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Book Reviews M.D. Simonova
172 MGIMO REVIEW OF INTERNATIONAL RELATIONS • 12(5) • 2019
-. 2019. 12(5). . 172-180
DOI 10.24833/2071-8160-2019-5-68-172-180
Beyond GDP. Measuring What Counts
for Economic and Social Performance
M.D. Simonova
Moscow State Institute of International Relations (University)
A review of Stieglitz J., Fitoussi J.-P., Duran M. Beyond GDP. Measuring Economic Develop-
ment and Social Progress. OECD: Paris, 2018. 148 p.
Received: 15.06.2019
Accepted: 22.10.2019
Key words: GDP, SNA, economic downturn, households, welfare, economic insecurity, economic
sustainability, ecology, trust.
Aer the beginning of the Great Depression of the 20
th
century, an urgent need
developed for adequate indicators to assess the state of the country's economy.
Governments across dierent countries began to collect data needed to meas-
ure the amount of National Income (later Gross Domestic Product). e economic
concept of Keynesianism
1
determines the level of economic production as a result
of demand from dierent sectors of the economy. erefore, government regulation
should be aimed at maintaining full employment across the country. Economists Si-
mon Kuznets
2
from the University of Pennsylvania (Kuznets 1955) and Richard Stone
3
from the University of Cambridge (Stone 1984) were awarded the Nobel Prize for their
contribution to the creation of a system of national accounts (SNA), which includes
the macroeconomic indicator Gross Domestic Product (GDP) developed by Kuznets.
e crisis of 2008 and its consequences showed a drop in the level of GDP in all
countries of the world. e consequences of the crisis were long, with signicant costs
that could not be accounted for in the accepted statistical methodology and calcula-
Keynes J. M. is an English economist and founder of the Keynesian direction in economic theory. Founder of macroeco-
nomics as an independent science (Keynes ).
Winner of the Nobel Prize in Economics "for an empirical interpretation of economic growth, which led to a new,
deeper understanding of the economic and social structure and the development process as a whole."
М.Д. симонова Рецензии
ВЕСТНИК МГИМО-УНИВЕРСИТЕТА • 12(5) • 2019 173
tions. In most countries, GDP growth has returned to their pre-crisis level or close
to it, but the economy will never return to a state in which it could have been in the
absence of a crisis (Stiglitz, Fitoussi, Duran 2018: 14). In this regard, it is necessary to
continue the development of a comprehensive system of indicators, in order to catch
the harbingers of crisis and to take social aspects in the measures of state regulation of
social and economic policy into account, and to prevent the possibility of a new large-
scale recession.
New research by J. Stiglitz, J.P. Fitoussi and M. Durant was published as "Beyond
GDP. Measuring economic development and social progress, published by the OECD
in November 2018". is is a comprehensive study of an economic, statistical, social
and political nature.
Joseph Y. Stiglitz – American economist, belonging to the neo-Keynesian school,
was awarded the Nobel Prize in Economics in 2001 (together with American econo-
mists J. Akerlof and M. Spence) for analyzing markets with asymmetric information;
that is, markets in which some participants have more information than others.
J.P. Fitoussi – French economist, professor of economics at the Institute for Politi-
cal Studies in Paris.
M. Durant – Head of the Statistical Service of the Organization for Economic Co-
operation and Development (OECD).
e purpose of the paper is to continue the development of a system of indicators
of the welfare of society to prevent new large-scale crisis phenomena in socio-econom-
ic development based on adequate measures of state regulation.
e practical signicance of the study by J. Stiglitz, J.P. Fitoussi and M. Durand is
due to the fact that the presented recommendations are gradually being introduced
into the work of national government bodies and statistical institutions, which allows
a wider range of aspects of individual well-being to be taken into account and, accord-
ingly, the right measures to support it to be accounted for too.
In 2009, the Stiglitz – Sen-Fitoussi Commission (hereinaer referred to as the
Commission) presented the “Report on Measuring the Level of Economic Develop-
ment and Social Progress” (hereinaer referred to as the Report). In this work, their
critique of quantitative indicators of the level of economic development and social
progress was set forth. us, the fact that the quality of life depends not only on the
objective conditions in which a person lives, but also on his own abilities, was particu-
larly emphasized. Furthermore, international and national statistical agencies, in one
way or another, began to develop new, more qualitative indicators of social progress,
in order to more accurately measure the quality of life.
In a new study of 2018, taking into account the recommendations of the Commis-
sion and the Report, the authors emphasize the relevance of having a system of indi-
cators that reect people's subjective perceptions of the most important life aspects,
such as living conditions, health status, quality of education, participation in public
life, social contacts, economic security, trust in the state, etc. (Stiglitz, Fitoussi, Duran
2018: 16).
Book Reviews M.D. Simonova
174 MGIMO REVIEW OF INTERNATIONAL RELATIONS • 12(5) • 2019
J. Stiglitz, J.P. Fitoussi and M. Durand are of the position that the GDP indicator
has many limitations. e paper argues, rstly, that on the basis of the growth of GDP
(Simonova 2018: 509), it can be concluded that there are positive trends in a country's
economy although the majority of citizens may not feel this in everyday life. Secondly,
the desire to achieve GDP growth by any means signicantly impairs the environment.
irdly, the methodological problem of calculating the GDP indicator – measuring
the cost of production of goods and services in the public sector, whose activity is usu-
ally estimated in accordance with the size of government spending – may overestimate
the value of this indicator (Stiglitz, Fitoussi, Duran 2018: 33).
A High-Level Expert Group on measuring economic development and social pro-
gress (HLEG) based its study on the analysis and recommendations of the Commis-
sion. e authors note the need to actively introduce elements of economic theory into
statistical practice due to the imperfection of modern statistical methodology used in
research. A key thesis of the work of HLEG is the inuence of measured indicators on
the vector of political development. e absence of a certain aspect in statistical calcu-
lations can lead to the omission of a particular problem.
According to the authors, it is extremely dicult to display various aspects of so-
cial welfare, using only one numerical indicator. Since the indicator of GDP is used
to measure production in the international methodology, it has been used as an indi-
rect indicator of the level of economic development and well-being, as well as to de-
scribe the well-being of the population as a whole. Robert Kennedy expressed concern
about an indicator such as GNP: “Our GNP ... includes air pollution, cigarette adver-
tising and ambulances that carry victims in disasters ... But it does not take into ac-
count the health of our children, the quality of their education and the smiles on their
faces”
4
.
Since GDP was not originally designed to solve this problem, the authors pro-
pose to move "beyond GDP", which is necessary to assess the state of the "health" of
the country. e authors propose supplementing the value of the GDP indicator with
a wider panel of indicators that can reect the distribution of welfare in society and
its sustainable development in social, economic and environmental dimensions. e
problem is to make the system of indicators capacious and easy to understand, but at
the same time suciently extensive to summarize all those aspects that are of greatest
importance to society.
An important part of the work is a section on the measurement of economic re-
cessions. Since many analysts did not want to go beyond the GDP volume indicator,
the lack of quality indicators reecting the lack of people’s economic security made it
impossible to measure the deeper eects of the recession. e fall in GDP that followed
the crisis was not a short-term trend, as traditional macroeconomic models predicted.
Kennedy R.F. Remarks of Robert F. Kennedy at the University of Kansas, March , . URL: http://glaserprogress.org/
program_areas/pdf/Remarks_of_Robert_F_Kennedy.pdf (accessed ..)
М.Д. симонова Рецензии
ВЕСТНИК МГИМО-УНИВЕРСИТЕТА • 12(5) • 2019 175
Its negative dynamics indicate a long-term loss of large amounts of capital – not only
material, but also so-called “hidden capital”. For example, there was a widespread de-
cline in on-the-job training (a problem for young people entering the labor market
during the recession), and a decline in condence in the economic system, which is
intended to benet only a limited number of people. ere is a need for tools to ef-
fectively manage economic cycles, in order to avoid long periods of recession (Stiglitz,
Fitoussi, Duran 2018: 53).
is chapter identies that focusing only on government commitments when
evaluating the performance of the public sector is a key shortcoming of traditional
indicators. e authors mention the inability to adequately assess the entire amount
of unused labor (which exceeds the ocial unemployment rate). For example, in the
United States, where the unemployment rate dropped markedly aer the crisis, the
GDP level is much lower than it could have been without a crisis. e destruction of
“hidden wealth” described by the authors in this chapter was one of the consequences
of the 2008–2009 recession. is destruction will have long-term consequences, and
it explains the dierence between the state of the economy today and how it could be
in the absence of a crisis. “Hidden wealth”, which determines the level of production
in the future and its changes, should be understood as a concept and evaluated for the
implementation of relevant policies (Stiglitz, Fitoussi, Duran 2018: 47). For example,
a decline in productivity in the future can be minimized by controlling the distribu-
tion of limited production volumes that are observed during a crisis, as was done in
Germany. But even those indicators that take into account changes in human, social
and physical capital will not be enough to assess the consequences of a deep recession
in society as a whole, its impact on people's behavior.
e authors argue that it is possible for governments to use incorrect statistical
indicators that demonstrate economic recovery when most of the population did not
experience improvements in their well-being; this partly contributed to the developing
distrust towards state institutions as well as the growing discontent and anti-globalist
sentiments that are observed today the world.
Another equally important part of the work is devoted to the main ideas to be
followed developing upon the recommendations of the Commission; also areas that
require methodological improvement and increased attention of statistical agencies,
researchers and politicians are identied (Stiglitz, Fitoussi, Duran 2018: 98).
e UN Sustainable Development Goals (UN SDGs), which the global community
agreed on in 2015, apparently go beyond “GDP”. From the point of view of researchers,
169 goals and over 200 indicators for “global monitoring” are excessive for determin-
ing the political vector. Countries will have to identify their priorities and improve na-
tional statistical methodologies and practices, which even in developed countries are
currently not enough to monitor the implementation of SDGs. e global community
should provide technical and methodological support to the statistical services of de-
veloping countries, especially in assessing global climate change processes or income
distribution.
Book Reviews M.D. Simonova
176 MGIMO REVIEW OF INTERNATIONAL RELATIONS • 12(5) • 2019
e next group of indicators, recommended by the authors, concerns income
and wealth inequality. is aspect has a more signicant role in political discussions
today as compared to 2009. Nevertheless in a number of areas signicant progress
is still needed: for example, to measure income distribution processes, as well as to
integrate various data sources that are adequate for accounting for income distribu-
tion, consumption, and welfare over individual level. When studying the problem of
inequality, for example, it is necessary to use and analyze indicators of the dierence
between social groups (horizontal inequality). Among these are important indicators
characterizing inequality within households, as well as the distribution of resources in
them, which is especially important in the case of determining the level of well-being
(Stiglitz, Fitoussi, Duran 2018: 51-53).
From the point of view of researchers, it is also important to include information
on economic inequalities in national accounts. In ocial statistics, indicators of sub-
jective well-being, which are extremely important for determining the intangible costs
and benets of government programs and political reforms, need to be revised. Cur-
rently, in many countries, ocial surveys reveal the level of this indicator.
e authors focus on the concept of "economic insecurity". is has been pro-
posed to develop a system of indicators of economic insecurity. With their help, we
can conduct a comprehensive and more reliable analysis of the degree of recession ef-
fects, take more radical measures to smooth out the negative impacts of the crisis, and
improve the social security system. Deciencies in the anti-crisis measures of govern-
ment regulation were exacerbated by over-focusing on the eects government spend-
ing had on increasing government commitments, as such expenditures could take the
form of investments that increase government assets and balance sheets and positively
aect inter-sectoral balance sheets of countries. is aects the unemployment rate
and the “unused” labor resources of a country (Stiglitz, Fitoussi, Duran 2018: 81-87).
Indicators of economic insecurity are a new area. Hacker denes economic inse-
curity as “the degree of an individual’s or household’s vulnerability to economic losses”
(Hacker 2018). is includes such concepts as shocks, losses, and buers. e authors
propose developing a methodology for measuring the likelihood of an adverse event,
as well as the negative economic consequences of the event. A set of protective meas-
ures to reduce negative consequences involves the sharing of ocial insurance against
informal risks, accumulation as a type of self-support.
Much more eort is required to develop indicators showing shocks aecting peo-
ple, as well as the “reserve reserves” available to them. e 2008 crisis reduced not
only the level of people's economic security, but also their level of trust in the political
system, which is associated with negative perception of crisis management. Loss of
trust in each other and in institutions is a long-term legacy of the crisis, whose conse-
quences contribute to the political upheavals that are observed throughout the world.
An important group of indicators is the measurement of the sustainability of
economic, environmental and social development. is direction is a priority for re-
searchers and, in particular, statisticians, demanding input from various disciplines
М.Д. симонова Рецензии
ВЕСТНИК МГИМО-УНИВЕРСИТЕТА • 12(5) • 2019 177
and approaches. e authors note the importance of introducing new indicators into
the political process so well that the unrest of electoral cycles would not prevent their
use (Stiglitz, Fitoussi, Duran 2018: 87-90).
is work also contains references to the experience of individual countries in
order to illustrate how welfare indicators are used at dierent stages of the political cy-
cle. In some countries (for example, in France and in Italy), national parliaments that
distribute the state budget sought to improve statistical data, since incorrect indicators
could lead to the undue allocation of budget funds. In other countries (for example,
in New Zealand), the state treasury has played a leading role in developing a wider
panel of statistical indicators covering issues of sustainable development, economic
inequality and risks, as tools for planning measures for government reform or for pro-
viding expert assistance to other government departments. At the same time, in other
countries, welfare indicators were used in policy practice to harmonize priorities and
actions between government departments and administrative levels (for example, in
Scotland) and to identify ways to achieve goals as quickly as possible (for example, in
the United Kingdom).
e Commission’s report “Inaccurate Measurement of Our Lives: Why the GDP
Indicator Is Not True”
5
not only created incentives for a number of researchers and
national statistical agencies, but also helped to form a global movement that took the
form of initiatives from parliamentary commissions, civil society, and central and local
governments to use indicators that go beyond GDP when developing their policies. At
the international level, the global forum “Statistics, Knowledge and Politics” was or-
ganized by the OECD, which brings together representatives of civil society, research-
ers, national statistical experts and civil servants to promote the Program “Beyond
GDP”. Conferences were held in Palermo (2004), in Istanbul (2007), in Buzan (2009),
in New Delhi (2012), in Guadalajar (2015) and in Inchon (2018). In 2011, the OECD
introduced a system of welfare measurement indicators. Also, in 2016, this organiza-
tion developed a panel of indicators of household economic well-being to identify
short-term changes in their living conditions, which can be compared with indicators
of quarterly GDP growth. is comparison revealed signicant dierences between
indicators at the household level and indicators across the economy. Similarly, the Sta-
tistical Oce of the European Union (Eurostat) contributed to the work in this area (in
particular, the INSEE-Eurostat project on measuring economic progress, welfare and
sustainable development was initiated), through which a set of indicators was devel-
oped for measuring the quality of life (17 core indicators related to 9 areas) which are
regularly used to monitor living conditions in EU member states
6
.
Stiglitz J.E., Sen A., Fitoussi J. Mismeasuring our lives: Why GDP doesn't add up. URL: http://pdfalldogen.com/mismeas-
uring-our-lives-why-gdp-doesn-t-add-up-jean-paul-fitoussi-a-list-of-book-download-free.pdf (accessed ..)
Eurostat. Final report of the expert group on quality of life indicators. . URL: https://publications.europa.eu/en/
publication-detail/-/publication/cfeee-d-e-e- aaeda/language-en (accessed ..)
Book Reviews M.D. Simonova
178 MGIMO REVIEW OF INTERNATIONAL RELATIONS • 12(5) • 2019
e following, however, is the main criticism we can provide of this study: the
authors propose, in addition to the numerical indicator of GDP, applying additional
indicators; these include the description and measurement of inequality across the
population, sustainability, subjective well-being, trust, and so on. ese t not only
into the system of quantitative change; qualitative indicators, such as various indi-
cators of subjective well-being, trust, and some others, are subject to collection as a
result of special surveys. For this it is necessary to develop statistical questionnaires to
determine the characteristics of units of the population. erefore, they are dicult to
subject to statistical and econometric processing and analysis, as well as forecasting.
Constructing one aggregate, in addition to or including GDP, is problematic at this
stage. e system of collecting primary information organized in all countries must be
fundamentally restructured, which requires large additional funds.
e authors conclude the book with general conclusions. Firstly, the book has
started a transition from the inaccuracies of the methodology (assumptions and esti-
mates concerning the new measurement system) to the whole movement, which today
attracts researchers, policy analysts, statistical experts, international organizations and
treasuries. A “dictionary” of new concepts and indicators has combined academic re-
search and statistical practice, and this link needs to be maintained in the future.
Secondly, “using a more comprehensive, but capacious, dashboard of indicators,
reecting what we value as a society, would most likely lead to a more signicant in-
crease in GDP than that actually achieved by most countries aer the crisis” (Stiglitz,
Fitoussi, Duran 2018: 115). e authors argue that economic growth, which contrib-
utes to an increase in GDP but does not increase the well-being of most citizens, leads
to environmental degradation and the depletion of natural resources, leads to the econ-
omy and the population as a whole becoming less protected (a fact that undermines
trust in social institutions and society), provokes conicts due to the unfair treatment
of certain ethnic or racial groups; in other words, this is not real growth. Real growth,
which should be at the center of our attention, is fair and sustainable growth.
e authors oppose a narrow approach to an economic system that does not take
into account social and environmental development, as a system in which the factors
of production are always used to the maximum extent, and where the only political
goal is to maximize economic eciency, producing more with less. e “Beyond GDP”
program had such a global response because citizens and now, nally, economists real-
ized that GDP itself is not an objective indicator of well-being, and that our economy
serves as a means to achieve the goal of improving the well-being of all citizens.
irdly, researchers, practitioners, statisticians and policy makers should promote
this program with very concrete practical actions. Despite the progress achieved, most
of the Commission’s recommendations remain relevant today; in the future it will be
possible to make further progress in their implementation.
In the light of the work done by HLEG, the authors present recommendations that
are practical in terms of economic theory and statistics. ese include the following
provisions (Stiglitz, Fitoussi, Duran 2018: 118):
М.Д. симонова Рецензии
ВЕСТНИК МГИМО-УНИВЕРСИТЕТА • 12(5) • 2019 179
1. Creating a system of indicators of the population’s material conditions and
quality of life, as well as its inequality and sustainability, in order to assess the state of
the population in dierent periods of economic cycles.
2. Ensuring the full independence of national statistical agencies, providing them
with the resources to use the potential of big data. e international community should
provide technical support to the statistical services of poor countries.
3. Providing statistical agencies with the opportunity to use data from tax ser-
vices to account for changes in the upper limits of distribution; developing a method-
ology for analyzing the joint distribution of income, consumption and wealth.
4. Data should be disaggregated by age, gender, disability, sexual orientation,
education, and other signs of social status to describe group dierences in welfare; in-
dicators to describe inequalities within households (for example, asset ownership and
resource sharing, nancial decision making) should be developed.
5. Integration of information on economic inequality into the System of National
Accounts; the convergence of micro- and macroeconomic approaches with the aim of
interpreting the distribution in society of the benets of GDP growth.
6. Further recommendations concern the assessment of equality of opportuni-
ties, the use of administrative data on the development of generations; subjective well-
being; the impact of the policy on the economic life of the population, its insecurity,
available buers, the adequacy of social insurance to key risks, and subjective assess-
ments of insecurity.
7. e eectiveness of measures to ensure sustainability requires the develop-
ment of full balance sheets of various institutional sectors, covering all their assets and
liabilities, measuring the rent used to value assets, and improving human and environ-
mental capital, vulnerability, and sustainability of all systems.
8. Improving the measurement of trust and other social norms through both gen-
eral and specialized household surveys, as well as experimental representative samples
of respondents that use the approaches of psychology and behavioral economics.
9. Condential access of scientists and politicians to statistical and administra-
tive data; ensuring equal conditions for all research groups.
10. To provide “better policies for a better life”, welfare indicators should be used
to inform decisions at all stages of the political process: setting priorities, measures
and agreeing program objectives, analyzing the benets and costs of dierent policy
options, making budget and nancial decisions, monitoring programs and their evalu-
ation.
e applications of this work contain a list of developed and recommended indi-
cators consisting of three groups (Stiglitz, Fitoussi, Duran 2018: 136-142).
About the author:
Marina D. Simonova – Doctor of Science (Economic Sciences), Professor of Accounting, Statistics and Au-
diting Department of MGIMO-University. Elected Member of International Statistical Institute. 76 Prospect
Vernadskogo, room 3020, Moscow, Russian Federation, 119454. E-mail: rusinamar@mail.ru.
Book Reviews M.D. Simonova
180 MGIMO REVIEW OF INTERNATIONAL RELATIONS • 12(5) • 2019
References:
Hacker J. 2018. Economic security. For Good Measure: Advancing Research on Well-being
Metrics Beyond GDP. Stiglitz, J.E., J.-P. Fitoussi and M. Durand (eds.). Paris: OECD Publishing.
Keynes J.M. 2007. e General eory of Employment, Interest and Money. Palgrave Mac-
millan. 472 р.
Kuznets S. 1955. Toward a eory of Economic Growth. National Policy for Economic Wel-
fare at Home and Abroad. Garden City (N.Y.) Ed by. R.Lekachman. P. 12–77.
Stiglitz J., Fitoussi J., Duran M. 2018. Beyond GDP: Measuring What Counts for Economic
and Social Performance. OECD Publishing. Paris. 148 p. URL: DOI: 10.1787/9789264307292-
en.
Stiglitz J.E., Sen A., Fitoussi J. 2009. Report by the Commission on the Measurement of
Economic and Social Progress. URL: http://ec.europa.eu/eurostat/documents/118025/118123/
Fitoussi+Commission+report (accessed 27.10.2019)
Stone J.R. 1984. Balancing the National Accounts: e Adjustment of Initial Estimates.
Demand, Equilibrium and Trade. A. Ingham and A. M. Ulph, eds. London: Macmillan.
Simonova M.D. 2018. Cifrovaya ekonomika i problemy rascheta VVP [Digital Economy
and Challenges of GDP Calculation]. Lomonosovskie chteniya-2018. Sekciya ekonomicheskih
nauk. Cifrovaya ekonomika: chelovek, tekhnologii, instituty. Sbornik tezisov vystuplenij. P. 506-
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