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BPP Team

November 10th, 2015

Because GDP is not enough: five headline indicators for better policymaking

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Estimated reading time: 5 minutes

BPP Team

November 10th, 2015

Because GDP is not enough: five headline indicators for better policymaking

1 comment | 1 shares

Estimated reading time: 5 minutes

karen jeffreyThe New Economics Foundation (NEF) has called on the Office of National Statistics to adopt a new set of five headline indicators of national success. Karen Jeffrey explains why performance on good jobs, wellbeing, environment, fairness and health should be the key measures that are used to inform UK policymaking.

Recent public consultations show that people in the UK are clear and consistent about what really matters to them: secure, well-paid work; high levels of personal wellbeing; effective public services that guarantee good health and education; low levels of economic inequality, and a healthy environment.

Economic and social policy should aim to make these priorities a reality; but when it comes to assessing how our nation is performing these outcomes are not adequately taken into account.

Most would agree that economic growth, measured in terms of Gross Domestic Product (GDP), is an intermediate means towards achieving a range of social and economic ends. But in practice, the quarterly release of GDP figures are treated by the media as a crude measure of overall government success or failure. In turn, this creates a powerful incentive for policymakers to prioritise economic growth above other goals.

We see this influence at play in a number of policy decisions, from creating tax breaks for fossil fuel exploration and reducing renewable energy subsidies, to prioritising growth based on debt-fuelled private consumption.

To enable a more balanced approach to policymaking, we need a new set of headline indicators that will create the incentive for political action, and offer a compelling new vision of what we define as national success.

Informed by public consultation results and advised by a range of experts, NEF’s five headline indicators have been endorsed by a range of leading businesses, charities and unions. NEF has called on the Office for National Statistics to adopt five headline indicators of national success: Good Jobs, Wellbeing, Environment, Fairness and Health.

nef five


1. Good Jobs

While employment figures already receive a lot of attention, the unemployment rate doesn’t distinguish between the number of people in precarious, low-paid employment, and the number of people with secure jobs and decent pay.

Adopting a headline indicator of good jobs that reflects the proportion of the labour force in secure employment that pays at least the Living Wage, will draw attention to the number of people in good jobs – not just any jobs.

As well as increasing the overall number of jobs available, policy prioritising this indicator would require or incentivise businesses to pay higher wages to low earners, and improve job security.

Though it’s easy to imagine businesses resisting such interventions, many examples of forward-thinking, responsible businesses acting in the interests of staff already exist. Examples include the recent wave of employers pledging to pay staff at least the Living Wage (including IKEA, Lidl and Aldi), to those doing away with zero-hours contracts.

2. Wellbeing

Improving people’s lives should be the ultimate aim of public policy. Adopting average life satisfaction in the UK as a headline indicator will send a strong message to government that wellbeing isn’t an optional extra or a luxury to be prioritised only once economic objectives have been met.

Prioritising wellbeing as a key measure of whether policy is improving human lives would lead to more interventions like the provision of psychological therapy for people with mental health problems, which  increased access to at least minimal levels of talking therapies, rather than just medication, for those suffering depression and anxiety disorders. This policy was implemented as a result of efforts by wellbeing expert, Professor Richard Layard, and his engagement with wellbeing evidence.

3. Environment

Our prosperity, and that of future generations, depends on a healthy environment and international negotiations are key to unlocking serious global progress in this area. By prioritising how well the UK is performing against a measure of the UK’s consumption-based carbon emissions – set in relation to a safe emissions limit based on scientific evidence – the UK could play a key role in advancing climate negotiations on the global stage.

Examples from around the world demonstrate how, with the right policy intervention, we can make enormous steps towards reducing emissions to a sustainable level. For example, while carbon-pricing was in place in Australia, emissions resulting from electricity generation dropped to a ten-year low within just two years of the policy being implemented (though the policy was later repealed for political reasons).

4. Fairness

The Fairness headline indicator uses data from the Office for National Statistics’s Effects of Taxes and Benefits on Household Income to compare how after-tax incomes differ between the richest and poorest households in the UK. High levels of inequality have been proven to have corrosive effects on both society and the economy. The UK has gone from being one of the most equal industrialised countries in 1979, to one of the most unequal today. We call on policymakers to adopt a headline indicator that measures the gap between the income of the top and bottom 10% of households in the UK to interrupt this trend of growing inequality.

While policies which rely too heavily on taxing the rich are unlikely to be effective on their own, a wide range of policy interventions can be made to reduce income inequality. For example, in the Nordic countries, state provision of universal childcare with a strong focus on education has been found to break the reinforcing cycle of income inequality.

5. Health

Good quality healthcare and public health provision, measured by a reduced percentage of deaths considered avoidable given high quality healthcare and public health provision, is a pre-requisite for all other social and economic goals. Prioritising performance using this measure will force policymakers to pay attention to recent research that outlines how the structure of society can affect health. It will also help prevent ill health, rather than waiting to treat it once it arises.

Such policies might include anti-obesity taxes on junk food and sugary drinks, as implemented in Denmark, Hungary, and France – and as UK doctors have also  recommended. Similarly, restricting  advertising targeted at children was found to reduce the likelihood of purchasing fast food by 13% in affected households in Quebec in the early 1990s.

A smarter, more rounded approach to policymaking

Prioritising our performance against each of these headline indicators would put what matters to the UK public at the heart of policymaking. Further, evaluating policies in terms of these five non-hierarchical indicators at once would represent a smarter, more-rounded approach to policymaking.

Not only would the trade-offs between different policy areas be made more explicit, but policy measures that benefit more than one of the headline indicators at once would be favoured, creating ‘double-dividend’ or win-win effects.

We need a sustained push from across British society for the Office for National Statistics to adopt a more balanced set of headline indicators to bring about the change our society and economy needs to see. Fortunately, there are many signs that the agenda is gaining momentum among government, statistical offices, civil society organisations, and business.


Please note: This blog is based on a new report from the New Economics Foundation, which has a launch event on 11th November 2015. The article represents the views of the author and not those of the British Politics and Policy blog nor of the LSE. Please read our comments policy before posting.


About the Author

karen jeffreyKaren Jeffrey is a Researcher in the New Economics Foundation’s Centre for Wellbeing. Read more about NEF’s Five Headline Indicators of National Success here.



(Featured image credit: Melanie Holtsman CC BY-NC 2.0)

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