The SEDA report The Boston Consulting Group's Sustainable Economic Development Assessment highlights the importance of considering factors beyond GDP to get a more complete picture of government performance.
Madrid, 28 August 2019. High levels of social inequalities, as reflected in differences in access to health care and education, for example, are an even greater obstacle to a country's well-being than economic inequalities. This is the main conclusion of the 2019 edition of SEDA (Sustainable Economic Development Assessment), the annual assessment of sustainable economic development in more than 150 countries of the Boston Consulting Group.
Social inequalities receive less attention than economic inequalities in policymakers' discussions. However, BCG's SEDA 2019 analysis establishes a much stronger correlation between social equality and well-being than between economic equality and well-being. The analysis also shows that people in countries with relatively high levels of social equality tend to report relatively high levels of happiness.
"Today's governments face enormous challenges, the disruption created by rapid technological advances being one of them," says Joao Hrotko, BCG partner and co-author of the report. "These factors will change what is needed for public and private sector actors to succeed in the next decade. Governments, in particular, should aim to achieve a vision closer to the real concerns of their citizens to address potentially overlooked problems, such as social inequalities.
The power of a multidimensional control and actuation panel
The report also details how governments can obtain important signals, such as those related to social inequalities, through the development of a comprehensive monitoring and action framework. There has already been a great deal of momentum in countries such as New Zealand and the UK which, in moving beyond a focus on purely economic metrics such as GDP, have oriented policy and budgetary decisions around well-being. The next step may be to create a dashboard that assesses country performance more broadly. Such a monitoring framework should include in addition to economic metrics such as real GDP per capita growth, well-being metrics-objective metrics such as that represented by the SEDA indicator and subjective metrics such as indicators of happiness or life satisfaction.
BCG's report demonstrates how a three-dimensional dashboard can reveal problems that would be missed by using a single metric. Country scores in the UN's World Happiness Report, for example, tend to coincide with well-being, as reflected in a metric derived from SEDA: the wealth-to-well-being conversion ratio. But there are many countries with relatively high SEDA wealth and well-being scores that have lower than expected happiness indices. Only by studying the different metrics together can a country detect the worrying divergence and then begin to investigate what factors explain it.
"Governments that focus on a single metric, such as GDP, will miss important signals related to the problems their country needs to address," notes Enrique Rueda-Sabater, senior advisor at BCG and co-author of the report. "The three-dimensional dashboard we have developed will create a clear picture of where governments need to pay more attention to effectively impact the well-being of citizens.