Comment , News of 22 April 2013

Beyond GDP: “W3-Indicators” and an Annual Report on Wellbeing

Michael Steden (Copyright)  Berlin Reichstag Bundestag
Copyright: Michael Steden

The German Bundestag’s Study Commission on Growth, Wellbeing, and Quality of Life completed its work (Final Report Part1 & Part 2). Contrary to public expectations and media commentary, the Commission achieved its main goal: to relativize the importance of economic indicators, most prominently gross domestic project (GDP), in the public and political discussion.
The Study Commission proposed a set of indicators that are referred to as „W3-Indicators“. This name, which emphasizes the equal importance of three dimensions of wellbeing—economy, ecology, and social wealth—is concise and catchy enough to position itself alongside GDP.

The Commission proposed not a new single indicator (“Anti-BIP”) as many had hoped but instead a set of ten statistical indicators (and ten “warning signals”) for three target dimensions: economy, ecology, and social wealth. In detail, the indicators within these three dimensions are: “GDP, income distribution, and government debt”; “greenhouse gases, nitrous oxide, and biodiversity”; and “employment, education, health, and freedom.”

With these different indicators, it is now possible to cover the wide range of societal goals and challenges. But to ensure political efficacy, it is not enough to simply compute and publish the W3-Indicators. Rather, a culture of discussion must be cultivated that enables the indicators to take on political relevance. The Bundestag’s Study Commission has proposed that the federal government take a consistent (which implies a  “cross-departmental”) position on this matter at regular intervals (e.g., annually). This could, for example, take the form of an “Annual Report on Wellbeing.” To this end, Commission also recommends determining which of the federal government’s expert committees and commissions could and should contribute opinions on the W3-Indicators. This could also entail the creation of a new expert commission on “Sustainable Quality of Life.”

As a general rule: statistical indicators cannot and should not replace the political discussion process; they should facilitate it by supplying scientifically grounded and well-prepared information. Those who believed that an Anti-GDP indicator would change the world had unrealistic expectations. Looking at the outcomes realistically, the Study Commission has achieved its goal.

Professor Gert G. Wagner is an  expert in the German Bundestag’s Study Commission on Growth, Wellbeing, and Quality of Life. He is Chair of the German Data Forum (RatSWD) and Member of the Executive Board of the German Institute for Economic Research (DIW Berlin).