The Urgent Need for Social Wealth Indicators

In a climate of heightened public anxiety and growing concern, identifying and implementing more efficient and more accurate economic measures is an imperative of good government. Low-cost, high-value improvements in measures of economic success could have broad appeal across party lines. Ensuring our national competitiveness and future prosperity may be the ultimate opportunity for a bi-partisan win-win—the embodiment of a healthy democracy.

An Emerging Consensus That Something is Missing

Across political party lines, we all desire a healthy economy, a better quality of life, and a strong democracy. In the aftermath of the recent global economic tidal wave, a consensus is emerging that:

1. GDP has serious limits in terms of accurately identifying the real condition of our economy; and
2. something is seriously missing from our national economic indicators.

Economists, scholars, and policy-makers in private, non-profit, and public sectors are identifying similar missing pieces of the economic puzzle:

• The 2009 OECD World Forum on “Statistics, Knowledge and Policy” focused on these questions: What does progress mean for our societies? What are the new paradigms to measure progress? How can there be better policies within these new paradigms to foster the progress of our societies?
• A Bureau of Economic Analysis report (Landefeld et.al, 2010) calls for expanded or supplementary indicators to include the distribution of growth in income across households and regions, among other measures.
• A Commission on the Measurement of Economic Performance and Social Progress (Stiglitz et.al, 2009) report distinguishes measures of current well-being from sustainability (whether we can pass our “capital” on to future generations) and makes recommendations such as: 1) emphasize the household perspective; 2) broaden income measures to non-market activities; 3) understand that “wealth” is multi-dimensional and includes health, education, social connections, and the environment; and 4) ensure that quality of life indicators also assess inequalities.
• The Maryland Genuine Progress Indicator is an example of emerging state economic measures that include the social and environmental costs of what we buy and how we live in order to measure how economic progress impacts long-term prosperity.
• An Urban Institute report, The State of Society: Measuring Economic Success and Human Well-Being (June 2010) looked at dozens of new national indicator projects and recommended that the most inclusive indicators of economic health and social well-being should: 1) give more visibility and value to care work—in both market and non-market economic sectors; 2) pay particular attention to the status of marginalized groups such as women, children, the elderly, and groups defined by race, ethnicity, disability, and sexual identity; and 3) recognize that the status of women and the related status of children are powerful predictors of both economic competitiveness and quality of life, as well as the sustainability of economic success and long-term well-being.

Social Wealth measures the economic and social value of investing in our human infrastructure — the “high quality human capital” essential for the post-industrial knowledge/service economy.

These constituents all endorse the need for economic indicators that measure our Social Wealth. In addition to measuring our material and natural infrastructures, Social Wealth will measure the economic and social value of investing in our human infrastructure—the “high quality human capital” essential for the post-industrial knowledge/service economy.

Why Measuring Social Wealth Matters

Caring Societies Build Stronger Economies

A growing body of research shows that caring societies lead to stronger economies. However, measures of the economic (and social) impact of investing in caring for people have not been included in mainstream economic indicators.

Studies show that societies that support caring and caregiving enjoy improved economic success and higher quality of life (less poverty, less crime, and better educated children). For example, at the beginning of the 20th century, the Nordic nations were so poor that they experienced famines. Today, they invariably rank high in both the UN Human Development Reports and the World Economic Forum’s Global Competiveness Reports. How did this happen? These societies chose to invest in their human infrastructures. They have excellent child-care, universal health care, paid parental leave, elder care with dignity, high quality universal early education, stipends to families for childcare, and green environmental policies, as well as 40% representation of women in national legislatures.

Gender Matters: When Women and Children Thrive, Economies Grow

Gender has not been adequately included in mainstream economic and social measurements. However, studies show that the status of women is a powerful predictor of general quality of life and a nation’s long-term economic success.

A study by the Center for Partnership Studies titled Women, Men, and the Global Quality of Life (1995) analyzed statistical data from 89 nations comparing the status of women with general quality of life indicators (such as infant mortality, human rights, environmental regulations). The study found that  the status of women can be a better predictor of general quality of life than GDP. Other studies such as the World Economic Forum’s Global Gender Gap Reports and the World Values Surveys documented similar findings.

Since the status of women remains closely connected to the situation of children, the Social Wealth domain places a particular emphasis on gender and children. Measuring Social Wealth draws needed attention to the status of families, especially the effects of government and business support for caring and caregiving on families.

Valuing (and Counting) Care Develops Human Capacity and National Competitiveness

Our economic success and our national competitiveness in a global market depend on what economists call “high quality human capital”— essential for the post-industrial knowledge/service economy. Caring matters in terms of developing this high quality human capital.

Most would agree that fostering the ingenuity and capability of a nation’s citizens dramatically contributes to that society’s progress. Indeed, neuroscience shows that the quality of childcare and education in early childhood is vital to optimal human development. Therefore, Social Wealth focuses on the social and economic value of caring for people, starting in early childhood and throughout the lifespan.

Although women aren’t the only ones capable of care, the bulk of the caring work in the market (paid) and non-market (unpaid) economies is still primarily done by women. However, GDP doesn’t measure most of this caring work. Research, indicates that the failure to give adequate value to this work is a major factor in the disproportionate poverty of women in the United States (and most other countries). For more, read Riane Eisler\'s The Real Wealth of Nations (2007), Nancy Folbre\'s The Invisible Heart (2001) and Devaki Jain and Nirmala Banerjee, eds. The Tyranny of the Household (1985) .

In The Real Wealth of Nations (2007), Riane Eisler—whose vision aligns with other scholars such as Amartya Sen, Nancy Folbre, Randy Albelda, Jane Dutton, and W. Steven Barnett—proposes a full-spectrum economics, making it possible to measure the work of caring and caregiving. Eisler suggests that to measure our real wealth, we must include all of the pieces of the economic puzzle:

• conventional sectors (market, government, and illegal economies)
• new sectors (household, unpaid community, and natural economies).

The Social Wealth domain includes the work of caring and caregiving in the paid (market and government) sectors and in the unpaid (household, community and natural) sectors—measuring the contributions of caring work to four critical areas: 1) the production of high quality human capital; 2) household income security; 3) high quality care for children and the elderly, and 4) a sustainable natural environment.
 

References

de Leon, E., and E. T. Boris. (June 2010). The State of Society: Measuring Economic Success and Human Well-Being. The Urban Institute.
Eisler, R. (2007). The Real Wealth of Nations: Creating a Caring Economics. San Francisco: Berrett-Koehler.
Eisler, R., D, Loye, and K. Norgaard. (1995). Women, Men, and the Global Quality of Life. Center for Partnership Studies.
Folbre, Nancy (2001). The Invisible Heart: Economics and Family Values. New York: New Press.
Hausmann, R., L.D.Tyson, and S. Zahidi. (2010). The Global Gender Gap Report. The World Economic Forum.
Jain, D. and N. Banerjee (1985). The Tyranny of the Household: Women and Poverty. New Delhi: Shakti Books.
Landefeld, J.S., et.al. (April 2010). GDP and Beyond: Measuring Economic Progress and Sustainability. Survey of Current Business, 91(4), 12-23.
Schwab, K. (2011). The Global Competitiveness Report 2010-2011. The World Economic Forum.
Stiglitz, J.E., et.al. (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. www.stiglitz-sen-fitoussi.fr