REGIONAL GROWTH – HOW WE MEASURE MATTERS
Dr Susan F . Stone , Credit Union SA Chair of Economics , University of South Australia
The measurement of economic growth has always been wrought with controversy . What is easy to observe and provides good objective measurement is usually less than satisfactory when it comes to capturing modern ideas of growth and development . If we think about Maslow ’ s Hierarchy of Needs , fulfilling the lowest rung – physiological needs – are relatively easy to measure . When an economy provides more food , water , etc ., this can be easily measured and its distribution and consumption easily tracked . So when we can talk about populations having an improved standard of living , we usually are referring to better access to food and water , more electricity , more clothing and shelter . Even the second run of the Hierarchy , security , can be measured . Here we are talking about having access to things like vaccines , hospitals and police . Absence ( or the lack thereof ) of war and natural disasters can be measured and tracked as well . Thus , we often judge our well-being based on what we can readily measure .
Along with the ease of having access to relevant data and objective measures , there is also the ability to compare these measures across people , communities and countries . This data has the benefit of being consistent , so it also allows us to judge performance over time and know if a community is making ‘ progress ’. Thus , given their ability to be measured objectively and consistently , we tend to focus on these items . And for many people around the world , access to nutritious food , clean water , health services and a place to live , are the most relevant measures by which to judge progress . The amount of people living in poverty , while improving , is still high , and COVID did not help . People across the globe living in extreme poverty . The number of people in extreme poverty rate reached 9.3 percent in 2022 , up from 8.4 percent in 2019 . The Australian Council of Social Services estimates that over 3 million Australians live in poverty , including 716,000 children .
However , for those of us fortunate to live in a wealthy country , including most Australians , these measures have less relevance . We have , for the most part , moved up the Hierarchy to be concerned more about belonging , esteem and , at the top , self-actualisation . These things are more difficult to measure , and to measure objectively . The value put on these attributes changes , often depending on the individual . While societies and communities can share common values around certain aspects of economic development ( such as the maintenance of green space around housing development or the preservation of historical districts around business development ), different people will have different ways to value having choice , for example , or getting a graduate degree .
Besides these more subjective measures , other factors which can still fall in the ‘ meeting basic needs ’ and ‘ safety ’ categories and be difficult to measure . Many environmental goods and services fall in this category . Also , once we have the basics of food and water satisfied , we run into the varying degrees of quality for these items . No one would argue that the value of water which has been subjected to run-off from a local tannery is the same as pristine glacier water from the Himalayas .
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