New Metrics for Sustainable Prosperity: Options for GDP+3

A presentation of a preliminary study on options for GDP+3. Funded by the European Commission, DG RTD, the study explores three options for a GDP+3 set of indicators. Recognising the shortcomings of GDP as a policymaking guide towards prosperity, the study selects new indicators that complement GDP in three key dimensions of sustainable prosperity: social, environmental, and institutional prosperity. Our policy recommendations emphasize integrating the GDP+3 framework into EU policymaking processes, promoting it internationally through the EU’s economic diplomacy, ensuring it is responsive to citizens' needs, and investing in high quality, internationally comparable and regularly updated indicators.

1. New Metrics for
Sustainable Prosperity
Options for
GDP+3
Presentation by Celine Charveriat, CEO Pro(to)ptopia
Based on the preliminary study by Céline Charveriat, Saamah Abdallah, Susanne de Jong, &
Martin Vladimirov with statistical support by Lafortune, Massa and Touré from SDSN
Brussels, 17 May 2024
Imagineering a green caring society

2. Introduction
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3. Sustainable prosperity:
The need to complement GDP
GDP : the price of success
GDP as “the ultimate measure of a country’s overall welfare and a
statistic to end all statistics” (Dickinson, E.A history of GDP, 2011) ?
Short-comings of GDP
Reflects economic rather than social, political, geopolitical, or
environmental values of production
Does not provide information on the distribution of national output
amongst factors of production, and categories of people
Does not address over-financialisation of economy
The value of complementing indicators
Would provide equal visibility for other policy objectives (e.g. social
and environmental)
economic activity is only a means to an end which is ultimately
enhancing the well-being of Europeans
the public cares about objectives beyond GDP (74% G20 citizens
want a well being economy - Ipsos 2022)
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Illustrative example
Covid: Negative impact on wellbeing 3.5x higher than
GDP losses (McKinsey, 2020)

4. The need to provide better
tools for top-line decision-
making, long term planning &
accountability
Plethora of indicators at EU level
dashboards best suited for expert level rather than top
policy level discussions.
They need to be complemented by a much smaller set of
headline indicators
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Statistics New Zealand

5. Economic, social, environmental, institutional
Four Key Dimensions of EU
Sustainable Prosperity
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6. Defining the non-
economic dimensions
Art 3 TEU: aim at social progress;
2021 European Pillar of Social Rights IAP:
1) equal opportunities, 2) fair working
conditions, 3) social protection & inclusion
Social
Art 3.3 TEU: aim at high level of protection
Art 11, 191, 193 TFEU: EU competency
8th Environmental Action Plan: “living well,
within planetary boundaries,” 6 dimensions
Environmental
Art 2 TEU; EU Charter of fundamental rights
Focus on Rule of law, effectiveness of
justice systems, quality of public
administration, ability of citizens to
participate in decision-making, safety and
security of citizens
Institutional
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7. Methodology
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8. Mixed Methodology
32 indicators
initially selected
(15, 11, and 12)
Exclusion criteria
Statistical Tests
Expert survey & review
of citizen priorities
5 scenarios
Consultation
workshop and
structured
interviews
Final 3 options
14 criteria covering: the availability of suitable data, relevance for
policymaking, broad public support, ease of communication, ability to
reflect a dimension adequately, complementarity to GDP,
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9. Review of public priorities
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Reviewed the outcomes of 9
initiatives that attempted to
identify public priorities for
measuring wellbeing / progress
(augmented with output of Future
of Europe conversation)

10. Scenario 1
(Data validity)
Scenario 2
(Expert based)
Scenario 3
(Public
preference)
Scenario 4
(EU policy
coherence)
Scenario 5
(International
coverage)
Social
In-work-at-risk-of-
poverty rate
Palma ratio
Healthy life
expectancy at
birth
People at risk of
poverty or social
exclusion (AROPE)
Life satisfaction
Environmental Air quality
Gross greenhouse
gas emissions
Gross greenhouse
gas emissions
Raw material
footprint
Gross greenhouse
gas emissions
Institutional Life satisfaction Trust in institutions Rule of Law Index
Perceived
independence of
the justice system
Corruption
Perception Index
The 5 initial scenarios
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11. National Performance per 5 Scenarios
Table showing comparison of national average raw values 2018 - latest available (colours), and trends, based on trends over last 2 years available per 27 EU countries
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12. 3 Final Options
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13. Option Leaving
No One Behind
Option Better
Life
Option End
Poverty
Economic GDP/capita GDP/capita GDP/capita
Social S80/S20 ratio Life expectancy
Population at risk
of poverty and
social exclusion
(AROPE)
Environmental GHG/capita GHG/capita
Material
footprint/capita
Institutional
Trust in
institutions
Rule of Law
Index
Independence of
the justice system
Selecting the 3 Options
Strengths and weaknesses
Statistical tests: S2 and S5 score highest
Communicability: S5, S3, and S1 score highest
Expert survey preferred S2, S3, and S5
WB now, later, inclusion: minor differences
Political actionability: S2, S3, S4 score highest
(due to life satisfaction)
Final options inspired by S2, S3, & S4
S2: S80/S20 ratio instead of Palma ratio (more up-
to-date data)
S3: Life expectancy instead of healthy life
expectancy (less subjective and prone to
incoherence)
Social indicator suggest their title
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14. 3 Options: EU average performance (2017-2022)
Inspired by Kaldor’s square: there should be an ideal balance between 4 dimensions
Shows how economic dimension has been prioritised
Displays the key difference of selected indicators in environmental dimension
Institutional dimension underperforms in each option
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15. 3 Options: EU annual performance (2021-2022)
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16. 3 Options: Case
study illustrations
Ranking of five countries
Representing the EU’s different regions and
countries of differing economic performance
Performance over time
illustrated for Option “end poverty” (S4)
no decoupling between GDP and material footprint
national trends in AROPE and the perceived
independence of the justice system are distinct
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17. 3 Options: International
comparability issues
Lack of internationally comparable data
Different indicators and methodologies used by
Eurostat versus other major countries outside of the EU
Alternative indicators that are used internationally had a
too low update frequency (compared to GDP)
Only Scenario 5 allowed for international comparability
Eurostat’s forthcoming 2024 SDG report will include a
new section on international comparability, in which they
select robust and internationally comparable indicators
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18. Communication
considerations
Effective communications are
about 4 elements
Level of public understanding
Trustworthiness of indicators (trust in the
institution which is the source of the data and
consistency with other sources producing similar
indicators)
Relevance to the citizen (including at local level
Frequency
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19. Policy
Recommendations
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20. 5.
6.
7.
8.
1.
2.
3.
4.
Mainstream GDP+3 in EU policy
processes
Annual Sustainable Growth Survey
--> integrate GDP+3 + dashboard
Semester Country Recommendations
-> GDP+3 as headline indicators
Economic governance framework of
Council --> include GDP+3
Work programme of EC commission
align priorities with GDP+3
MFF process --> assess impact of budget
on GDP+3 (see example of Italy)
State of the Union speech --> refer to EU’s
performance on GDP+3
Better regulation --> impact on GDP+3
assessed ex-ante of legislation
More proactive EU economic diplomacy on
Beyond GDP
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21. Future research needs
Ensure disaggregability
Increase frequency and
nowcastability
Integrate negative spillovers in
environmental indicators
Test policy responsiveness
Collaborate with international
community
Statistics
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Explore use of life satisfaction
as cross-cutting indicator
Explore the creation of a peace,
safety and security single
indicator or index
Develop new institutional
indicators (transparency and
citizen engagement)
Indicator development
Determine mid-term
targets/landing zones for
each indicator
Define optimal balance
between GDP+3 indicators
Test framework through
citizen panel/assembly
Framework development

22. Conclusion
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It is immediately actionable
Sending a strong signal to citizens about a meaningful change
of direction in line with fundamental aspirations
Redefining prosperity, in line with EU values, is key in a context
of systemic rivalry

23. Saamah Abdallah
Hot or Cool
Susanne de Jong
Pro(to)topia
Martin Vladimirov
CSD
Contributors
Thank you
to everyone!
Céline Charveriat
CEO, Pro(to)topia
The Team
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Emanuele Bozzini
S4YP, for conducting
the survey
Eloise Bodin
Pro(to)topia, for
organising the workshop
SDSN
For their statistical
support
Advisory Council
Sandrine Dixson-
Declève
Enrico Giovannini Peter Browning
Browning
Environmental
Communications
Club of Rome
Club of Rome,
University of Rome
“Tor Vergata”

24. Thank you for
your attention
Do you have any
questions?
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[email protected]
Imagineering a green caring society