Professor Joseph Stiglitz visits the Mitchell Institute

The Mitchell Institute and the Victoria Institute of Strategic Economic Studies (VISES) had an outstanding opportunity in June to host a policy roundtable with influential economist and Nobel Laureate, Professor Joseph Stiglitz and 25 invited guests.

Professor Stiglitz is known for his ground breaking research and his many published works including his book, The Price of Inequality: How Today’s Divided Society Endangers Our Future,and the Report for The Commission on the Measurement of Economic Performance and Social Progress for the French government, which examined the limits of current indicators of economic performance and social progress.

The aim of the Mitchell Institute policy roundtable was to look at the work of Professor Stiglitz and foster discussion across a range of sectors and disciplines with a view to informing the work of the Institute in developing a suite of indicators to measure the impact of health and education on a person over their lifetime.

Professor Stiglitz has considered the issue of measuring social progress for much of his career. In his opening presentation, he stressed that measuring economic and social progress is an essential component in determining the health of economies and communities around the world. But in his view, current measurements such as gross domestic product (GDP) are extremely limited and capture a narrow portion of what is important to societal wellbeing.

"We have to remember that GDP was originally created to reflect the output of the market economy: the sum of goods and services; it was not really created as a measure of wellbeing," he said.

"Unfortunately, over the subsequent decades, GDP came to be used as a measure of wellbeing and politicians began to talk about how well the economy was doing in terms of how well GDP was doing."

Professor Stiglitz’ view is that for governments, societies and businesses, what we measure affects what we then do. He acknowledges that robust metrics are needed to determine whether a policy initiative is making progress but that GDP is too frequently relied upon to give a full picture of the development and success of a country at the exclusion of factors such as environmental degradation, resource depletion, health and wellbeing, and social exclusion. In the words of Robert Kennedy, Sitglitz reminded us:

"GDP measures everything except that which is important."

The roundtable also heard from Professor Bruce Rasmussen, VISES Director and one of the leads on the Mitchell Health and Education Indicators Project who provided an outline of his work.

“We want to identify measures that provide a strong and influential picture of the successes and failures of public policy; that track changes in health status and educational attainment which relate to policy initiatives and are sensitive to policy changes,” he told roundtable participants.

"We are particularly interested in measuring the interaction between health and education; how one affects and influences the other and how together, and over time, they provide a useful picture of how successful and fair a society actually is," he said.

In this first stage, the Mitchell Health and Education Indicators project focuses on a local community, the western metropolitan area of Brimbank in Melbourne. The project is developing a health and education atlas of Brimbank with the University of Adelaide, using nationally collected data, to provide the base data from which a set of indicators will be modelled and drawn to demonstrate the impacts of, and interplay between, health and education over the life cycle.