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WELL-BEING,FRONT AND
CENTER:A NOTE ON THE
SARKOZY REPORT
RICHARD A. EASTERLIN*
Introduction
As a result of French President Nicholas Sarkozy’s
dissatisfaction with current measures of well-being,
most notably GDP, in February 2008 he asked three
economists – Joseph Stiglitz, Amartya Sen (both
Nobel Prize winners), and Jean-Paul Fitoussi – to
create a commission to consider better ways of mea-
suring social progress. The resulting 25-member
group includes 22 scholars with advanced degrees in
economics. Of the other three, two are leading con-
tributors to behavioral economics, the third a pio-
neer in the study of social capital. Eight members
were born in the United States, six in France, and
three in Britain; four of the remainder are from
developing countries.Only two members are female.
The place-of-birth and sex distributions are probably
reasonably representative of the composition of the
economics profession at the time of the members’
professional training.
The resulting Report by the Commission on the
Measurement of Economic Performance and Social
Progress1is a landmark document, most notably in
its advocacy of the use of subjective measures of
well-being for designing policies and assessing so-
cial progress. The magnitude of this recommenda-
tion may not be fully appreciated by non-econo-
mists. For decades economists have prided them-
selves on being “behaviorists”, and they dismissed
self-reports, insisting, in the words of Victor Fuchs,
1995 president of the American Economic Associ-
ation, “that what people do is more relevant than
what they say” (Fuchs 1983, 14, italics in original).
Economic historian Deirdre McCloskey has char-
acterized the attitude of economists as follows:
Unlike other social scientists, economists are
extremely hostile toward questionnaires and
other self-descriptions. … One can literally get
an audience of economists to laugh out loud by
proposing ironically to send out a questionnaire
on some disputed economic point. Economists
… are unthinkingly committed to the notion
that only the externally observable behavior of
economic actors is admissible evidence in argu-
ments concerning economics (1983, 514).
That a group of distinguished economists, five of them
Nobel Prize winners, and most of them trained in the
economic era of behaviorism, would assert that in
measuring social progress serious attention should be
given to self-reports of subjective feelings comes close
to economic heresy. To be sure, the group does not
advocate exclusive use of subjective measures, but
even to admit such measures to the hallowed compa-
ny of so-called objective indicators like GDP or the
unemployment rate is a sharp break with a discipli-
nary paradigm that has dominated economists’ think-
ing for decades. It is,in my opinion, long overdue.
The Report itself comprises three main segments, enti-
tled “Classical GDP Issues”, “Quality of Life”, and
“Sustainable Development and Environment”. The
Commission was divided into subgroups,each working
on one of the three topics.Although the membership
of the subgroups is not stated, it can be fairly well sur-
mised from the references on each topic.
Readers are thoughtfully presented with three options,
each of which covers all three segments: the “Executive
Summary” (12 pages), a “Short Narrative on the
Content of the Report” (62 pages), and “Substantial
Arguments Presented in the Report” (207 pages). In
what follows I draw chiefly on the Executive Summary.
To make a long story short, the Report is built on a
conceptual distinction among four types of measures:
1) production (economic performance),
2) material living level (economic well-being),
CESifo DICE Report 4/2010 22
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* Professor of Economics University of Southern California. This
article is a reprint from the Population and Development Review
36(1), 119–124 (March 2010).
1Available at www.stiglitz-sen-fitoussi.fr.
CESifo DICE Report 4/2010
23
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3) overall (multi-dimensional) wellbeing, and
4) well-being of current versus future generations
(sustainability).
Substantively, item 1, “Production”, as captured in
measures of GNP or GDP, gets little more than a
handwave.The Report rehashes at some length long-
standing problems in the measurement of these con-
cepts: the need to take greater account of changes in
the quality of goods and to improve measures of ser-
vices such as those provided by retail trade and fi-
nancial intermediaries, and particularly of govern-
ment-provided services (health, education and the
like). Nothing new or startling is said here, and no
recommendations are forthcoming. In fairness, one
would hardly expect solutions to issues of output
measurement that have been debated since the
1930s (for example, in the series of volumes pub-
lished by the NBER’s Conference on Research in
Income and Wealth and by the International Associ-
ation for Research in Income and Wealth).
What is new, for economists at least, is the assertion
that GNP and GDP are seriously deficient as mea-
sures of well-being, whether or not modified to take
account of problems like those noted above. Instead,
“the report advocates a shift of emphasis from a ‘pro-
duction-oriented’ measurement system to one focused
on the well-being of current and future generations”
(p. 10), that is, a shift from item 1 in the list above to
items 3 and 4. The Commission’s rejection of GNP
and GDP as measures of well-being is forceful and
caustic: “To focus specifically on the enhancement of
inanimate objects of convenience (for example in the
GNP or GDP which have been the focus of a myriad
of economic studies of progress), could be ultimately
justified – to the extent it could be – only through
what these objects do to the human lives they can
directly or indirectly influence” (p. 8). Note, too, the
extent of the shift the Commission is advocating – it is
not just the addition of new statistics,but a shift in the
orientation of the entire “measurement system”.
As I noted, none of the Commission’s specific recom-
m
endations relates to item 1,“production”. Of the 12 re
-
commendations that are offered, all are concerned
with measuring well-being: five relate to item 2,five to
item 3 and two to item 4.
Those bearing on item 2 – economic well-being –
deal chiefly with ways in which the national econom-
ic accounts, on which GDP is based, might be modi-
fied and used “to shift emphasis from measuring eco-
nomic production to measuring people’s well-being”
(p. 12), specifically, material well-being. In this re-
gard, the main thrust of the recommendations is to
focus on measures of the income, consumption, and
wealth of households, both their per capita amounts
and their distribution. Of special note is the recom-
mendation of time-use studies as a way of obtaining
insight into goods produced and consumed at home.
The Commission’s heart,however, is not primarily in
better estimates of material well-being. Rather, it is
in broadening the measurement of wellbeing to
encompass multiple domains (item 3). To this end,
the Commission identifies eight “key dimensions” of
well-being that “in principle…should be considered
simultaneously” (p. 14):
i. material living standards (income, consump-
tion, and wealth),
ii. health,
iii. education,
iv. personal activities including work,
v. political voice and governance,
vi. social connections and relationships,
vii. environment (present and future conditions),
and
viii. insecurity, of an economic as well as a physical
nature.
In the Commission’s view, “All these dimensions
shape people’s well-being, and yet many of them are
missed by conventional income measures” (p. 15).
(This is a masterpiece of understatement; one may
well ask whether any of these dimensions are cap-
tured by “conventional” income measures.) To rem-
edy this situation the Commission offers a number of
recommendations. It is in this connection that the
Commission’s radical view (for economists) of sub-
jective measures comes to the fore.After advocating
the official collection of a variety of objective mea-
sures on each of the dimensions of well-being noted
above, the Commission states:
Research has shown that it is possible to col-
lect meaningful and reliable data on subjec-
tive as well as objective well-being. Subjective
well-being encompasses different aspects
(cognitive evaluations of one’s life, happiness,
satisfaction, positive emotions such as joy and
pride, and negative emotions such as pain and
worry): each of them should be measured sep-
arately to derive a more comprehensive ap-
preciation of people’s lives. … [T]he types of
question that have proved their value within
small-scale and unofficial surveys should be
included in larger-scale surveys undertaken
by official statistical offices (p. 16).
We have here, potentially, an analog to the great
breakthrough of the 1930s when the immense re-
sources of government took over from individual
scholars the measurement of national income.
The Commission does not dodge the thorny issue of
the desirability of a single summary measure of
well-being, recognizing the “strong demands” for
such a measure. Although not going so far as to
endorse any one measure, it notes that several sum-
mary measures “are already being used, such as
average levels of life-satisfaction for a country as a
whole [a subjective measure], or composite indices
that aggregate averages across objective domains,
such as the Human Development Index”, and that,
with new statistical efforts “[o]thers could be imple-
mented” (p. 16). In addition, the Commission rec-
ommends that attention be given to distributional
aspects of overall well-being and its various
domains,as well as to interrelations among domains.
The issue of interrelations is illustrated by the state-
ment that “the consequences for subjective well-
being of being both poor and sick far exceed the
sum of the two effects” (p. 206, cf. also pp. 16, 55).
What is especially telling about this statement is the
(perhaps unwitting) primacy given to subjective
well-being as the criterion of overall well-being.
The analysis of and recommendations for measures
of current wellbeing, item 3,are carefully separated
from item 4, “sustainability,” that is, whether the
current level of well-being can be maintained for
future generations.And for good
reason: “It is no longer a ques-
tion of measuring the pre
sent,
but of predicting the future, and
this prospective di
mension mul-
tiplies the difficulties already en-
countered” in the discussion of
items 1–3 (p. 61). After an excel-
lent survey and evaluation of the
bewildering array of concepts and
measures of sustainability, the Re-
port ventures two fairly muted re-
commendations, opting for mul-
tiple economic and environmental
indicators and largely rejecting
both aggregative indexes of sus-
tainability and attempts to synthe-
size
the measurement of sustainability with that of
current welfare. In the end it is the measurement of
current welfare – item 3 – that is clearly the Re-
port’s central focus and contribution.
Given the wide-ranging scope of the Sarkozy Re-
port, it is not hard to find specific points with which
one may take issue. But such disagreements are, at
best, secondary to the general message that is con-
veyed – that the commonly accepted standard of
social progress,GDP,is seriously deficient. Instead of
GDP, measures relating to the multiple dimensions
of well-being, not just material gains, should be used
in policy decisions and welfare evaluations.
The significance of this message cannot be exagger-
ated. Consider two examples. The World Bank’s
World Development Report (WDR) 2009 acclaims
the benefits of urbanization, devoting three chapters
to policy proposals to promote urbanization in de-
veloping countries. The benefits identified in WDR
2009 are first and foremost income gains, as workers
shift from lower-paying rural work to higher-paying
urban jobs. Under the heading “What this Report is
not about” (World Bank 2009, 34), WDR 2009 ex-
plicitly sets aside consideration of the social and
environmental effects of urbanization, effects that
might well be negative. If the Sarkozy Commission
were to have its way, then these effects would re-
quire at least equal attention along with income
gains, and the result might well be a quite different
set of policy proposals.
Or consider a 2008 World Bank report that hails as
“success stories” and a model for the developing
world the exceptional growth rates of GDP per capi-
CESifo DICE Report 4/2010 24
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0
2
4
6
8
10
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
0
20
40
60
80
100
Sources: Mean satisfaction from World Values Survey (2005); percent satisfaction from Kahneman and
Krueger (2006,16).
L
IFE
S
ATISFACTION,
C
HINA,
1990
–
2004
Mean life satisfaction
Percent satisfied
Figure
CESifo DICE Report 4/2010
25
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ta achieved in recent decades by countries such as
China and South Korea (Commission on Growth
and Development 2008, 19–20). Since 1990 China
has had perhaps the highest rate of economic growth
ever recorded. With incomes more than tripling in a
fraction of a lifetime, one might have expected the
population to be fabulously overjoyed. During this
period, however, satisfaction with life has not im-
proved at all (see the Figure).
If overall life satisfaction is taken as an indicator of
well-being (though not necessarily the only one), as
the Sarkozy Commission recommends, one might
have second thoughts about this “success story” as a
model for other developing counties.At a minimum,
the life satisfaction measure might lead one to won-
der whether other dimensions of well-being, not
reflected in the trend of GDP per capita, need to be
examined. The pattern for China is no exception. A
study of 37 countries worldwide – 17 developed, nine
developing, and 11 in transition – reveals no signifi-
cant relationship between the improvement in hap-
piness and the long-term rate of growth of GDP per
capita (Easterlin and Angelescu 2009). This is true
for the three groups of countries taken separately
and for all 37 countries combined.
Heretofore, social science disciplines other than eco-
nomics have been less enthusiastic about the benefits
of economic growth, but it is economists that have
had the policymaker’s ear.With the Sarkozy Report,
a sea change is perhaps in the making.
References
Commission on Growth and Development (2008), The Growth
Report: Strategies for Sustained Growth and Inclusive Develop-
ment, World Bank,Washington DC.
Easterlin, R. A. and L. Angelescu (2009), “Happiness and Growth
the World over: Time Series Evidence on the Happiness–income
Paradox”, IZA Discussion Paper No. 4060; in revised form in R.A.
Easterlin, Happiness, Growth, and the Life Cycle, Oxford Univer-
sity Press, New York, in press.
Fuchs, V. (1983), How We Live, Harvard University Press, Cam-
bridge, Mass.
Kahneman, D. and A. B. Krueger (2006), “Developments in the
Measurement of Subjective Well-being”, Journal of Economic Per-
spectives 20(1), 3–24.
McCloskey, D. N. (1983),“The Rhetoric of Economics”, Journal of
Economic Literature 21(2), 481–517.
World Bank (2009), World Development Report 2009: Reshaping
Economic Geography, Washington, DC.
World Values Survey (2005), Official Data File, v. 20081015, 2008,
http://www.worldvaluessurvey.org/.
