David talks to Diane Coyle about how we measure whether the state of the economy is actually doing us any good. Why is it so hard to capture well-being in economic statistics and what impact has the digital revolution had on our quality of life?
Talking Points:
What does it mean when there is a disconnect between conventional economic measures and life as it is experienced?
- Consider the United States: economic indicators such as GDP and unemployment statistics look good, but the social indicators are terrible. Life expectancy is falling due to an epidemic of drug overdoses and suicide. Politics are practically deranged.
What are the conventional economic measures missing?
- There are lots of things going on that GDP doesn’t pick up, especially in the household.
- Technology is rapidly changing work patterns, and data collection hasn’t yet caught up.
- Life in cities looks very different than life elsewhere. Due to forces of agglomeration, people in big cities have more access to public services.
- We need better data that takes into account factors such as wealth, the state of infrastructure, geographic distribution, and human capital.
- Disjunction leads to distrust. Better measurement might help build trust between experts and citizens.
The 2008 Crash left deep scars, but the problems we see today go further back than that.
- After deindustrialization in the 1980s and 1990s, there was no meaningful policy response to the loss of jobs.
- This created a vicious cycle of unemployment, declining schools, and poor health.
- With automation on the horizon, we need better policies.
- We aren’t asking the right questions around automation: What kind of skills will be needed and can people acquire them? What will the adjustment costs look like?
Interconnectivity is a key challenge going forward.
- Societies adjust to technological changes all the time, but today, rapid changes are also interacting with trade wars and geopolitical disturbances such as Brexit.
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Further Learning:
