Éloi Laurent on Measuring Tomorrow

Never before in human history have we produced so much data, and this empirical revolution has shaped economic research and policy profoundly. But are we measuring, and thus managing, the right things—those that will help us solve the real social, economic, political, and environmental challenges of the twenty-first century? In Measuring Tomorrow, Éloi Laurent argues that we need to move away from narrowly useful metrics such as gross domestic product and instead use broader ones that aim at well-being, resilience, and sustainability. An essential resource for scholars, students, and policymakers, Measuring Tomorrow covers all aspects of well-being, and incorporates a broad range of data and fascinating case studies from around the world: not just the United States and Europe but also China, Africa, the Middle East, and India. Read on to learn more about how we can measure tomorrow.

Why should we go “beyond growth” in the 21st century to pay attention, as you advocate, to well-being, resilience and sustainability?

Because “growth,” that is growth of Gross Domestic Product or GDP, captures only a tiny fraction of what goes on in complex human societies: it tracks some but not all of economic well-being (saying nothing about fundamental issues such as income inequality), it does not account for most dimensions of well-being (think about the importance of health, education, or happiness for your own quality of life), and does not account at all for sustainability, which basically means well-being not just today but also tomorrow (imagine your quality of life in a world where the temperature would be 6 degrees higher). My point is that because well-being (human flourishing), resilience (resisting to shocks) and sustainability (caring about the future) have been overlooked by mainstream economics in the last three decades, our economic world has been mismanaged and our prosperity is now threatened.

To put it differently, while policymakers govern with numbers and data, they are as well governed by them so they better be relevant and accurate. It turns out, and that’s a strong argument of the book, that GDP’s relevance is fast declining in the beginning of the twenty-first century for three major reasons. First, economic growth, so buoyant during the three decades following the Second World War, has gradually faded away in advanced and even developing economies and is therefore becoming an ever-more-elusive goal for policy. Second, both objective and subjective well-being—those things that make life worth living—are visibly more and more disconnected from economic growth. Finally, GDP and growth tell us nothing about the compatibility of our current well-being with the long-term viability of ecosystems, even though it is clearly the major challenge we and our descendants must face.

Since “growth” cannot help us understand let alone solve the two major crises of our time, the inequality crisis and ecological crises, we must rely on other compasses to find our way in this new century. In my view, the whole of economic activity, which is a subset of social cooperation, should be reoriented toward the well-being of citizens and the resilience and sustainability of societies. For that to happen, we need to put these three collective horizons at the center of our empirical world. Or rather, back at the center, because issues of well-being and sustainability have been around for quite a long time in economic analysis and were a central part of its philosophy until the end of the nineteenth century. But economics as we know it today has largely forgotten that these concerns were once at the core of its reflections.

Isn’t there a fundamental trade-off between well-being and sustainability? Can we really pursue those goals together?

That is a key question and the book makes the case that advances in human well-being are fully compatible with environmental sustainability and even that the two are, or at least can be, mutually reinforcing provided we think clearly about those notions. Well-being represents the many dimensions of human development and sustainability represents dynamic well-being. They are obviously related.

To use the words of Chinese Environment Minister Zhou Shengxian in 2011, “If our planet is wrecked and our health ravaged, what is the benefit of our development?” In other words, our economic and political systems exist only within a larger context, the biosphere, whose vitality is the source of their survival and perpetuation. If ecological crises are not measured, monitored, and mitigated, they will eventually wipe out human well-being.

Well-being without sustainability (and resilience understood as short-term sustainability) is just an illusion. Our planet’s climate crisis has the potential to destroy the unprecedented contemporary progress in human health in a mere few decades. As acknowledged by Minister Zhou, if China’s ecosystems collapse under the weight of hyper-growth, with no unpolluted water left to drink nor clean air to breathe, the hundreds of millions of people in that country who have escaped poverty since the 1980s will be thrown back into it and worse. But, conversely, sustainability without well-being is just an ideal. Human behaviors and attitudes will become more sustainable not to “save the planet,” but to preserve well-being. Measuring well-being, resilience and sustainability makes their fundamental interdependence even clearer.

 But do robust indicators of well-being and sustainability already exist? If so, what do they tell us about our world that conventional economic indicators cannot?

Plenty exist, the task now is to select the best and use them to change policy. This is really what this book is about. Think about health in the US. Simple metrics such as life expectancy or mortality rates tell us a whole different story about what has happened in the country in the last thirty years than just growth. Actually, the healthcare reform initiated by Barack Obama in 2009 can be explained by the desire to amend a health system in which the human and economic cost has become unbearable. The recent discovery by economists Angus Deaton and Anne Case of very high mortality rates among middle-aged whites in the United States, all the while GDP was growing, is proof that health status must be studied and measured regardless of a nation’s perceived wealth status. How is it that the richest country in the world in terms of average income per capita, a country that devotes more of its wealth to health than any other, comes close to last in the rankings with comparable countries in terms of health outcomes? Use different indicators, as I do in the chapter devoted to health, and the solution to the American health puzzle quickly becomes apparent to you: the ballooning of inefficient private spending has led to a system where the costs are huge compared to its performance.

Or consider happiness in China, which has seen its per capita income grow exponentially since the early 1990s, while happiness levels have either stagnated or dropped (depending on the survey) only to increase again in recent years when growth was much lower. If you look at China only through the lens of growth, you basically miss the whole story about the life of people.

Paying attention to well-being can also help us understand why the Arab Spring erupted in Tunisia in 2011, a country where growth was strong and steady but where civil liberties and political rights clearly deteriorated before the revolution. The same is true for the quality of life in Europe and in my hometown of Paris, where air pollution has reached unbearable and life threatening levels despite the appearance of considerable wealth. Measuring well-being and sustainability simply change the way we see the world and should change the way we do policy.

What sign do you see that what you call the well-being and sustainability transition is under way?

In the last decade alone, scholars and policy makers have recognized in increasing numbers that standard economic indicators such as GDP not only create false expectations of perpetual societal growth but are also broken compasses for policy. And things are changing fast at all levels of governance: global, national, local.

The well-being and sustainability transition received international recognition in September 2015, when the United Nations embraced a “sustainable development goals” agenda in which GDP growth plays only a marginal role. In the US, scores of scholars and (some) policy makers increasingly realize the importance of paying attention to inequality rather than just growth. China’s leaders acknowledge that sustainability is a much better policy target than explosive economic expansion. Pope Francis is also a force of change when he writes in the encyclical Laudato si, published in June 2015: “We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental.” and urges us to abandon growth as a collective horizon. Influential newspapers and magazines such as The Economist and NYT recently ran articles arguing that GDP should be dropped or at least complemented. Local transitions are happening all over the planet, from Copenhagen to Baltimore, Chinese provinces to Indian states.

How should students, activists and policymakers engage in “Measuring tomorrow?”

The book serves as a practical guide to using indicators of well-being and sustainability to change our world. The basic course of action is to make visible what matters for humans and then make it count. Unmeasurability means invisibility: “what is not measured is not managed.” as the saying goes Conversely, measuring is governing: indicators determine policies and actions. Measuring, done properly, can produce positive social meaning.

First, we thus need to engage in a transition in values to change behaviors and attitudes. We live in a world where many dimensions of human well-being already have a value and often a price; it is the pluralism of value that can therefore protect those dimensions from the dictatorship of the single price. It does not mean that everything should be monetized or marketed but understanding how what matters to humans can be accounted for is the first step to valuing and taking care of what really counts.

Then we need to understand that the challenge is not just to interpret or even analyze this new economic world, but to change it. We thus need to understand how indicators of well-being and sustainability can become performative and not just descriptive. This can be done by integrating indicators in policy through representative democracy, regulatory democracy, and democratic activism. Applied carefully by private and public decision-makers, well-being and sustainability indicators can foster genuine progress.

Finally, we need to build tangible transitions at the local level. Well-being is best measured where it is actually experienced. Localities (cities, regions) are more agile than states, not to mention international institutions, and better able to put in motion well-being indicators and translate them into new policies. We can talk, in this respect, after the late Elinor Ostrom, of a “polycentric transition,” meaning that each level of government can seize the opportunity of the well-being and sustainability transition without waiting for the impetus to come from above.

As you can see, so much to learn, do and imagine!

LaurentÉloi Laurent is senior economist at the Sciences Po Centre for Economic Research (OFCE) in Paris. He also teaches at Stanford University and has been a visiting professor at Harvard University. He is the author or editor of fifteen books, including Measuring Tomorrow: Accounting for Well-Being, Resilience, and Sustainability in the Twenty-First Century.

 

The New Ecology

The New Ecology by Oswald J. SchmitzIn The New Ecology, Oswald Schmitz provides a concise guide to ecological thinking for an era in which the activity of one species—humans—has become the dominant influence on the environment, the Anthropocene. Much traditional ecological thinking has attempted to analyze the natural world in isolation from the social world of human life, regarding the human world as an external disturbance to the state of nature. The New Ecology seeks to bridge this nature/human divide and understand human life as an integral part of local and global ecosystems. In turn, it seeks also to recognize the scale of human influence on the environment and to promote an ethic of environmental stewardship, of responsible use and husbandry of the resources embodied in the ecosystem.

Two fields that might seem paradoxical areas of study for ecologists are industry and the city. One might think that the factory and the concrete jungle are as far removed from ecological concerns as one can get. However Schmitz points out that neither can be considered in isolation from either the natural world or the global economy, and that both can benefit from ecological thinking. Much modern industry is dependent on raw materials extracted through mining, raw materials which are necessarily finite in supply, meaning that in the long term these industries cannot be sustainable. Schmitz suggests that these industries could be reconfigured to mirror the cycles of food chains in which different organisms act to produce, to consume, and to decompose food to once again become raw material for the producers. To some extent, the practice of recycling follows this cycle, but we are a long way from recycling enough to supply all the raw materials needed for production. Massive quantities of these raw materials are being lost to landfill. One step in the right direction would be to design products with their ultimate decomposition in mind, to make it as easy as possible to break down and recycle the constituent materials. Taking things further, we can think of industries as making up complementary clusters in which, as in ecosystem food chains, the waste products from one industry become inputs for another. Schmitz notes the example of a development in Denmark in which “an electric power company, a pharmaceutical plant, a wall-board manufacturer, and an oil refinery exchange and use each other’s steam, gas, cooling water and gypsum residues.” (p.174) Another potential resource is the enormous quantities of raw materials embodied in our cities—could cities become the mines of the future?

Cities also need to be considered as their own distinct type of ecosystem. The urbanization of the global population continues; it is estimated that as much as 90% of the the world’s population will live in cities by the year 2100 (p.180). The sustainability of these cities will depend in part on the extent to which they can produce the materials needed for operation and minimize dependence on external resources. Thanks to ecological study we are increasingly aware of the vital role played by urban trees and greenspaces in filtering pollutants from the air, cooling the urban environment (in turn reducing energy use for cooling buildings), and controlling rainwater run-off. These unpaid services can be valued at hundred of thousands of dollars (p.184). But cities themselves form parts of larger systems, drawing on and affecting vast hinterlands, and often affecting distant parts of the globe in their demand for resources. Only through deepening our understanding of these complex interactions, including industrial and urban ecology, can we hope for long-term sustainability.

5 Myths About Sustainability

On Earth Day and everyday we all need to focus on ways to be more environmentally conscious and responsible. In Pursuing Sustainability: A Guide to the Science and Practice, Pamela Matson, William C. Clark, and Krister Andersson draw on the most up-to-date science to provide a handy guide that links knowledge to action. In the process, they debunk commonly held misconceptions about sustainability. The first step in affecting positive change is awareness:

1. Sustainability challenges are largely a problem of consumption.
In meeting the challenges posed by implementing sustainable practices, production and consumption should be viewed as parts of an integrated system. Demand may drive production, but production can influence consumption by creating a demand where there was none previously. (Pg. 16).

2. As we move toward more sustainable practices, precedence should be given to the environment; humans should be considered as negative pressures that put ecosystems at risk.
To meet the goals of sustainable development, there needs to be an integrated appreciation and understanding of the social-environmental systems that we are operating in or any solutions will be unbalanced and fall apart over the long-term (Pg. 53).

3. Better policies and technologies are all that is needed to meet the environmental challenges ahead.
The complexity of social-environmental systems means that we cannot always predict the consequences of new technologies or policies. The pursuit of sustainability has to be an adaptive process in which we try the best possible solutions, moniter the results, and make adjustments as needed (Pg. 64).

4. GDP (Gross Domestic Product) and GNI (Gross National Income) are useful metrics when considering sustainability.
Both of these measures do not take important elements into account. First, they measure flows (what is happening now) rather than stocks or assets (what’s left to draw on in the future). They also fail to recognize and integrate the social and environmental as well as the economic determinants of well-being. To achieve an accurate sense of how we are doing in regard to sustainability, other measures and indicators that are more inclusive and broad-ranging are needed (Pg. 76).

5. Implementing sustainable practices means sacrificing profits.
Not necessarily. When taking into account social-environmental systems, sustainable solutions can actually save money. For examples of sustainability success stories that aided in, rather than hindering, economic goals, see Chapter 6 of Pursuing Sustainability.

As we work to meet the challenges posed by climate change and environmental vulnerability, it is important to educate ourselves so that we can arrive at solutions that will work over the long term. This Earth Day, Pamela Matson, William C. Clark, and Krister Andersson’s book is necessary reading.