonstrations, sit in’s were held but the corporate political powers held on aided and abetted by a Corporate Press.

    Perhaps a good example appears in today’s Guardian:
    Walmart is also one of the few big companies that does not offer employees increased hourly wages for working shifts on a holiday. At Target and Amazon, workers are paid time and a half for each hour worked.

    “Walmart doesn’t offer holiday pay. They have a discount you have to work certain days to receive and one discount only lasts two days,” said a Walmart worker in Idaho who requested to remain anonymous for fear of retaliation. They are re scheduled to work full-time shifts on Thanksgiving Day and Black Friday this year. https://www.theguardian.com/business/2019/nov/27/walmart-thanksgiving-workers-holiday-staff-pay

    The Corporate Press will provide us with up to the second reports on Holiday Sales, the cameras will record people lined up to storm the doors, looking for holiday deals. The message all is right with America. WAHOOO shop until you drop.

  7. “Stiglitz says it is now possible to construct much more accurate measures of an economy’s health.. I think it is fair to say that we should adopt those measures–but only after we subject them to a rigorous analysis to assure ourselves that the elements being measured are the ones that should be measured, the ones that will give us a more accurate understanding of ecological and economic (and inevitably social and political) reality.”

    I suggest we use more accurate measures of the latest Democratic presidential wannabe by subjecting him to “a rigorous analysis” of his past history as Mayor of New York City. What I have found about problems within Mike Bloomberg’s Mayoral administration; he appears to be a replacement for Trump hiding behind the title of Democratic candidate. Please do not “test” Bloomberg by what he says in his campaign speeches or that he is a well known billionaire; analyse his past actions and their failures…maybe these are why he is late in coming into the 2020 race, other candidates have already been heavily scrutinized and their failures “outed” on the campaign trail.

    “What we choose to measure will tell us what we really value.” And WHO we choose to measure!

  8. We already have a Happiness Index and Social Progress Index measuring world economies. And surprise, we don’t do well in either one. Our country is failing economically and unhappy, but Washington and our Mainstream media keep pointing to GDP.

    Again, the Oligarchs don’t want the working class to grasp just how badly they are getting screwed and to learn how unfair and unpopular our economic system is compared to results around the world.

    Obama went out of his way to use the word “exceptionalism” to describe the U.S. despite our Wall Street gurus committing fraud and tanking the world economy requiring over $13 trillion in bailout monies.

    Yet, for some reason, we cannot afford universal healthcare and free public education through college.

    It’s all a matter of political will, and the politicians (both parties) are captive of the Oligarchy. They are flaunted on the MSM, also captive of the Oligarchy. Their words mean absolutely nothing. It’s mere entertainment — no substance from any of them.

    Just an FYI, we rank 26th for Social Progress. https://www.socialprogress.org/?tab=2&code=USA

    We rank 19th on the Happiness Index. https://worldhappiness.report/ed/2019/changing-world-happiness/

    What is the hidden cost of unhappiness?

    I found this nugget from Jeffrey Sachs in the Happiness Index Report:

    “At the outset of this chapter it’s worth emphasizing that if the U.S. is indeed suffering from an epidemic of addictions, the implications are crucial not only for public policy but also for the rethinking of economic science. The free-market theory taught in our universities holds that consumers know what’s best for them, with businesses efficiently and appropriately catering to those desires. The prevalence of addiction suggests a very different picture: that individuals may be lured into self-destructive behaviors, notably by businesses keen on boosting sales of their goods and services. Economists of course know of such risks, but drastically underestimate their prevalence and significance.”

  9. When I look around the world, I notice that without a healthy middle class, countries do not appear to have a healthy democracy. I’m sad to say I believe we are rapidly falling into the same kind of unhealthy democracy. Still, I am trying to practice voluntary simplicity because I believe this is one way I can try to sustain the earth. I just heard that our life expectancy is declining and that suicide rates are rising. GDP does not measure any of that. We cannot measure our well being with GDP. I am getting ready to read a couple of books that critique unethical capitalism.

    And in the meantime, my fellow citizens, I wonder what each of us can do to share what wealth we have. If we want to be happy, we need to be willing give to others. Want to be happy? Give something away.

  10. If I missed it above, I apologize. One of my key learnings from years in and advising mega-corporations is that “what gets measured, gets done”. Like most “tools”, it can be turned into things negative – executives getting huge bonuses for raising stock prices.

    Or, “what if”, we measured and allocated Federal funds to states for the quality of life for those in poverty, the reduction of criminal recidivism, etc.

  11. In the working world we just see the paycheck and shrug the shoulders,we are suppose to accept it. most working class have a thousand mile stare at this,they dont see it. every one parrots what the news,family of like generations,and local gosip as the” why were here”,few ever say wages…the experian commercial is,about as gross as it gets,press the button and your credit score soars..its the realm of how its done,simple,in 5 minutes or less..i use to be able to save for a new car,boat,pay cash.,its been so long,and the socio,economics i associate with,never seen wages above water,nor saving for a cheap used boat..saving is mainly just for christmas..ive watched the changes,i live them..all the warm fuzzy the dow spews every nite,just reminds me that was a raise in my wages,,knowing some jerk who really does not work,spends his day,day trading in his underware.im know theres much more to it,but after seeing 40 years of wage freeze,and credit anything,work for the bank,and watch wall street take over,literally, our goverment…GDP,its only a sell to buy more stocks,,i woke up 40 years ago,You?

  12. I watched the News Hour and the Nightly Business Report last night. The New Hour featured an interview with a scientist answering questions about climate change and how recent data indicates that humanity will now need to step up efforts beyond original estimates because the amount of carbon in the atmosphere is slow to degrade and our current level of emissions increased in the last year. This followed by the NBR report that the major stock indexes were at all time highs – again. The juxtaposition of the reports made it clear how tone-deaf investors are to the existential threat of climate change. This probably also applies to most tribes who are focused on their own issues. I think it points out how divided we are divided as a country and how ineffective that renders us to deal with the real problems that actually threaten us.

  13. John Neal, the criticism is not of measurement, but what we measure.

    There is an absolute correlation between what is measured and the results. Take a company that makes it a number one priority for short customer service call times. The result is customer service people hang up on difficult calls regardless if a solution is reached. The call center might be able to handle more calls, but customers are unhappy.

    There needs to be measurement, but make sure what is measured is really getting you to your goal.

  14. Robin you are correct. We are slipping. Along with Republicans President Clinton signed NAFTA. Politicians are corrupt and apologize after they make huge decisions to receive donations to their foundations.
    Even most of us voted for Obama, Obama didn’t measure up as the ACA destroyed small businesses endeavors nationwide and jobs slipped as employers could no longer hire new employees as their finances went to fund healthcare options with large premiums and deductibles. $10 trillion was spent to boost the economy as failures in the housing market with poor regulations were drawn allowing the banking community to cash in on uneducated borrowers. Although Obama meant well his policies failed just like President Carter’s did. We doubled our national debt and that’s a huge burden on our children.
    Now we see a President focus on worldwide corruption, bringing jobs back and making sure nations pay for their own protection. He was a Democrat before running for President and some of his policies show this. He is the first President to pass prison reform receiving an award. Black unemployment is down and instead of receiving accolades for giving millions to the opioid crisis as his wife goes to speak at an opioid crisis rally she is booed. Our children are being taught to hate and that doesn’t measure up. If she were married to a Democrat President she would be the greatest First Lady ever, we should be ashamed.
    As far as metrics in regards to the economy, we would have to say Obama didn’t make any achievements in the economy while we know he did make improvements in the last three years as the economy readjusted to the ACA regulations.
    We need to keep our hopes up as every time we listen to the news there is projected doom and gloom m I’ll

  15. I think that the concept that measures can obscure as well as clarify applies equally to all of our symbols. The same can be said of words.

    For instance we use here every day different symbols for different political world views – Republican, Democrat, Independent, conservative, liberal, authoritarian, oligarch, libertarian, etc. and our meaning is a code shared by some others but not universally. Of course that is combined with our various levels of skill making symbols of symbols, sentences and paragraphs that attempt to capture and communicate our thoughts. Of course that inability to be precise requires institutions like the Federal Courts to help us reach a more common understanding of high stakes issues.

    There’s no better example of inability to communicate because of lack of sophistication in understanding all of the symbols that civilization runs on than our current President. Of course the other possibility is that he knows that what he is really thinking cannot be clearly represented or he would be at risk of overwhelming accountability by law.

    One of the examples of the opposite extreme are those who do scientific research to expand the body of human knowledge of what we are one with, the Universe. Design of experiments really is the process of measuring reality in such a way that the data will unambiguously inform on the truth of a very specific hypothesis that reveals something fundamental about what appears to be cause and effect chaos we are immersed in.

    We are knocking at the limits of what we are collectively informed enough to manage. Our challenge has come back to the one faced by our founders. What is the best approach for taking into account the superior knowledge of the few without risking the freedom of the many?

  16. Before the two crashes, Boeing’s chief measurements were how many planes they sold, how much profit that produced, and how they are doing vis a vis Airbus. Maybe a measurement/focus on safety would not have imperiled their future earnings quite so much.

    Asking the right question is Step 1 in solving any problem. That’s why Trump’s 13,000 lies have so often led us, and him, in the wrong direction and to the wrong conclusions.

  17. China is having its worst year in 57 years and the US was not surpassed. Black unemployment is below 6 percent and 13 million came off welfare.
    Tariffs are what Democrats wanted and begged for and a Democrat businessman has an R by his name and they are trying get rid of him.
    Some regulation easing is wrong but the VA is being held accountable and new legislation was passed in effort to take care of the veterans
    Who is measuring up?
    The USMCA won’t be passed. We’re to busy to help the working man. Shame shame shame

  18. Dan,

    Opening sentence. ” I’ve become increasingly fascinated by our human obsession with measurement, and the ways in which measuring something affects–and often distorts–our ability to understand it.”

    I translated this as measurement is a human “obsession”, and that “measuring something affects- and often distorts- our ability to understand it”.

    Thus my “caution”.

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