Choosing the right mix of indicators – A central challenge of Beyond GDP approaches

Publication Date: 

Tuesday, 27 October 2015 - 4:15pm


Marius Hasenheit

Approaches to Beyond GDP are often multi-dimensional. Aggregating different factors into a single measure for policy-makers, who need to have a comprehensive view of existing problems, is de-manding. Information contained in one indicator is not enough to provide such a view. To understand and develop their policy problems, policy-makers very often need more than one indicator. Choosing the right indicator set among the many indicators assembled under headings like Sustainable Development, Green Economy, Beyond GDP etc. is therefore a key task for policy-makers who strive to take all relevant dimensions of societal welfare into account in their policy choices.

An important challenge of this task is that each indicator points to a certain part of reality just like a window presenting a limited view of the outside surroundings depending on the window’s size and the side it faces. Just as someone interested in knowing the entire surroundings of a house needs the knowledge of the window’s characteristics, so too does someone exploring different dimensions of societal welfare require a good understanding of the limitations of each specific indicator used. In other words, it is important to understand what each indicator shows and what it does not in order to assemble a set of indicators where each complements one another.

For example energy efficiency alone will not provide you with a robust view on how society is balancing the need for a dependable and affordable energy supply on one hand and the need to limit the related environmental damages. Energy efficiency indicators can improve for many reasons that are not entirely consistent with progress towards sustainable development (e.g. outsourcing of emissions, economic depression, or unaffordable prices of energy). Hence, only by looking at additional indicators policy-makers are able understand whether the rising energy efficiency means that the economy is producing more goods and services with less related environmental damages.

Many international organisations like EUROSTAT, the OECD, or the World Bank provide databases with many indicators useful for the purpose of Beyond GDP. These databases provide detailed in-formation on the technical parameters of the indicators (data availability, data quality and others). However, information that would help interpret the indicator results is very limited, as the re-quirement for these organisations to remain politically impartial does not give them the freedom to provide support in data interpretation.

Equally, scientific research provides little help as there is no general scientific theory on how to as-sess which information an indicator can provide or what it is missing, and how to find complementary indicators. The main reason for this is that the type of information needed depends on the policy question of the user and can therefore differ significantly, making the formulation of general rules challenging.

In conclusion, in order to build robust indicator sets for specific policy problems users need technical information on data quality, methodology and data availability, as well as the understanding of the information provided by the indicator and the correct interpretation of that information. Because most indicators sets provided under the headings of Beyond GDP, sustainable development, and general welfare indices have numerous component indicators, users need additional tools with concise and structured information to enable time sensitive decision-making. Making that information available to users is still an ongoing task in the Beyond GDP framework.

Recently, DG RESEARCH of the European commission has funded an attempt to make the access to sustainable development, Beyond GDP and green economy indicators simpler. The website provides an entry tool to find the right indicators for specific policy problems. The website links directly to the original data sources like EUROSTAT, the WORLDBANK or the OECD, while in the meantime provides information on the quality of the indicators and the strengths and limitations of them. By linking the indicators with each other and providing interpretation suggestions of the results, the website supports the user with a robust indicator set with indica-tors that complement each other to obtain a complete vision on the policy issue of interest.

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