Economic wellbeing Glenn Everett, Head of Measuring National Wellbeing ONS Economic Forum 7 April 2014 1
Oct 19, 2014
Economic wellbeing
Glenn Everett, Head of Measuring National Wellbeing
ONS Economic Forum
7 April 2014
1
Economic Well-being: Background
• GDP inevitably and correctly plays a central role in monetary and fiscal policy
• Traditional measures of progress such as GDP are increasingly considered an incomplete picture of overall economic well-being
• Additional economic, social and environmental measures are needed alongside GDP to provide a complete picture of how society is doing
• UK’s Measuring National Well-being (MNW) Programme was launched in November 2010
Measuring National Well-being: what are we trying to achieve?
Social Environment
The ‘triple bottom line’
Economy
An accepted and trusted set of National Statistics to help people understand and monitor national well-being.
Limitations of GDP
• GDP has known weaknesses as a measure of economic welfare or well-being
• GDP does not consider:Changes in populationDepreciation of assetsDistribution of incomeNational and household wealthNon-market activities
Proposed additional measures
Economy wide• Gross Domestic Product (GDP) per capita• Net Domestic Product (NDP) per capita• Real Net National Disposable Income (RNNDI) per capita• Real Net Financial and Physical Assets
Households• Real Adjusted Household Disposable Income (RAHDI) per
capita• Real Median Household Income • Real Household Net Financial and Physical Assets
UK GDP and GDP per capita (1997 = 100)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201380
90
100
110
120
130
140GDP
GDP per Capita
UK NDP and GDP per capita (2010 prices)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201210,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
GDP per capita
NDP per capita
£
UK Real Net National Disposable Income and GDP per capita (2010 prices)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201210,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
GDP per capita
RNNDI Per capita
£
UK net financial and produced assets (2010 prices)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
1000
2000
3000
4000
5000
6000
7000
8000
£ Billions
UK Real adjusted household disposable income and GDP per capita
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
5,000
10,000
15,000
20,000
25,000
30,000
RAHDI per capita
GDP per capita
£
UK median household income, average household disposable income and GDP per head
19971998
19992000
20012002
20032004
20052006
20072008
20092010
201180
90
100
110
120
130
140
GDP per capitaMedian incomeRHDI per capita
1997 = 100
Real Household Wealth (2010 prices)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Residential wealth Other non-financial assets Net financial assets£ Billions
Key Findings
• GDP recovered substantially from the falls in recent years, but GDP per capita has only recovered a little
• Real net national disposable income per capita has continued to fall gently
• Real adjusted household disposable income per capita held up well during the deepest phase of the recession but has been falling gently in the subsequent period
• Median household income and real household income have grown broadly in line with each other in recent years, suggesting no major distributional factors
Way forward
• Regular publication of additional measures
• Continue to develop and refine additional measures (eg natural capital, human capital)
• Update the ‘dashboard’ accordingly
• Update the Household Satellite Accounts