COMMENT 1

Finding the right question ccmomic policy is a difficult business in a world of uncertainty. But it is also a problem when we do not have clearly defined objectives. Too often, the debate becomes centred E around differing views on the efficacy of policy levers masking the more crucial

differences about the real aim of policy. Arguments about what indicators we should use to guide us are -in the main -arguments

about what policy should aim to do, and who it should help. This issue of New Ecaomy could equally have been entitled "What is the pomt of economic policy"?

Governments t r ad i t i d aim has been to maximke GDP. But to what end? Robert Eisner makes a powerful case for the use of CDP to remain at the corn of any fuller measwe of indicators. in a mainly market economy we certainly do need a measwe of market transactions. But if we accept that GDP is not enough, where do we go from there?

One avenue is the environmental agenda, where a conam with sustainability is at the fom. G i l a Atkinson and David P w get to the root of this issue, arguing for a measure of 'genuine savings' thatapp~~~afirmsbalancesheetandtakesacco\nrtofthefactthatnu\ningdown assetswithoutreplacingthanissimplynotsustainable.HazelHendasoPlisalsoconcemedwith environmental indicators, but with a much wider set of issues. She warm against bundling indicators together to create a composite mdicator, preferring to make many mdicators available for people to weight and combine as they choose. Certaidy this feels more democratic, but its diffuse nature may mean it would have little impact m policy.

Another approach is to focus on some concept of happmess or well-being in an attempt to focus policy making - and thinking - on what the public art? most interested in. Economic well-being is, naturally, difficult to define and we quickly descend into subjective judgements. But useful lessons emerge from the proass.

Most people feel their well-being is affected, to a certain extent, by the economic state of the nation On this basis, Hawkins et d experiment with a composite indicator of well-being to see how differat the outcomes are compared to just using GDP figures. Debate about the relevance of the indicator means thinking further about the objective of economic policy.

Andrew Oswald goes further. His studies suggest that GDP has very little impact on happi- ness, while unemployment has very big effects, thus suggesting that the policy focus should be more on jobs than growth. He also argues that relative income matters most to the individual, which may lie behind the false intuition that people in better off nations should be happier. The picture is complicated further by Andnew Clark who shows that what makes men and women happy at work are quite different, surely a lesson that could be extended to other sub sectors of the population. We need to recognise d i f f m among groups.

Economists love to try and get away from value judgments. These, however, cannot be avoided. In health for instance, Robinson's discussion shows the debate over QALY's is as much one about what we are trying to achieve as about any technical measurement pmblems.

M e m m n e n t t e s ~ c o m p l s c But mozeopermesstothefactthatdiffemmtmdicatorsmatter, and that the objectives of eamomic poky a well worth debating, would not be abad start on the rmdtobetteremmmicpoky.

DAN CORRY/RANDI HAwKrmS

1070-3535i96~01001 + 01 572.00'0 I 1996 THE DRYDEN PRESS