Economic and social policy decisions are increasingly becoming data-dependent. Specific key metrics and indicators are now being rigorously monitored as a precursor to decision-making in connection with public policy issues. While “management by objectives” techniques are well-established and widely practiced in government and industry, the stated objectives are often set in terms of inappropriate metrics or indicators. The growth rate in Gross Domestic Product (GDP) or the level of a stock market index are prevalent measures that strongly affect how the state of a national economy is assessed, as is clearly evident from recent political pronouncements from Washington. However, the GDP growth rate or the Standard & Poor’s Index do not provide suitable measures of the well-being of society as a whole. The assessment of national well-being requires consideration of such important factors as sustainability and resilience with specific reference to societal conditions relating to health, education, work, social security, and the population’s degree of satisfaction with economic and social conditions. Well-being is not defined exclusively by income or growth; it is a much wider concept that requires detailed research, analysis and quantification to ensure that policy objectives and decisions are driven by relevant metrics and indicators.
Three French economists, Thomas Piketty, Jean Tirole, and Éloi Laurent, have each written books that focus on important economic and social issues and how appropriate metrics and indicators should be used as policy tools to help understand and direct the challenges posed by these issues. Thomas Piketty is a professor at the École des Hautes Études en Science Sociales, professor at the Paris School of Economics and Centennial professor at the London School of Economics International Inequalities Institute. He is best known as the author of Capital in the Twenty First Century, which describes the themes of his research on wealth concentration and distribution over the last 250 years; one of his major findings concerning inequality is that the rate of capital return in developed countries is persistently greater than the rate of economic growth and this fact causes wealth inequality to increase over time. Jean Tirole is Chairman at the Jean-Jacques Laffont Toulouse School of Economics and Scientific Director of the Institute for Industrial Economics; he was awarded the Nobel Prize in Economic Sciences for his analysis of market power and regulation. Jean Tirole is the author of recently-published Economics for the Common Good in which he promotes the idea that economics is a positive force for the common good and envisions a greater role and influence for economists to engage with the many challenges facing society, helping to identify societal key objectives and the tools, metrics and indicators needed to meet them for the common good. Éloi Laurent is Senior Economist at the Sciences Po Centre for Economic Research in Paris. He is author of Measuring Tomorrow: Accounting for Well-Being, Resilience, and Sustainability in the Twenty-First Century. In this book his principal theme is that society is becoming increasingly data-dependent and that data are powerful influences on organizing societies and determining policy. He demonstrates his belief in applying economics for the common good, by discussing such social and economic issues as climate change and global warming, the digital revolution, technology and innovation, employment and unemployment, the euro crisis, and the post-2008 global financial order, and a particular emphasis on his own research on the proper balance between the free market and regulation. He criticizes GDP and growth as bad indicators of the well-being of society, whereas he postulates specific metrics for the assessment of income, work, health, education, happiness, and trust as constituting an appropriate way forward in ensuring a meaningful focus on well-being for society as a whole. He also emphasizes the importance of good governance for the state of the biosphere, environmental performance, sustainability and resilience.
The inclusion of “happiness” in the Laurent book perhaps is an acknowledgment of Thomas Jefferson’s declaration, enshrined in the United States Declaration of Independence, that the pursuit of happiness is an inalienable right, along with life and liberty. Éloi Laurent pays a special tribute to the country of Bhutan for its pioneering efforts to empirically define its own concept of happiness in 1972, by adopting a holistic policy instrument named Gross National Happiness (GNH) Index. The original concept underlying this index was to recognize the impact of economic development on the environment and the impact of economic openness on social cohesion. GNH is constructed to high professional standards. GNH defines 758 variables covering nine specific domains: psychological well-being, health, time use, education, cultural diversity and resilience, community vitality, good governance, ecological diversity, and resilience and living standards. For each indicator, a sufficiency threshold is applied, which makes it possible to identify two groups of persons in the population, namely the “happy” and the “not-yet-happy”.