To bring back trust in politics, Britain needs a local measure of GDP

Sheffield by night. Image: Benedict Hunjan/Wikimedia Commons.

The Indigo Prize was created to find a better way of measuring the economy than the traditional GDP. In his entry, Tom Forth explained why the competition was asking the wrong question.

On 7 July, in the Financial Times, Tim Harford argued that the simplest innovations often create the most value. It’s a familiar and beautiful story, and it doesn’t take much thinking to agree that toilets probably matter more than a web-connected thermostat.

On 8 July, in the London Evening Standard, some of the the creators of the Indigo Prize explained why a better measure of progress than GDP is worth £100,000. And again, it doesn’t take much thinking to agree that what matters in our lives is family, friends, health, purpose, and happiness. They certainly matter more than the number of pounds in the national GDP measure that makes the headlines every quarter, and fills discussions in between.

There’s an important link between these two pieces. Here, in just over a fifth of the 5000 words that I’m allowed to win the big prize, I’ll explain it.

GDP works

Add up every hair cut, glass of water, pint of beer, bicycle tyre, bank account fee, pet insurance policy, bus journey, electricity bill, contact lens, tank of petrol, dentist appointment, pay packet, business investment, rent bill, and much much more, and you get a country’s GDP.

If you want to compare one country with another you adjust for the difference in how much things cost in each: that’s called PPP (“purchasing power parity”) or PPS (“purchasing power standards”). If you want to compare a country today with itself in the past, you also adjust for the difference in how much things cost: that’s called real terms or constant prices.

And if you make some adjustments for how well the GDP is shared within a country, you get inequality-adjusted GDP. Well, you would, if someone had invented it: I’m sure that The Indigo Prize will get many such suggestions.

But an inequality-adjusted GDP, or a sustainable GDP, or a fair-trade GDP are like the web-connected thermostats that many of us mock. They are complicated, exciting, new, fresh, and just not very important. They are what you get if you try and solve a problem with technology without asking the right people what the problem was.

GDP is a simple idea. The details are hard, but we’ve got good at them in the past 70 years or so. Most importantly, it works. Famously, the human development index correlates almost perfectly with it.

And when you think about it, the correlation shouldn’t be a surprise. People and societies prioritise the things that really matter to them. The more money they have, the more that they can do, and the further down their list of priorities they can get.

So GDP is a great measure of what really matters – as long as we trust people to spend their money on what matters to them. I do.


GDP is like toilets

What’s really lacking from our current measures of GDP is the same as what’s lacking with our current toilets. There are too many places where you can’t find a good one.

Today two-thirds of people have access to a toilet. It’s a remarkable achievement, but it’s not good enough. The unglamorous task of getting toilets to the remaining third of humanity matters more than almost anything else. Try Rose George's book Adventures in the World of Human Waste if you need convincing. You'll be convinced in the first chapter.

It’s the same with GDP. Today, the majority of people in the world have access to a national GDP measure. But far too few know how their local economy, and thus their wider community’s wellbeing, is changing.

For years I’ve built free tools that give people a slightly better idea of how their economy is doing. People in Wales can see how their economy came to perform as well as Estonia’s. People in Greater Manchester can see how their economy came to perform as well as Spain’s. People in South Yorkshire can see how their economy performs about as well as Portugal's.

And yet we know that these numbers aren’t good enough. They are available far too slowly; the best data we have for South Yorkshire's GDP today is from 2015. We will get 2016's estimates in December 2017. We also don’t collect enough data on consumption and production locally, we don’t look hard enough at what things people buy, and we don’t measure how much those things cost in different places. So our local measures of GDP don't take into account local inflation.

The ONS know this: its RSTI (Regional Short Term Indicators) project is trying to fix it, and in December 2018 England will get its first ever timely estimates of regional GVA. Still not quite GDP, but closer.

We need to go further, in more places, and all over the world. We need to make this a priority, because we have seen what happens when we cannot produce measurements that are relevant to the communities that people live in: they stop listening.

Fixing GDP

Fixing GDP is like fixing toilets. We need more of the same, not something new and fancy.

If Iceland can measure real GDP for its 330,000 people every quarter, and if Estonia can measure real GDP for its 1.3m people every quarter, then it’s not good enough that much larger parts of the UK, and many other parts of the world, have much worse data.

I’ll end with just one of the many reasons why I think that this is important.

Scotland calculates its own GDP figures and debates them vigorously. My home region of Yorkshire, with an equal population, doesn’t calculate its own GDP, and is rightly uninterested in the weak proxies that are available.

This matters enormously. GDP, the favourite measure of economists, isn’t relevant to the people of Yorkshire. It is certainly not relevant to the people of Bradford or Barnsley. And so, since everyone lives in a place not a country, UK GDP figures are not relevant to most of the UK.

People can feel this. They correctly feel that their lives are not reflected in public debates. This influences the trust that they have in economists, and in those politicians that rely on economists' arguments and data.

The UK has had two extremely important referendums in recent years. In the first, Scotland took the option recommended by most economists, to remain in the UK. In the second, Scotland again took the option recommended by most economists, to remain in the EU. But England, especially areas like mine in Yorkshire – those areas most poorly informed by the data collected by our national economists – took the option that most economists did not recommend. We voted to leave the EU.

If economists want people to listen to them again, they should dump plans for a new measure of well-being. To return to my analogy, they should stop dreaming about internet-connected thermostats and get on with building more toilets. They should make sure that never again do they talk about economic collapse in Greece while celebrating the UK's success, unaware that South Yorkshire's economy was collapsing nearly as quickly.

 Economists should use the methods that we already have to make GDP relevant to more of the people of Britain, and then spread this to more of the world. If the goal of economic measures is to inform people better about their current situation, then providing them with local GDPs will achieve much more than providing them with a national inequality-adjusted GDP, a national sustainable GDP, or a national fair-trade GDP. But as a suggestion, it’s not likely to win any prizes.

Sadly, this essay did not win the Indigo Prize.

Tom Forth runs a software company called imactivate and is an associate at ODILeeds. He tweets as @thomasforth. This post first appeared on his blog.

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Green roofs improve cities – so why don’t all buildings have them?

The green roof at the Kennedy Centre, Washington DC. Image: Getty.

Rooftops covered with grass, vegetable gardens and lush foliage are now a common sight in many cities around the world. More and more private companies and city authorities are investing in green roofs, drawn to their wide-ranging benefits which include savings on energy costs, mitigating the risk from floods, creating habitats for urban wildlife, tackling air pollution and urban heat and even producing food.

A recent report in the UK suggested that the green roof market there is expanding at a rate of 17 per cent each year. The world’s largest rooftop farm will open in Paris in 2020, superseding similar schemes in New York City and Chicago. Stuttgart, in Germany, is thought of as “the green roof capital of Europe”, while Singapore is even installing green roofs on buses.

These increasingly radical urban designs can help cities adapt to the monumental challenges they face, such as access to resources and a lack of green space due to development. But buy-in from city authorities, businesses and other institutions is crucial to ensuring their success – as is research investigating different options to suit the variety of rooftop spaces found in cities.

A growing trend

The UK is relatively new to developing green roofs, and governments and institutions are playing a major role in spreading the practice. London is home to much of the UK’s green roof market, mainly due to forward-thinking policies such as the 2008 London Plan, which paved the way to more than double the area of green roofs in the capital.

Although London has led the way, there are now “living labs” at the Universities of Sheffield and Salford which are helping to establish the precedent elsewhere. The IGNITION project – led by the Greater Manchester Combined Authority – involves the development of a living lab at the University of Salford, with the aim of uncovering ways to convince developers and investors to adopt green roofs.

Ongoing research is showcasing how green roofs can integrate with living walls and sustainable drainage systems on the ground, such as street trees, to better manage water and make the built environment more sustainable.

Research is also demonstrating the social value of green roofs. Doctors are increasingly prescribing time spent gardening outdoors for patients dealiong with anxiety and depression. And research has found that access to even the most basic green spaces can provide a better quality of life for dementia sufferers and help prevent obesity.

An edible roof at Fenway Park, stadium of the Boston Red Sox. Image: Michael Hardman/author provided.

In North America, green roofs have become mainstream, with a wide array of expansive, accessible and food-producing roofs installed in buildings. Again, city leaders and authorities have helped push the movement forward – only recently, San Francisco created a policy requiring new buildings to have green roofs. Toronto has policies dating from the 1990s, encouraging the development of urban farms on rooftops.

These countries also benefit from having newer buildings, which make it easier to install green roofs. Being able to store and distribute water right across the rooftop is crucial to maintaining the plants on any green roof – especially on “edible roofs” which farm fruit and vegetables. And it’s much easier to create this capacity in newer buildings, which can typically hold greater weight, than retro-fit old ones. Having a stronger roof also makes it easier to grow a greater variety of plants, since the soil can be deeper.


The new normal?

For green roofs to become the norm for new developments, there needs to be buy-in from public authorities and private actors. Those responsible for maintaining buildings may have to acquire new skills, such as landscaping, and in some cases volunteers may be needed to help out. Other considerations include installing drainage paths, meeting health and safety requirements and perhaps allowing access for the public, as well as planning restrictions and disruption from regular ativities in and around the buildings during installation.

To convince investors and developers that installing green roofs is worthwhile, economic arguments are still the most important. The term “natural capital” has been developed to explain the economic value of nature; for example, measuring the money saved by installing natural solutions to protect against flood damage, adapt to climate change or help people lead healthier and happier lives.

As the expertise about green roofs grows, official standards have been developed to ensure that they are designed, built and maintained properly, and function well. Improvements in the science and technology underpinning green roof development have also led to new variations on the concept.

For example, “blue roofs” increase the capacity of buildings to hold water over longer periods of time, rather than drain away quickly – crucial in times of heavier rainfall. There are also combinations of green roofs with solar panels, and “brown roofs” which are wilder in nature and maximise biodiversity.

If the trend continues, it could create new jobs and a more vibrant and sustainable local food economy – alongside many other benefits. There are still barriers to overcome, but the evidence so far indicates that green roofs have the potential to transform cities and help them function sustainably long into the future. The success stories need to be studied and replicated elsewhere, to make green, blue, brown and food-producing roofs the norm in cities around the world.

Michael Hardman, Senior Lecturer in Urban Geography, University of Salford and Nick Davies, Research Fellow, University of Salford.

This article is republished from The Conversation under a Creative Commons license. Read the original article.