Ecologic Institute hosted the fourth green salon of the American Voices Abroad on the 16^th of August 2011. Three introductory presentations by Lucas Porsch, Tanja Srebotnjak and Rich Rosen on the need for and the challenges of Beyond GDP indicators triggered a lively discussion on the information needs of policy makers that aim at sustainability. To this end, important similarities and differences were examined in the attitudes to welfare measurement in Europe and the US.

Lucas Porsch opened up the evening with a presentation about the key failings of GDP in measuring sustainability and the work of the Ecologic Institute on helping to address those issues. Being a flow indicator, GDP ignores all changes to stocks of capital, which reduces its value for the measuring of economic welfare. More importantly, GDP neglects any impacts of economic activity on the environment and social connections. Lucas summarized the work of IN-STREAM addressing some of those failures by assessing, indicators, valuing environmental damages and modelling trade offs or sustainability.

Tanja Srebotnjak focused on the challenges of creating alternative indicators. For example, any alternative indicator has to find an agreed weight for the different dimensions of sustainability and finding this consensus on preferences is very difficult. The point was brought home by a little exercise, asking the audience to weight different dimensions of sustainability and discussing those weightings. The differences even in the small group were significant, showing the challenge involved.

Rich Rosen began by explaining the relationship between “indicators” and an “index”. Explaining the key success factors of GDP, Rich Rosen also pointed out the critical failings like for example not distinguishing between good and bad investment. He also pointed out his view that the policy use of composite indicators is limited as they allow trade offs between indicators which especially in some cases in the environment is not acceptable. Some damages simply must be limited or they will reach dangerous thresholds.

The following discussion, led by Lisa Pettibone, with the audience focused on the question how alternative welfare indicators can be made useful and credible for policy makers and the general public and brought together many different viewpoints that were further discussed long after the official end of the evening.

Download:

• Presentation of Lucas Porsch: Beyond GDP: Measuring Welfare in the Context of Sustainable Development [pdf, 116 KB, English]
• Presentation of Tanja Srebotnjak: New Ways to Measure Prosperity– Beyond GDP [pdf, 186 KB, English]