The Treasury has released a report which it hopes will stimulate discussion on how to measure New Zealand’s living standards.
The report focuses on the Living Standards Dashboard, which will be a collection of indicators to help measure the wellbeing of New Zealanders.
The dashboard is part of a wider movement to broaden the measurement of an economy away from narrow measures like GDP. This was one of the key recommendations of the famous Sen-Stiglitz-Fitoussi report commissioned by the French Government in 2008. These measurements will help to inform New Zealand's first Wellbeing Budget in 2019.
Newsroom Pro previewed the Wellbeing Budget, which will use some of these indicators, back in February.
The report proposes 40 measurements of current wellbeing such as people’s health, sociability, and income. It also measures stocks across Treasury’s four 'capitals': natural; social; human; and physical/financial.
A key recommendation of the report is that natural units should be used for measuring capital stocks, rather than converting measurements into monetary units.
Converting to a monetary unit would allow easy comparison with other forms of capital, potentially making cost-benefit analysis comparisons easier.
But the report argues these capitals are difficult to price accurately and fluctuations in monetary values over time may mask real changes in the capital stock. For example, if fish stocks decline the reported value of the stock may go up as fish become more rare.
The report also recommended looking at the distribution of the measurements, saying it was important to be able to measure the distinction between several different groups experiencing different but equal forms of hardship and one group experiencing many hardships.
The report also recommended Statistics NZ’s New Zealand General Social Survey be broadened and that it should report annually, rather than every two years.
Consultation for the report closes on July 31.