| Working Group
of Statistical Experts, 11th Session |
| Bangkok,
23-26 November 1999 |
| National
Progress Indicators |
Australian
Bureau of Statistics
October 1999 |
| Contents |
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| Introduction |
| 1. |
ABS is investigating the development
of broad based measures of national progress.
This is in response to the issue of
the appropriateness of GDP as a single measure
of "progress", and discussion in the field of
environmental statistics on developing sustainability
indicators. The ABS accepts the argument that
GDP is a limited measure of national progress.
The development of more broadly based indicators
provides an opportunity to draw together a number
of measures across both economic and social statistics.
This paper discusses some of the recent thinking
on this subject in ABS. |
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| Alternative
Approaches to National Progress Indicators |
| 2. |
There are at least two alternative
approaches which can be adopted to the development
of national progress indicators. The first
alternative is the production of a composite indicator
which incorporates a number of measures, given
appropriate weightings and valuations to arrive
at a single index. An example of this type
of measure is the Genuine Progress Indicator (GPI).
(Cobb, Halstead and Rowe, 1995) These
measures are based on GDP, but apply a series
of "modifiers" to the index to take account of
factors such as income distribution, unpaid household
and community work and the various costs of social
problems such as crime. A GPI has also been
developed for Australia (Hamilton and
Saddler, 1997). The second alternative
is to develop a framework of separate indicators
which together seek to cover the range of issues
which might be relevant to national progress
but which are not additive and do not produce
a composite index. This approach also allows
countries to decide the indicators which are most
relevant to their circumstances. |
| 3. |
Another composite indicator
that is frequently cited is the Human Development
Index (HDI). The ABS has significant problems
with the HDI because of its lack of statistical
validity and the unwillingness of UNDP to address
errors in its compilation. In Australia's
case, several representations to correct errors
of fact were simply ignored. |
| 4. |
The lack of validity of the
HDI as a means of monitoring progress is clearly
and logically argued by Ian Castles, the former
Australian Statistician (Castles,1998).
The primarily goal of the HDI would seem to be
to gain publicity for UNDP's agenda. Its
accuracy and validity are not primary considerations,
yet the publicity it obtains through local media
can be embarrassing for countries' administrations.
Given the problems in the HDI persist despite
representations to UNDP, the ABS current strategy
is to highlight the HDI's deficiencies to the
Australian public, through the media in particular. |
| 5. |
The advantages of a single indicator
such as the GPI or HDI are obvious. It provides
for an apparently simple measure which can be
reported regularly to give a single "performance
score" . It provides a counterweight to
GDP as a measure of growth and progress and it
would be easy to capture headlines with such a
measure. It presupposes, however, a conceptual
framework to underpin the composite measure.
This framework would need to provide a basis for
deciding on the various constituent measures of
the composite and a basis for determining the
relative weights to be given to different constituent
measures. Like any composite statistic,
a single progress indicator conceals the complexity
of the relationships between underlying measures,
and thus makes interpretation of movements in
the index particularly difficult. Without
an agreed framework on which to base the measure,
there are potentially intractable problems of
valuation and weighting for the various constituent
items, leading to problems in interpreting the
meaning of the composite measure. |
| 6. |
In our view, work in this area
is insufficiently developed to undertake production
of a composite indicator. The opportunity
for misinterpretation would outweigh any benefits
from apparent simplicity. The ABS is therefore
proposing to investigate the second alternative,
which is to develop a suite of measures which
together would give a picture of overall "progress".
This would allow a number of advantages including
the ability to base measures on current issues
in Australian society; the ability to explicitly
show interconnections between different measures;
and the ability to measure national progress as
an inherently multi-dimensional concept.
Measuring national progress will require integrating
statistics across the three broad areas of environmental,
social and economic indicators. |
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| Environmental
Indicators |
| 7. |
A lot of the interest in the
area of developing more broadly based measures
of progress has been generated in the field of
environmental statistics, particularly around
the issue of producing measures of sustainable
development. In Australia, a recent Government
report recommended that the ABS take a lead role
in coordinating the development and collection
of sustainability indicators. ABS has for
some time produced environmental statistics in
areas of general interest such as transport and
its impact on the environment and public awareness
of environmental issues. There is now interest
in extending this work to comprehensive measures
of sustainability and the interaction between
economic and environmental issues. |
| 8. |
ABS has now started work on
the development of environmental accounts.
These are being compiled within the SNA93 framework.
Input-output tables underpin many of these developments. |
| 9. |
Environmental accounts that
have already been produced are the national balance
sheets, environment protection expenditure accounts,
energy, minerals and fish accounts. Other
environmental accounts are planned for water,
forests, waste and biodiversity. The water
account is expected to be released early next
year. These accounts can potentially form
the basis for more detailed policy analysis of
environmental issues, and can also assist in developing
a framework for environmental indicators. |
| 10. |
In addition, we have recently
started exploring what we might do in the field
of environment or sustainability indicators partially
in response to requests from other areas of government.
A first step here is to determine those environmental
issues which are of most concern to Australian
governments and society and to develop a set of
indicators around these concerns. This has
been the approach adopted in the United Kingdom
for example, where their Department of Environment,
Transport and the Regions has been producing a
State of Environment report based around time
series for 150 environmental indicators, organised
around a number of broad policy aims and objectives.
The attraction of this approach is that it ensures
that indicators are relevant to a country's own
policy concerns and hence will be relevant to
policy making. There is more recent work
in the United Kingdom which might be of interest.
This is discussed in a following section. |
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| Social
Indicators |
| 11. |
In the field of social statistics,
ABS is paying increasing attention to developing
measures of the interaction between different
social and economic variables on individuals and
communities. In examining this area, ABS
is returning to some extent to the work on social
indicators. |
| 12. |
The ABS has defined social indicators
as measures of social well-being which provide
a contemporary view of social conditions and monitor
trends in a range of areas of social concern over
time. |
| 13. |
Indicators so defined only have
relevance because they reflect societal goals
and values. The choice of indicators
therefore involves judgement on the part of the
ABS as to what appropriately reflects these values.
Values will change over time in response to changing
socio-political and economic circumstances.
This changing context will, therefore, influence
the relative importance of particular indicators
at different times as well as their interpretation. |
| 14. |
ABS social indicator work has
focused on the development of frameworks for the
various areas of concern and the identification
of arrays of indicators within each concern area.
These indicators are drawn from the program of
ABS social surveys as well as administrative statistics
produced by other agencies. In addition,
those areas of concern for which frameworks are
not well articulated such as family and community,
and social and political participation are being
further developed. Currently, ABS produces
a range of broad time series across a range of
social concerns in Australian Social Trends.
This work, together with the efforts in framework
development may lead to the production of a greater
array of social indicators across the areas of
major social concern. |
| 15. |
The ABS is now looking to extend
activity in this area. The proposed General
Social Survey, for example, which will commence
in 2002 is aimed at producing broad indicators
across a range of social and economic domains,
and should allow analysis of the interaction of
different variables on individuals and households.
Through the use of standard question modules repeated
at regular intervals, the intention is to develop
a set of measures as a time series which, while
interesting in their own right could also
provide an input to broad indicators of progress. |
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| Developing
National Progress Indicators |
| 16. |
One of the main difficulties
in producing statistics which show the interaction
of economic, environmental and social variables
is the lack of integration in the data.
Data sources may differ, as may concepts and classifications. |
| 17. |
Economic indicators in contrast
to those in the social area have the advantage
of a common conceptual framework in the National
Accounts which enables aggregates to be derived
which have a well understood meaning, and whose
elements are linked in a well defined quantitative
relationship. The goal in developing more
broadly based measures of national progress is
to capitalise on the existing conceptual framework
of the National Accounts to include consideration
of environmental and social issues. |
| 18. |
A further advantage of using
the SNA as a basis for integration is that even
where there is no direct quantitative linkage
which can be made between social variables and
National Accounts aggregates, the common framework
at least ensures that the concepts, classifications
and definitions which are used are common, well
understood, and allow for some international comparability.
How far it will be possible in practice to devise
indicators which can be integrated in this way
will depend to some extent on the issues which
are chosen as the focus for the statistical measures. |
| 19. |
One approach to overcoming the
problems of data integration is to use social
accounting matrices within the National Accounts
framework to show the linkages between economic
and social variables. For example, the
SESAME system, developed by Statistics Netherlands
aims to link social and environmental statistics
to economic statistics to produce an internally
consistent and coherent set of statistics. |
| 20. |
SESAME is a statistical information
system presented in matrix format (Keuning,
1996). It is based on social accounting
matrices, with supplementary tables added to the
system to cover issues of particular policy relevance
(eg income distribution and expenditure patterns).
This information is useful in its own right, but
it is also the base from which a set of economic,
social and environmental macro-indicators can
be developed. The set of matrices and indicators
is policy driven. There are numerous possibilities
but the sets of matrices and indicators actually
used in the Netherlands are determined by the
policy issues that have the highest priority to
government. |
| 21. |
The blend of matrices and indicators
attempts to provide an integrated system that
supports both the need for detailed information
for analytical purposes and summary statistics
that give a more immediate impression of the most
important trends. In describing the system,
the author uses the analogy of a series of icebergs,
where the "tips" are a range of indicators, which
contain beneath them a large body of information
which allows detailed analysis of interconnections.
By producing a number of SESAMES for different
years, it is possible to develop indicators of
economic and social change. |
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| United
Kingdom |
| 22. |
As discussed above,
the UK Department of the Environment, Transport
and the Regions has been producing a State of
Environment Report based around time series for
150 environmental indicators. These indicators
are organised according to particular themes or
issues and are based on the Government's Sustainable
Development Strategy. |
| 23. |
An interesting recent development
has resulted from a request by the UK Government
to produce a report which provides broader measures
of national progress than simply economic progress.
It also asked that the report be limited to a
relatively small number of indicators so that
readers of the report won't be overwhelmed by
the detail. To undertake this exercise the
Department of Environment, Transport and the Regions
carried out an extensive public consultation program
to try to identify those indicators which were
most pertinent to measuring progress. It
was agreed that the indicators would be issues
based. As a result of this public consultation
process, fourteen issues were identified and an
appropriate indicator chosen for each issue. |
| 24. |
The first report has now been
published. As well as a time series for
the selected indicator, it contained analysis
of the reasons for changes over time and disaggregations
of the indicators, for example, on a sub-population
basis. The public reaction to this report
has been very favourable. |
| 25. |
The Australian Minister of the
Environment has seen this report and has expressed
interest in a similar report for Australia. |
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| ABS
approach to developing National Progress Indicators |
| 26. |
ABS is now investigating the
best ways of developing new national progress
measures. It is proposed that, where possible
and desirable, the indicators would be based on
the SNA93 framework. This would maximise
the opportunity for international comparisons,
for understanding the conceptual basis of the
indicators, for allowing a greater degree of policy
analysis and for explicitly showing connections
between economic growth and other areas of progress.
The use of this framework would also provide an
opportunity to develop at a high level, a more
integrated national statistical system across
both economic and social issues. |
| 27. |
We are also considering adopting
the UK approach and basing the indicators on areas
of policy concern and issues of public interest.
As a first step in this area it is proposed to
produce an information paper setting out the options
for indicators of national wellbeing and seeking
input from government and community. We
will also be looking at mechanisms for deciding
on the areas or themes of most concern to the
community. This information will then form
the basis for choosing a set of progress indicators.
Research work can then commence on determining
the best way of collecting and presenting this
information, both as a set of summary indicators
and as a set of more detailed matrices and other
data which will allow interpretation of the linkages
between different measures. The current
work in social and environmental statistics will
assist in providing the information base from
which indicators can be derived. |
| 28. |
The intention is to move relatively
slowly in developing indicators and to allow ample
opportunity for public consultation. This
will maximise the chances of the indicators which
are ultimately developed being generally accepted
by governments and the community. |
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| References |
- Castles, I (1998)
Population and Development Review
- Cobb, C., Halstead, T.
and Rowe, J (1995) The Genuine Progress Indicator:
Summary of Data and Methodology (Redefining
Progress)
- Hamilton, C. and Saddler,
H. (1997) The Genuine Progress Indicator.
A New Index of Wellbeing in Australia
- Keuning, S. (1996) Accounting
for Economic Development and Social Change
- Indicators of Sustainable
Development for the United Kingdom, Department
of the Environment (1996)
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