Archive for December, 2009

Measuring Wellness is Affected by Statistics

health statisticsThe winners of the Nobel Prize economist Joseph Stiglitz and Amartya Sen, coordinated by the noted economist Jean-Paul Fitoussi, worked on a committee with 21 other internationally recognized experts to develop a set of recommendations to improve government statistics. In February 2008, French President Nicolas Sarkozy has summoned them to respond to dissatisfaction with the state of statistical information on economy and society. On September 14 last was presented at the Sorbonne University Commission Report on the measurement of economic development and social progress.

The relevance of this work is that most strikingly exposes the loss of confidence in official statistics is a phenomenon that cuts across many countries. He particularly emphasized the cases of France and Britain, stating that only a third of the citizens of these countries rely on official figures. There is a pronounced difference between regular measurements of the major socio-economic variables such as growth, inflation and unemployment, among others, and widely generalized perceptions of these realities. The report argues that "this difference is so important and so pervasive that not only can be explained by referring to the money illusion or human psychology. This phenomenon influences the modalities of public debate on the economic situation and policies are implemented.

Given the political scope of academic debate and conflict that exists around the form and content of the statistics compiled by the INDEC, visit the main contents of this report can tread a path beyond the position indignant about the quality of the national public statistics. Stiglitz, Sen and Fitoussi detailed in the introduction the reasons behind the need for such work, which is an essential framework for understanding what is happening with global statistics. A basic definition is that information is a public good, and the more informed the public is better able to function in society,

The objective of this mission was to determine the limits of GDP as an indicator of economic performance of social progress. It was explained with a basic concept: if the measurements are faulty, decisions may be incorrect. "If the measurements are distorted development, the same may happen with the conclusions we draw on economic policy," states the document. At the same time, indicates that the way statistics are published or used can give a distorted view of economic trends. This paragraph refers directly to the work of the INDEC, but the local political process has even more relevance to the responsibility of the private sector with consulting firms that perform measurements according to the direction of the wind and gain legitimacy from the result of clumsiness at the Institute.

The GDP statistic is not wrong in itself but which is used incorrectly, they explain, and therefore suggest the need to better understand the proper use of each measuring instrument. The wrong use refers to regard such data as an index of social welfare. For that reason, the report considers to be shifting the center of gravity of the statistical apparatus of a measurement system focused on production to one oriented towards measuring welfare to obtain a more relevant indicator of social progress. This will have to invest significant resources in order to relieve reliable quantitative information for statistics in this regard.

The specialists in this field and economists know that GDP measures essentially commodity production (expressed in monetary units) and as such is where its usefulness. However, it has often been used as if it were a measure of economic welfare. "The confusion between these two notions is in danger of misleading result in the level of satisfaction of the population and cause incorrect policy decisions, is highlighted in the report. This suggestion is locally relevant given the emphasis in official discourse about the undoubted success of the long period of steadily rising rates of Chinese GDP, but exposes their obvious limitations in social perception as a positive political asset precisely because it has encountered confusion Stiglitz noted in the report.

The need for changes in the way of addressing this issue arises from the structural transformations of the modern economy. In case the increase in services and goods production increasingly complex it more difficult to measure the volume produced and economic performance. "Today there are many quality products with a complex and multidimensional subject to rapid changes," explained Stiglitz-Sen-Fitoussi. This is evident in goods such as cars, refrigerators or computers to computers, but not so much on services such as health, education, information technology and communication.

"In some countries, the growth of the ‘output’ is due more to improve the quality of goods produced and consumed than quantity", say in a clear provocation to the traditional and dominant economic thinking. To add that "accountability for the quality change is a huge challenge but is essential for measuring real income and consumption, determinants of the material welfare of the people." In a didactic exercise in order to highlight the importance of this approach, states that the qualitative improvements underestimate amounts to overestimate the inflation rate and, therefore, to underestimate the actual income. Among several other considerations to extend this concept, the report notes that to be exhaustive, income and household consumption should also include state-provided services, such as subsidies (transport, education and health).

The notion of being requires a multidimensional approach that includes the material conditions (income, consumption and wealth), health, education, personal activities (including work), participation in political and social life, environment and insecurity (economic and physical). "All these dimensions shape the welfare of each, however, many of them are not considered in the traditional tools of measurement of income", questions the document Stiglitz-Sen-Fitoussi. This report expands the universe of gathering information in surveys of subjective well-being, the impact of global warming as a monetary cost that diminishes the quality of life of the population and indicators to assess inequality. All this new measurement system should be under the rigor of the sustainability of social welfare, ie their ability to sustain over time. This feature is reflected in the evolution of the quantities and qualities of material goods and human capital, social and physical development of a country.

The discussion on statistics relating to their concepts, characteristics and quality is presented as a very interesting exercise because the body discuss the development of traditional economic figures call into question certain ideas naturalized-and defective-in the conventional analysis. Besides working to expand a space for reflection which exceeds the miseries policies and arrogance of certain academic circles when they talk about the essential process of rebuilding the national system of public statistics.