Register Wednesday | June 12 | 2024
Missing Values Illustration by Chloe Cushman

Missing Values

As policymakers set their sights on frameworks beyond GDP, the question of what it means to quantify a nation's wellbeing becomes pressing.

Phosphorus is a key element of life, the second most common mineral in the human body. It’s in urine and bone ash and rocks; it plays a vital role in the formation of cell membranes and DNA. Across Canada, it’s also regularly used as an ingredient in fertilizers, since it can promote growth and increase yield in crops. But when excess amounts of phosphorus concentrate in an area, there’s a darker side to its impacts. Lake Erie, on the southern border of Ontario, pulses with an odd green hue; within it, algal blooms release toxins dangerous to human, animal and environmental health. The Great Lake is so polluted that it’s earned the sad moniker of a  “dead lake,” and phosphorus runoff from industrial use is partially to blame. Its poor condition is a national and species-wide tragedy. And yet, according to the measure of a nation’s economic health known as GDP, this intense pollution isn’t all negative: government spending on the extensive remediation work required actually adds to Canada’s gross domestic product.

GDP attempts to provide a comprehensive snapshot of the national economy through a series of not-well-understood computations, which involve adding up the monetary value of goods and services that are produced in the country in a given time period, typically a year. It’s calculated in three ways, which are all supposed to produce the same result: by summing up the total spending by households, businesses and governments, known as the expenditure approach, by tallying total income, known as the income approach, or by adding the total value of products and services produced, known as the output approach. Often, GDP is treated not just as a simple summary of total spending, income, or production, but as a measure of overall economic health; for this reason, it’s used to guide the policymaking decisions of government agencies and global financial institutions like the International Monetary Fund and the World Bank. And yet, sometimes what GDP computes as beneficial for economic welfare is at odds with common sense; environmental degradation and natural resource depletion can be, according to its logic, net beneficial economically. Even as oil spills cause dramatic damage to our oceans and lakes, cleanup efforts generate employment and spending, theoretically boosting the economy.

Giant Mine, just north of  Yellowknife in the Northwest Territories, is another case in point. Over the course of the gold mine’s operations from 1948 to 2004, it generated more than 200,000 tonnes of arsenic trioxide, a highly toxic byproduct of gold extraction, and inflicted lasting damage on the traditional lands of the Yellowknives Dene First Nation. When the price of gold plummeted in the 1990s and the owner went bankrupt, it fell to the Canadian government to address the environmental destruction left behind. The process of dealing with the arsenic trioxide and otherwise remediating the site will be immensely costly: a recent estimate puts the total cost at more than $4 billion. Both the cleanup efforts and the mining work have been framed in terms of their massive contributions to GDP and employment, environmental damage notwithstanding. GDP leaves no space to account for the fact that Giant Mine’s profits were generated by processes that caused irreversible harm to its surroundings, or that the remediation project, while unquestionably important, was only made necessary through this harm. All it sees are the cold, abstract dollar figures.

The inability of GDP to account for these intricacies is made more pressing for how politicians, and the general public, think of it. Though GDP was initially supposed to be just a measure of the economy, over time it has come to be seen as a proxy for progress and quality of life itself. The assumption is that economic growth raises the standard of living, which in turn translates into greater wellbeing. But the idea of this one-to-one translation is riddled with holes and contradictions: why should the fallout from environmental catastrophes, for example, be considered a financial benefit to a country? A purely market-based quantification of wellbeing also naturally excludes any activities that take place outside of the market — like unpaid caregiving and volunteer work — regardless of their important contributions to society. These critiques aren’t new;  GDP’s many flaws are widely known, yet increasing it continues to be pursued as a policymaking objective. Though there have been regular attempts to supplement or replace GDP with other measures, from economic security to physical and mental health, they too struggle to quantify wellbeing. The problem is that no matter what tool you’re using, capturing something as complex and elusive as quality of life in concrete numbers is like wearing blinders: by zoning in on a specific target, you become less open to other possibilities beyond it.

GDP measures in broad strokes, ignoring many of the nuances of people’s realities within a country. It doesn’t account for inequality issues, nor does it look at access to material needs or ties to friends, family and communities—in other words, things generally understood as genuine markers of human welfare. Danny Graham, chief engagement officer of Engage Nova Scotia, an organization working to implement a wellbeing framework for the Maritime province, explains that while economic conditions and quality of life are connected, a growing economy doesn’t target or address the concerns of people struggling with basic necessities. A country can have a high GDP but still have a large number of people experiencing food insecurity. Evidence of Graham’s point exists right here in Canada: today, the growth of our GDP is driven heavily by real estate, rental and leasing, which includes the rent tenants pay to property owners. Consequently, when landlords increase rents, they contribute to GDP growth — while directly reducing housing affordability for renters. In 2022, the average rent in Canada for new tenants increased by more than 18 percent from the previous year, putting an even greater burden on renters while growing our GDP. What does it mean to talk about a nation’s economic growth on an abstract level, when on a material one, the ability of its citizens to afford necessities like shelter is decreasing?

GDP might be an abstract measure, but political obsessions over it drag the theoretical into the material. GDP factors significantly into fiscal policy, which can have far-reaching effects on social programs. In the 1990s, when former prime minister Paul Martin was minister of finance, one of his top priorities was to reduce Canada’s debt-to-GDP ratio — the metric that compares a country’s public debt to what it produces — “come hell or high water.” While he succeeded on that front, he did so by slashing social services, cutting healthcare payments to the provinces and terminating federal spending on social housing — the repercussions of which we can feel keenly now as we experience a severe affordable housing shortage. Politicians’ emphasis on GDP continues to this day: in 2022, finance minister Chrystia Freeland likewise asserted the need to lower the debt-to-GDP ratio, and stated her intention to achieve this goal in part by cutting back on government supports introduced during the pandemic.

Rather than critique the assumptions upon which the GDP formula is built, politicians seem all too willing to accept the measure as an objective truth. Part of the issue is that it’s virtually impossible for anyone to truly understand the intricacies of the calculation process. Many politicians are generally unaware of what goes on under the hood to generate the mysterious dollar figure that is Canada’s GDP, says Mark Anielski, who worked as an economist and senior policy analyst for the Government of Alberta for thirteen years and currently advises communities on integrating wellbeing metrics into their decision-making. The equation is based on an internationally-standardized framework known as the System of National Accounts (SNA), first developed in 1953 under the auspices of the United Nations and now used by many countries as a framework for calculating GDP. The procedure is exceedingly detailed — the most recent version of the SNA, from 2008, runs to 722 pages, up there with the tax code as far as “inordinately long documents most people don’t want to read” go. The SNA provides guidance around a host of concerns, from whether incarcerated people serving long sentences should be treated as belonging to a single institutional household (yes) to whether illegal activities should be included in calculations (yes, if they are productive in an economic sense).

As quantitative data often does, GDP has taken on a veneer of objectivity and credibility. Jacob Assa, a strategic advisor with the United Nations Development Programme who advanced a critique of GDP in his PhD dissertation, describes it as a form of  “numerical rhetoric,” in that politicians can wield it to support their particular policy agenda. GDP is not an impartial statistical measure; rather, the way it’s calculated can be manipulated by political forces and, as a result, tends to reflect the goals and strengths of powerful countries and industries. Changes to how the SNA treats the financial sector in calculating GDP are a prime example. Initially, banking services in which banks function merely as intermediaries (for example, earning interest by loaning out and investing customers’ deposits) were considered to be unproductive — that is, they didn’t add to GDP. But by the 1993 edition of the SNA, when wealthy countries and international financial institutions became an active part of the SNA’s decision-making body, these banking services were classified as positive contributors to GDP. The shift had the effect of enlarging the financial sector’s share of GDP in many countries in the Global North, increasing its perceived importance.

Lina Brand Correa, an assistant professor in the Faculty of Environmental and Urban Change at York University, explains that the perception of economics as a scientific discipline, rather than a political one, continues to permeate policymaking and debates. She points to the recent controversy over Ontario’s Greenbelt as an example. Already, groups like the Greenbelt Foundation, a non-profit which seeks to protect the Greenbelt, have developed sophisticated formulas to estimate the economic impact of the clean air, flood protection and recreational benefits provided by the protected green space. While well-intentioned, by demonstrating it using monetary value as a metric, they’re accepting the premise that the natural environment can be quantified and compared to other market-based activities in purely financial terms. By reducing the Greenbelt’s intrinsic value to dollars, they open the door to arguments that the economic value of development exceeds that of the Greenbelt’s. The worth of something in dollars isn’t a neutral fact—it can be engineered by politicians and industries to show that their policies are best. At its core, it’s political.

For as long as there has been interest in calculating GDP, also referred to as national income accounting, there have been critiques of its inadequacy for understanding the wellbeing of a nation. Scholars trace its origins to William Petty, an English political economist and physician who in 1665 produced the first assessment of England’s national income, to determine how much money the kingdom could raise in taxes. GDP in its modern form is more closely associated with the American economist Simon Kuznets. Spurred by the urgent need for more reliable statistics on the US economy to inform policy interventions during the Great Depression, Kuznets developed a comprehensive method for computing the national income. Yet even he warned against using these calculations as a measure of wellbeing, writing in a 1934 report to Congress that “[t]he welfare of a nation can ... scarcely be inferred from a measurement of national income.”

In Canada, the rise of national income accounting is intertwined with the early twentieth-century drive to establish a centralized system for the collection and analysis of statistical data. In 1915, Robert H. Coats was appointed the first statistician and commissioner of the census; one of his first undertakings was to calculate the value of Canada’s national wealth, which he estimated at $16,293,500,000. Like Kuznets, Coats later cautioned about the limitations of this form of accounting. In a 1936 report, he wrote: “[e]conomics is not able to take cognizance of the immense field of intangible wealth created by churches, schools and other institutions which develop morals, wisdom and character rather than commodities, nor of such things as climate, location, health, etc. which promote individual and national welfare.”

Over the last couple decades, the push to move beyond GDP has gained significant traction. In 2008, France created the Commission on the Measurement of Economic Performance and Social Progress, tasked with examining the limits of GDP and proposing alternative metrics of success. The Commission’s final report in 2009 was strongly in favour of shifting emphasis away from the measurement of economic production and toward a more general measurement of quality of life. The report generated considerable discussion worldwide, and led to the inclusion of indicators on different aspects of wellbeing, such as health, leisure time and social relationships, in the data collected by EU member states to facilitate cross-country comparisons.

Other countries have also been searching for ways to measure wellbeing outside of purely economic terms. Wales’ 2015 Well-being of Future Generations Act mandated that public bodies like the Natural Resources government body and the Higher Education Funding Council consider the long-term impacts of their decisions on the nation’s wellbeing not just from an economic standpoint, but also a social, environmental and cultural one. In 2002, New Zealand enacted the Local Government Act, which requires city and district councils to identify what matters most to their residents and then design policies and programs tailored to those particular aspects of wellbeing. Since 2019, New Zealand has also adopted a wellbeing approach to the country’s annual budget, connecting budget items to five wellbeing objectives — including physical and mental wellbeing, greater opportunities for Māori and Pasifika peoples and a just transition to a low-emissions economy. This model puts wellbeing at the heart of federal investments and requires ministers and agencies to collaborate on initiatives that address general wellbeing objectives, rather than work in disconnected silos.

Wellbeing has also made it onto the federal radar in Canada. In 2021, the Department of Finance published a report titled “Measuring What Matters,” intended to serve as a basis for consultations on the development of a national quality-of-life strategy. Though the report continues to recognize GDP as an important metric, and insists that increasing it is crucial for raising the standard of living, it also suggests that decision-making should be informed by social and environmental factors. The report outlines several opportunities for integrating wellbeing into policymaking — during priority setting when the budget is being determined, and when considering whether suggested policies contribute to quality of life — but the path to implementing those changes isn’t so clear. As Dalhousie political science associate professor Anders Hayden observes, while it’s a step in the right direction, the wellbeing approach it advances hasn’t yet been fully embraced at the highest level of government.

The report is far from the first time wellbeing frameworks have been advanced in Canada. The Canadian Index of Wellbeing (CIW), based out of the University of Waterloo and first conceptualized in the late 1990s, is perhaps the country’s most widely known. The index separates quality of life into eight different domains that were selected through consultations with the public, including community vitality, environment, health and living standards. Each domain is then further subdivided into eight more granular indicators, such as the rate of food insecurity or how the population self-grades their overall health.

By evaluating the wellbeing of individuals and communities, the CIW catches things that GDP cannot. Bryan Smale, the director of the CIW, points to the disparity between the two in the aftermath of the 2008 financial crisis. Though the economy recovered relatively quickly, the same wasn’t true for people; living standards dropped while work became more precarious. If you were looking only at GDP, you wouldn’t know that Canadians were struggling to restabilize themselves after the crisis: GDP declined sharply in 2009, but by the next year it had bounced back above pre-2008 levels. A similar trend was repeated in the wake of the pandemic, where GDP declined in 2020 but recovered in 2021, while wellbeing indicators continued to suffer. Housing and food prices have skyrocketed and the pandemic has taken a well-known toll on our mental health and social lives, but according to our GDP growth, we’re supposedly doing fine.

The CIW’s domains are meant to represent values that are as close to universal as possible. But what are universal human values? And if they do exist, can they sufficiently capture the diverse possibilities for living and being in the world? Brand Correa, the York University assistant professor, looks to Chilean economist Manfred Max-Neef to answer these questions. Max-Neef argued that while needs like sustenance and shelter are shared by all, the ways they’re satisfied tend to be shaped by contextual factors like culture and geography. It would be unreasonable to propose that the nutritional needs of Indigenous communities that practice subsistence hunting and fishing can just be fulfilled by increasing access to supermarkets. Advancing wellbeing requires the government to listen to communities, and in this case may mean stronger protections of Indigenous rights and better environmental policies to maintain healthy animal populations and ecosystems.

The index might be most useful as a catalyst for identifying and building coalitions around pressing community needs. In addition to producing national and occasionally provincial reports, the CIW lends its expertise to communities interested in surveying wellbeing on a local level, and has been commissioned by several regions to facilitate this work, including Guelph, Victoria and Oxford County.  Smale recalls one particular workshop to plan a wellbeing survey in Fort McMurray, Alberta. Representatives from diverse sectors took part, from arts and culture to health to social services. While Smale sensed some initial skepticism around the work, throughout the day he overheard conversations that may not have taken place otherwise. When one attendee mentioned that she needed to find a venue for children’s art classes, the director of a food bank offered up a vacant room in their space. By assembling information on a range of indicators, and actively trying to bring those indicators together in a social, collaborative manner, the CIW framework becomes a tool that communities can use to explore and leverage the interconnectedness of different components of wellbeing.

Among proponents of wellbeing frameworks, opinions differ as to whether they should supersede GDP entirely or simply be used alongside it. The CIW falls into the latter camp. “We’ve never claimed that this is an alternative to GDP, we’ve argued that it’s a complement to it,” says Smale. Smale is an optimist in nature — throughout our call he refers to himself as a “naive fantasist.” In many ways, the pursuit of economic growth not only fails to capture wellbeing, but actively works against it. GDP and wellbeing aren’t readily cooperative partners in any sense, and as the environmental and social consequences of unchecked industrial growth become more and more pressing, the idea that they can work together becomes less and less believable.

Increasingly, there has been strong opposition to the ideology of unrestrained economic growth underpinning GDP. In their recent book The Future is Degrowth, authors Matthias Schmelzer, Andrea Vetter and Aaron Vansintjan make the case that continuous growth is fundamentally incompatible with ecological sustainability, and that its pursuit necessarily begets environmental degradation and resource depletion. Advocates of “degrowth,” a theory that claims we need to reorient our societies away from economic growth, contend that while more investment is needed in housing, public transport and renewable energy, other industries will have to be downscaled significantly, which will likely reduce GDP as a whole. They are also quick to point out that degrowth does not mean austerity, but rather a strategic focus on sectors that are critical to social and environmental wellbeing, and on meeting people’s needs rather than aiming for excess. Political science associate professor Hayden agrees, stressing that “due to the ecological constraints, we need to start looking at other ways to improve wellbeing beyond further increases in production and material consumption.” In other words: the world around us is suffering from the relentless pursuit of growth. To truly flourish, we must focus on a relationship to wellbeing that centres human and ecological needs.

But even if we take GDP out of the picture, wellbeing frameworks still have limitations; though they might help mitigate some of the issues with obsessively fixating on economic productivity, they also carry some of the same characteristics, and flaws, that GDP does. It’s intrinsic to the way they’re structured: like GDP, they’re founded on a growth-oriented paradigm, and like GDP, they’re built to aggregate large quantities of data, and are thus restricted to focusing on indicators that are measurable and unsubtle. By attempting to capture wellbeing in this quantified, singular way, we flatten and restrict the ultimately elusive nature of what it means for the people of a country to live well.

C. Thi Nguyen, an associate professor in philosophy at the University of Utah, has been thinking about the problems that arise when we try to articulate complex and subtle values, like wisdom or social connection, in the form of metrics that can be quantified and aggregated. Nguyen uses the term “value capture” to describe what happens when institutions present us with oversimplified versions of our values, leading us to internalize pre-packaged definitions over the rich and multidimensional ones we develop from our own individual experiences. He notes that this process of substitution is what’s at work when Netflix uses streaming time as a measure of what its best shows are, or when publications in top-ranking journals are used as a measure of an academic’s calibre. Though these factors might be part of what goes into determining the value of a show or an academic, using them as proxies to represent larger, more amorphous concepts causes us to funnel our efforts toward those narrow targets, and discourages us from seeking out other opportunities. Netflix then aims for shows with high stream counts, ignoring other aspects of what makes a show special; academics pour their efforts into scoring places in top journals. When we try to capture wellbeing using metrics, the same process is at work: a simple statistic like the proportion of adults with a university degree, for example, may come to stand in for the knowledge and capabilities of a country’s citizens.

As part of its measure of democratic engagement, the CIW tries to quantify the strength of the relationship between elected officials and their constituents — an idea that’s difficult to assign a number to. It uses the average percentage of MP budgets spent on communication with constituents as one indicator, which in theory can gauge the extent to which voters are kept apprised of representatives’ activities. But a high number here could mean a lot of things: it doesn’t account for wasteful spending or ineffective communication strategies, or consider whether simply mailing newsletters to households in a riding can really be said to constitute rigorous engagement. The trouble with indicators that serve as proxies for more complex goals is that they might reward behaviours not aligned with what they’re purporting to measure; the goal, instead of improved relationships with voters, becomes higher communications spending. As the old adage known as Goodhart’s Law goes: “when a measure becomes a target, it ceases to be a good measure.”

Values become static when we attach metrics to them — pinned in place like dead butterflies mounted on a board, rather than living ones that can continue migrating, reproducing and adapting in response to shifting conditions. But for the sake of efficiency, large bureaucratic institutions often rely on standardized metrics that don’t have to contend with the messiness of being human in an uncertain world. Nguyen doesn’t reject the use of quantitative indicators outright: “institutions need metrics to think, they need clear targets,” he says. The real concern is when such measures eclipse other more nuanced and context-sensitive conceptions of our values.

Using subjective wellbeing indicators in conjunction with a range of more objective criteria, as the CIW does, may alleviate some of these concerns. Subjective indicators can get at the heart of a wellbeing issue in a personal way without relying on a proxy: Are you satisfied with your job? How would you rate your mental health? Do you feel lonely? But subjective data is less easily translated into action. If the goal is to reduce the number of households spending more than 30 percent of their income on housing, government officials may lack political will or disagree on the best approach, but the general policy direction is relatively clear. Improving subjective wellbeing is not so straightforward: how do you lessen people’s subjective feelings of loneliness over time?

The idea that we can capture the complexities of life satisfaction through a handful of quantifiable indicators may just be hubris. Nevertheless, we need measures of success that go beyond the abstract and flawed accounts of economic activity that are disconnected from the actual wellbeing of the average person, remaining vigilant that wellbeing frameworks don’t replicate the problems of GDP. While we must continue to advocate for access to basic needs and the building blocks for good lives for all, we must also remember that there is so much of value in this world that we cannot put into words, let alone into numbers. ⁂

Jackie Brown is a researcher and journalist studying law and political economy. She is interested in new possibilities for housing, work and care.