Book Review: Measuring What Counts... (GDP?)

In 2009, a group of economists led by Nobel laureate Joseph E. Stiglitz, French economist Jean-Paul Fitoussi, and Nobel laureate Amartya Sen sparked a global conversation about GDP and a major movement among scholars, policy makers, and activists to change the way we measure our economies.

Book cover – November 19, 2019

For economists, metrics are the means to measure performance. “If we measure the wrong thing, we will do the wrong thing,” 

“The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem.” says Stiglitz.

GDP gives no hint of environmental degradation or resource depletion, nor inequality, middle-class suffering, or lower standards of living.

“If growth is not sustainable because we are destroying the environment and using up scarce natural resources our statistics should warn us,” he says. “It is clear that something is fundamentally wrong with the way we assess economic performance and social performance.”

The new book, Measuring What Counts: The Global Movement for Well-Being, cowritten with French economists Jean-Paul Fitoussi and Martine Durand, provides a blueprint for how countries can use more appropriate metrics that account for details such as sustainability and how people feel about their lives.

This book provides an accessible overview of the last decade’s global movement, sparked by the original critique of GDP, and proposes a new “dashboard” of metrics to assess a society’s health, including measures of inequality and economic vulnerability, whether growth is environmentally sustainable, and how people feel about their lives. Essential reading for our time, it also serves as a guide for policy makers and others on how to use these new tools to fundamentally change the way we measure our lives—and to plot a radically new path forward.

"If we want to put people first, we have to know what matters to them, what improves their well-being, and how we can supply more of whatever that is."—Joseph E. Stiglitz

Moonshot, the World Bank plan for building an inclusive digital future across Africa

In 2019, global internet adoption has surpassed 50 per cent of the world’s population.

According to ITU, the strongest growth of the percentage of population using the Internet was reported in Africa, where it increased from 2.1 per cent in 2005 to 24.4 per cent in 2018.
According to Digital 2019 Report overview from January 2019, Africa has a population over 1.3 billion with 43 per cent living in urban areas; over one billion mobile users representing a mobile penetration of 80 per cent; and Africa has over 216 million Internet users which represents only 16 per cent of the African population. And more than half of urban African adults owned Internet-capable devices (McKinsey Global Institute 2013).

There is a need for a moonshot!!

The World Bank has launched 'Moonshot Africa', an ambitious initiative to connect individuals, firms, and governments in Africa to boost broadband penetration between 2021-2030.
The World Bank estimates large investment needs: about 20 billion US Dollars would be needed to double connectivity by 2021 in Africa and  Middle East, and about 51 billion US Dollars would be needed to achieve Universal Access to broadband by 2030 in Africa and Middle East.

Doubling connectivity by 2021 and expanding coverage by 2030 requires more than infrastructure investment, it requires a renewed focus on securing enabling policy frameworks and investment in digital skills and content.

Will Moonshot Africa create jobs on a continent where job creation is needed for Africa’s working-age population projected to rise by 70% in the next twenty years?

A recent paper by Jonas Hjort and Jonas Poulsen, “The Arrival of Fast Internet and Employment in Africa,” published in the American Economic Review in March 2019, gives technology optimists reason for hope. Using household survey data from 12 African countries with a combined population of roughly half a billion people, the authors document a large positive effect on employment.

There will still be concerns about a disruptive effect of technology (robots and algorithms replacing human labor) -when increasing digital transformation in a continent that needs jobs creation-, despite economists studies.  But Africa cannot stay behind any longer.

Digital transformation will certainly create opportunities for Africa to grow its economy, create jobs, and transform people’s lives. With the aim to digitally connect every individual, business and government in Africa the “moonshot” will help countries accelerate progress, inclusion, bring high-speed connectivity to all, and lay the foundations for a digital economy. 

An ecosystem approach beyond broadband deployment
Some have suggested that the new initiative should go beyond broadband connectivity to also cover “e-government , Fintech, investment in human capital and digital literacy, innovation-friendly policies that foster entrepreneurship.This digital transformation requires an ecosystem approach.

An impactful digital transformation must be inclusive
Others, have called for a digital transformation agenda prioritizing digital inclusion, including with a focus on women. If implemented with the appropriate policies and business incentives, a perspective on inclusion could help “mitigate the possible negative effects of the digital transformation.

Sustainable development
I would add that all investment should take into account impacts on environment and climate already in the beginning.
Africa must get the latest energy-efficient innovations and technologies to create a sustainable Africa that will support mitigate climate change effects on the planet.

In September 2019 at the UN General Assembly in New York, The Broadband Commission for Sustainable Development will release its report together with the report of the Moonshot Working group, we hope to have a good idea about the plans, ambitions and most of all the commitments of the donors.

Sources:

1. https://datareportal.com/reports/digital-2019-global-digital-overview
2. https://www.itu.int/en/mediacentre/Pages/2018-PR40.aspx

Aadhaar: India’s massive digital inclusion project

Public advertisement

India is the second largest country in the world in terms of population. India has also a large number of villages; more than 600.000 villages with poor transport infrastructure making movement of goods and people extremely difficult.

The idea of a universal electronic ID was proposed by the Indian Department of Information Technology in 2006. Immediately, an organization was given capital and resources to implement a large-scale program with the objective to include all Indian residents in a single ID system housed in an electronic repository. 

They called it: Aadhaar, which means base or foundation in Hindi language. 

India’s program to provide a unique identity number for every resident was created; the largest biometric identification program in the world. Launched in 2008, the program has created biometric identities for over one billion people. The program also aims to achieve social inclusion and more efficient public and private service delivery. 

Aadhaar has also started to be used for several public purposes, such as digitizing government subsidy flows (government-to-person payments); financial services; recording attendance for government employees to reduce 'absenteeism'; and issuance of passports and voter identity cards. The impact of a strong digital identity scheme affects banks, payments, security, compliance and financial inclusion

How does it work?
Indian residents can apply for an Aadhaar number by submitting their proof of identity, proof of address and registering their biometric (fingerprints and iris scan) information.

What's in it for banks?
Money transfer is widely used through traditional brokers and biometric capabilities are turned on in India, so when someone wants to initiate a money transfer through an agent, they can identify and verify themselves using their biometric fingerprint, without showing any paper or plastic documents.
And nowadays, people are spending more time online or on mobile whether they’re on social media, they’re shopping, or even paying their bills and transferring money.

A great inclusion example for public governance 

Aadhaar is a great inclusion example of how a government-mandated program could work at scale to create positive impact and create sustainable development.
The impact of a strong digital identity scheme affects banks, payments, security, compliance and financial inclusion -- and Aadhaar's is already seeing results.

Although the value of this project is obvious in terms of digital inclusion, still macroeconomic studies need to be engaged in order to quantify the real economic value of such an effort, and its GDP impact on India's economy.

Finally, recently Aadhaar leadership initiated discussions with public institutions in African and Asian countries in order to support and replicate such a great inclusion project.

Aadhaar organization, website: https://uidai.gov.in/

Universal Basic Income pilot results from Finland and India

India Sikkim state landscape 

In a previous post, I was introducing the Basic Income concept together with few operating and announced pilots. I was also questioning whether we can find a link between the Basic Income and the United Nations Sustainable Development Goals.

One of the possible link is the 'new' transient nature of poverty. Because of the increased global and local climate risks. Several studies of economists prove that poverty is transient in nature, i.e., individuals move in and out of poverty (Dercon and Shapiro 2007).
Therefore, the idea of a Basic Income is interesting to get the poor from their poverty and, given the transient nature of poverty, a Basic Income could provide insurance against economic shocks in many poorer countries. Policymakers should take into account the transient nature of poverty with including a much larger share of the population.

Finland pilot: self-perceived well-being improved, during the first year, no effects on employment. 

In the same previous post, I presented two pilots: the Kenya pilot with preliminary results that GiveDirectly, a New York-based nonprofit has initiated in a rural village in Western Kenya, in October 2016, and the pilot launch in Finland. Just a a reminder, in January 2017, 2000 Finnish unemployed people received their first cash transfer of 560 euros, which they will continue to receive each month, until 31 December 2018. They were randomly selected from 25 to 58 years to participate in a study to assess the impact of universal basic income. During the evaluation of the basic income experiment they study the effects of the basic income on the employment status, income and well-being of the participants. The results are preliminary, and it is not yet possible to draw any firm conclusions regarding the effects of the basic income experiment.

Preliminary results of the Finland pilot: the recipients of a basic income perceived their well-being as being better than did the control group. 55% of the recipients of a basic income and 46% of the control group perceived their state of health as good or very good. 17% of the recipients of a basic income and 25% of the control group experienced quite a high degree or a very high degree of stress.
The recipients of a basic income had less stress symptoms as well as less difficulties to concentrate and less health problems than the control group. They were also more confident in their future and in their ability to influence societal issues’, says a lead researcher at Kela.

India Sikkim state is on the verge of becoming the first place on Earth implementing a basic income

Sikkim, the second smallest state in India, has grown a reputation, over the years, for environmental consciousness, ethnical diversity and tourism. It is also the home of one of the most educated people on Earth, with a 98% literacy rate. 

The Sikkim Democratic Front (SDF), the democratically elected party governing the state since 1994, has written basic income into its manifesto for the 2019 Assembly elections, and aims to have it implemented by 2022.This initiative is not intended as a pilot test, but as an actual implementation.

As for financing the basic income scheme, SDF officials are considering surplus energy generation revenue (from hydropower) and redirecting costs from welfare programs which cease to be relevant.

Germany 
A  pilot is being prepared in Germany in 2019

Interesting projects to follow... 

Sources

Finland pilot
https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/preliminary-results-of-the-basic-income-experiment-self-perceived-wellbeing-improved-during-the-first-year-no-effects-on-employment

Kela, the Social Insurance Institution of Finland, is a government agency that provides basic economic security for everyone living in Finland. 

https://basicincome.org/