Tuesday, September 15, 2009

France to Count Happiness in GDP

Real economists can not be happy about this.

France’s president, Nicolas Sarkozy, on Monday urged other countries to adopt proposed new measures of economic output unveiled by a panel led by Joseph Stiglitz.

The logic here is baffling. Sarkozy, who set up the Stiglitz-led commission last year, said the world had become trapped in a “cult of figures”.

And, so now, Sarkozy is going to attach a number to happiness? Who exactly is saran wrapped in a numbers obsession?

Next we will be measuring love among movie stars as a measure of happiness. And the key to new GDP numbers will come from Perez Hilton reports on who has been jilted and who has not.

Insee, the French statistics agency, will start incorporating the new indicators in its accounting, Sarkozy said.

Government statistics were always hard to swallow when they measured real output. To the degree the SS (Stiglitz-Sarkozy) approach is adopted, the numbers will just be absurd. GDP data will look like a Dali painting.

Naturally, one consequence of the commission’s proposed "enhancements" to gross domestic product data would be to improve instantly France’s economic performance by taking into account its health service, expensive welfare system and long holidays, and throwing some kind of number out on that. At the same time, the commission’s changes would downgrade US economic output.

The commission suggested a series of "improvements" to the way GDP is measured. It proposed accounting for people’s well-being and the sustainability of a country’s economy and natural resources. “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated,” said the president. “And they have reasons to think like that.

“Behind the cult of figures, behind all these statistical and accounting structures, there is also the cult of the market that is always right,” he said.

So the solution is counting happiness? You know Sarko baby, there are somethings that can't be measured, and, really, we shouldn't even be trying.

We get a kick out of little kids who stretch their arms out and say they love mommy and daddy this much I-----------I apparently Sarkozy is going to be out there with a tape measure to see just how much these kids are stretching their arms.

Bottom line Sarkozy is a manipulator. His overriding objective, as FT points out, is to raise France’s trend rate of growth by a percentage point. Henri Guaino, Sarkozy’s speechwriter and inspiration for the commission may even get how absurd this all is, he quipped: “We just found half of that.”

As for Stiglitz he has always been a tool of big government, he is a former Senior Vice President and Chief Economist of the World Bank. He was a lead author for the Intergovernmental Panel on Climate Change. He served in the Clinton Administration as the chair of the President's Council of Economic Advisors (1995 – 1997). Among other activities, he currently chairs the University of Manchester's Brooks World Poverty Institute.

Stiglitz and Jean-Paul Fitoussi, co-author, said a more comprehensive method for measuring performance would cut the per capita GDP gap between the US and France by at least half. US per capita GDP is 14 per cent higher than France’s. Although the commission did not work out the effects of its proposals on different countries, Stiglitz said the changes would bring “a number of major adjustments”.

The US spends 15 per cent of its GDP on health and France 11 per cent. Stiglitz has come up with some mad equations which say that if GDP accounted for outcomes and not just financial inputs, that alone would cut the per capita GDP by a third. Again, GDP is difficult enough to measure, to add some mystical outcome numbers is turning economic science into fortune telling.


  1. Wenzel,

    The subjective value theorists invade government GDP offices?!

  2. Taylor,

    They are trying to measure happiness, that would make them objectivist value theorists, i.e. they think they can look at happiness and determine externally its value.

  3. Wenzel,

    Sorry, I should've put "(sarcasm)" in my comment. The joke I was trying to make was that happiness is a decidedly subjective valuation based upon individual preferences, and they are trying to accumulate these subjective valuations into an overall objective total statistic. The very idea of putting importance on happiness seemed like a decidedly "subjectivist" notion so I thought I'd kid and suggest the subjectivists had invaded the statistics offices!

    Poor attempt at e-humor, I'll be more careful next time!

  4. Plus, it's France. That alone should be good for five points.

    Maybe they'll be able to measure beauty and love next.

  5. Re Taylor's first comment:

    Subjectivists do get to actual, objectively measurable prices (or probabilities/odds) through exchange with others: A buyer and seller each have a subjective assessment of value, and they bargain to agree upon price. A market is created, and market outcomes (# of units sold, and at what price) are objectively measurable. Oh, and it means something. Subjectivists go awry when they pose their value beliefs as 'objective.' In that case, I'd stop calling them subjectivist and start calling them idiots.