Broader Measures of Progress J. Steven Landefeld, Director “Response to the Rio+20 Mandate for Broader Measures of Progress” High Level Forum Event for the UN Statistical Commission Meeting February 25th, 2013 www.bea.gov Broader Measures of Economic Progress? ▪ Recent Impetus for Broader Measures: Rio +20 Housing and financial crisis Great recession and slow recovery Fiscal crisis Increasing concentration of income Stiglitz report ▪ How Broad? “National accounts should include elements that reflect economic welfare that can be brought directly or indirectly into relation with the measuring rod of money” –Pigou ▪ He emphasized that can might mean anything from can easily to can with violent straining. Progress on broader measures have waited too long (over 75 years!) www.bea.gov We need to set ambitious, but achievable goals 2 Broader Measures of Economic Progress? ▪ Long-Standing List to Choose From: Energy and Natural Resource Accounts Environmental Accounts Distribution of Income, Consumption, and Wealth Alternative Measures of Sustainability Medical Care and Health Accounts Education Real Government Output Household Production ▪ Choices will depend on country priorities and resources, but some degree of standardization and comparability (SNA/SEEA, etc.) important www.bea.gov 3 Broader Measures of Economic Progress? ▪ Challenges include: Gaps in data Lack of consensus on estimating methods Fiscal crisis Economic crisis This stuff is really important with large economic and political implications ▪ Big Bang or Incremental Approach? Current environment may suggest incremental approach with extensions in key areas (w/double bang for the buck) What are some of these areas? www.bea.gov 4 Growing or Shrinking Living Standards? Source: BEA, Census www.bea.gov 5 Growing but Slower Source: BEA, Census www.bea.gov 6 Alternative Measures of the Purchasing Power of Households Source: BEA www.bea.gov 7 How Did We “Miss” the Housing Bubble? Source: BEA, Federal Reserve Board, Standard & Poor’s www.bea.gov 8 How Did We “Miss” the Stock Price Bubble? Source: BEA, Standard & Poor’s www.bea.gov 9 Where’s the Debt? Total liabilities/total financial assets Source: BEA www.bea.gov 10 Investing For the Future of Just Keeping Up? Source: BEA www.bea.gov 11 Human Capital Source: BEA, Christian (2012) www.bea.gov 12 What is the Value of Household Work? www.bea.gov 13 Long-Term Happiness and Real GDP Source: BEA, University of Michigan, Veenhoven, R., World Database of Happiness, Distributional Findings in Nations www.bea.gov 14 Happiness & the Financial Crisis Unemployment rate Gallup Well-being Index Source: BEA, Gallup www.bea.gov 15