Rethinking indicators of well-being: A discussion with New Zealand’s Treasury Secretary


So what’s the living standard framework?
We’ve had a.. the Treasury’s mission statement has been that we’re about
improving the living standards of New Zealanders and a few years ago we said what does it actually mean to improve the living standards of New Zealanders and out of this discussion came the
concept of four capitals – natural, human, social and financial physical and in
fact I call those four capitals economic capital and there’s a big debate to be had about whether I’m using that correctly which I believe I am and essentially what we say is that
those capitals generate flows that enhance intergenerational well-being
so our focus as policy advisers becomes an intergenerational focus we’re about
we’re not just about advising governments from what the next step
should be we’re about advising government on how for the next step actually fits
into an intergenerational landscape and ultimately intergenerational well-being
depends on the sustainable growth all of those of those 4 capitals which I think
requires just also a question from our experience is worth talking about right now and
probably the thing we are absolutely focused on at the moment and in some
respects the most important thing is to have a robust and credible framework of
indicators a robust and credible measurement
framework because one of the criticisms and critiques we have of the living
standard framework is that you know the data aren’t reliable it’s all too
subjective it’s all too fuzzy so we’ve been investing quite a lot of effort and
we’ve used the OECD’s work on better life index to try and develop that… you know there’s
been a lot of talk about what is well-being around the world from Bhutan’s happiness stuff to work done in France and UK and New Zealand itself I think we’re a bit
further along the road of taking these concepts and saying let’s actually
put them into practice yes I’m a firm believer that what can be
measured will be done or at least you can we can attempt to
achieve if we have specific measurements of those objectives and in that sense we are obviously way
behind the curve as as far as measures of well-being are concerned so I’m glad you mentioned.. it really is the next level globally but you know
we’ve had the human development indices for many years now.. decades ..through the UN
system and I think countries like India have have made an attempt to achieve
those indicators because we’ve sort of committed to certain benchmarks even
before Millennium Development Goals became the gold standard and then of course
subsequently the SDGs but looking inwards you know we are I think
right now at a point in time when we are having to really rethink our
statistical capacity and yet this is a country where you have a lot of
investment very robust statistical systems developed since the last 40s and the early 50s through know the Indian Statistical Institute
we’ve had some of the the best survey data systems put in place whether it was the
National Sample Survey annual survey of industries, the National family health survey over the last let’s say two and a half decades and you know Angus Deaton, the Nobel prize winner in economics, most of his seminal work really emerged out of
NSS data from India consumption surveys and so on so forth we’ve had data
systems in place but now I think we’re getting to a stage when you really need
real-time data you cannot wait five years or ten years to collect data in order
to then formulate policies and create indicators so that’s that’s as far as
the data is concerned and of course remember that this is also a time of a
big data and digital India which means we are digitizing a lot of this data on a real-time basis
so it’s not really the paucity of data right now I think our bigger constraint
is how do you transform data into information and that really requires
analysts it requires scientists data scientist and people who’re
trained in statistical methods and I think that is our binding constraint because
we have a lot of data and now real time data that we have few people across
institutions and within the government definitely who can create these indicators and indices so that’s largely putting the context into place but same time we might you know this the
next budget might be the first budget when we actually do serious gender
budgeting and it’s not just gender it’s gender and child budget and so there are
you know steps being taken towards that direction but obviously we are very much
in the first order problem solving phase now again towards that the NITI Aayog has started creating indices for many many different measures of well -bring health
and education definitely, the ease of doing business and the idea is
eventually that if we can properly estimate or create
certain ordering then this is information either to the market or to
the policy makers competition among states competition amongst districts
will lead to better decision making so again these indicators whether it’s
ease of doing business health indicators now will be trying to rate our public
health facilities surprising the district hospitals and every district in
India has almost all have a district hospital but quality of that varies enormously so for instance in the northern part of India and this is where I think you know
earlier I would always be critical of people who say yeah but India is so
large and diverse we do… aspiration is to move towards that but
that’s South Delhi if you just compare the magnitude of the problem
and the complexity of the problem South Delhi is about five six million , Delhi is
20 million diversity does play into real time problems which which need to
be overcome in order for these indicators to improve realtime decision-making within the government and also markets so a lot of indicators are now being also attempted at the state level so going
back to the district hospital you know in the southern part of the country and
I really don’t want to maybe yeah it’s not just southern by the way it’s also
Himachal Pradesh and Odisha because I think it’s a false narrative
now catching on that India’s really two Indias – North versus South – it’s not
really that it’s the four southern states – Odisha, Himachal Pradesh, Sikkim, Meghalaya – there and many states in the country where across income quintiles
people go to public facilities because they’re good they’re well run, well governered in many parts of the North belt the
BIMARU belt – less than 20% go even amongst the poorer income quintiles so it tells
you that where the facility functioning of it is well governed and it performs
across income quintiles everyone’s going to public health facilities when they’re good
and no one not even the poor are going to the badly run public facilities now
what is well-run and poorly run really comes out of these hospital level indicators we’re trying to right now it’s not quality of health care that is again
I think in another five years because quality of care is a very nuanced
indicator which involves a lot of patient level data right now we’re just talking
about do you have an facility how many x-rays
machines are functioning does the electricity how many hours does it come how far are you from .. do you have ambulances very basic measures and yet when you put
them together in the form of indicators it is information so a chief medical
officer of one district is in a position to say look my facility is is much worse and therefore the budget requirement is bigger so eventually absolutely right that idea of
all these indicators is to have better well-being but eventually it is it’s
it’s more growth it’s it’s better decision making better governance and on the
whole it’s good for the economy and for the citizens it’s interesting that you
mentioned human capital I in fact I think the part of the reason why I was
inducted into the PMC current council is being told that I have the only
economists in the last 70 years who is actually focusing on education and education.. and it’s a pity it’s probably the way we have thought of economic policies essentially
from the lens of growth but we have understood growth only from a very
narrow perspective which has been mostly hard infrastructure driven public investments again into infrastructure and related things understanding monetary policy or broader fiscal policy we really haven’t gone into understanding the culture of growth, the culture of growth will require smart people healthy people so human capital which sadly
in India we put it in social sector social sector in the government is more like a
shunting posting bureaucrats don’t really want to be part of health and education it
also tells us the priority as far as public systems are concerned
I think there is now an effort and that’s largely my objective as well to push towards
thinking of human capital and now that fundamental constraint because India’s constraint now after 25 years of sustained growth isn’t really you know
physical capital we have the money we then invested greatly in our
infrastructure it’s very important now that we invest in health and education
and we’re seeing some of those steps and a large part of it has to do with these
indicators because it’s very shameful in many ways to see the numbers
in stunting and wasting and malnutrition and again because we have so many
Indias we have malnutrition where you have acute stunting and also have
obesity in the urban areas coexisting and actually magnifying in many ways so you
know the effort in India is towards transforming a lot of this data into
simple metrics well-understood metrics the capacity within the government
particularly the ministry of statistics is being enhanced in census systems but we are still way way behind internationally

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