Report by the Stiglitz Commission on the Measurement of Economic

Performance and Social Progress

This report has been written to give alternatives to how statistical information
about the economy and the society is made and measured. The main aims of
the Commission are to identify the limitations of GDP as an economic and
social performance indicator and its problems of measurement; to observe
which complementary information could be used to make more pertinent
indicators of social progress; to see if these alternative tools could be
implemented and to discuss how the statistical information could be presented
in a viable way.
It has been seen how statistical indicators have been increasingly relevant
during the last years for policy-making for advancing the progress of society and
also for assessing and influencing how the economic markets work. In the
information society we are in, access to data is way easier. But, as the report
says, What we measure affects what we do; and if our measurements are
flawed, decisions may be distorted. This is the problem nowadays with data
and what the reports wants to give an alternative to. It has been seen how
sometimes the indicators do not reflect the perception of how people feel about
the issues they measure. This phenomenon may have various explanations but
the most important thing to change here is the tendency to rely just in the GDP
when it comes to measure the economic performance, as there are other
factors that are not taken into account and influence directly or indirectly the
economic performance.
The reforms suggested by this Commission in the report started to be discussed
before the crisis but with the crisis they believe that there is even more urgency
to apply them. Some of them believe that we could have been less surprised by
the crisis if the right indicators to reflect the economic performance had been
used. They also emphasize the environmental crisis we are going through and
how it is also not reflected when measuring economic performance.
The recommendations given by the report are focused on establishing a better
way to measure economic and social performance. They want to change the
measurements in a way that reflect the structural changes that had occurred in
modern societies. Also, they emphasize that the economic measures should
reflect peoples well-being. This does not mean that they avoid GDP
measurement but that it has to be complemented. To look at this well being the
focus should be in income and consumption rather than production. Also, they
consider that there has to be a focus in the household perspective. This means
considering, when measuring household consumption and income, services
provided by the government. Even more, they consider that income and
consumption should be analyzed together with wealth. To have a broaden idea
of the living standards, they also consider that there should be given more

importance to the distribution of income, consumption and wealth as the

average does not give the full information. As there has been also changes in
how the societies and the household work, there should be an emphasis in
broadening measures to non-market activities to have a wider perspective of
the economic and social reality. When it comes to well-being, they consider that
it is multi-dimensional. The main dimensions that they consider that define wellbeing are: Material living standards, wealth, education, personal activities
including work, political voice and governance, social connections and
relationships, environment, and insecurity, of an economic as well as physic
nature. They consider that well-being depends on the objective conditions and
capabilities of people. It is not just about the perceptions people have but
having a strong and reliable way to measure their well-being according to the
main dimensions considered in the report. Also, these indicators should reflect
inequalities in a comprehensive ways. Another recommendation is that when
designing surveys, those should link the different dimensions so policy-making
can be better made in various subjects.
Another focus of the report has been on sustainability. Sustainability allows
knowing if the current level of well-being will last in time or not. This
sustainability needs a well-defined dashboard of indicators that are precise and
interpretable. This sustainability should be analyzed by its own so it does not
send confusing messages.
The report also considers the environmental dimension. They believe that
several physical indicators should be considered when measuring the
environmental sustainability and focusing in an indicator that measures the
proximity to dangerous levels of environmental damage. This idea is for me the
most interesting one as we have been aware of the need of changing measures
about economic and social performance to really reflect the reality but not that
much when it comes to climate change. I believe that climate change has a mid
and long-term impact to which we are not paying attention to but can have
serious consequences to our economic and social stability. This is why I believe
that the fact that the report focuses also on environment makes it a very
complete and a good alternative to our present way to measure social and
economic performance. As they say, nowadays we rely too much on the GDP
but it has proven to reflect a false reality as it simplifies it to just one factor. This
new approach to measuring social and economic performance could at least
give us a more real vision of what is going on so we can be more prepared and
try to prevent future events. I do not believe that we can predict everything from
data but some awareness can be made if we know how things are really going
on around us in a broader and more complex way than the one we have been
used to until now.
Olga Arroyo Hernndez