If you were diagnosed with cancer in Australia in the early 1990s, the chances you would survive for another five years were little better than 50–50 — a toss of the coin. Thirty years later, the most recent data shows the odds of surviving that long are better than 70–30. But such remarkable improvements in medical treatment aren’t always captured in our national statistics. As the Productivity Commission noted last year, our traditional way of measuring productivity may be missing a significant share of the benefits patients are receiving from improved care.
Diane Coyle has spent her career carefully studying how we measure economic progress, often highlighting the shortcomings of traditional approaches. Her many books include The Weightless World (1997), which examined how digital technologies shifted value towards ideas and services, and GDP: A Brief but Affectionate History (2014), which traced the origins of national income accounting and its limits in a service-based economy.
In her latest book, The Measure of Progress: Counting What Really Matters, Coyle returns to some of the same themes. She points out that there is always a lag between the structure of the economy and how we measure it, noting that statistics in the late 1800s were overly dominated by agricultural numbers rather than metrics that captured factory production. Today, however, Coyle goes further. “The elastic relationship between the statistics and the economy they represent,” she contends, “has stretched to breaking point.”
Policymakers have long recognised the limitations inherent in national income accounting. No one has expressed it more powerfully than Robert Kennedy, who in 1968 noted that gross national product included money spent on cigarette advertising, ambulances and guns, yet “does not allow for the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.”
To this, Coyle brings fresh examples. A hypothetical treatment that reverses disabling symptoms and restores a patient’s ability to lead an independent life. A silicon chip that is more energy efficient. A decision by a hospital to use a cheaper medicine that achieves the same result. Smaller smartphones. A person who marries their paid cleaner, increasing happiness while reducing measured economic output.
In some cases, the evidence is more contested than Coyle acknowledges. Her own surveys find that the typical British respondent would have to be paid £150 to go off Facebook for a year. Another study estimates an amount almost ten times as high. Yet it would be a mistake to assume this represents unmeasured wellbeing. Randomised trials find that social media restriction significantly improves people’s wellbeing. If our goal is to estimate consumer welfare, it would be too hasty to augment GDP by adding in the implied value of free digital services. A medium that combines YouTube videos about how to change a washer with Instagram content that exacerbates body image problems in teens can’t easily be slotted into analyses of wellbeing.
Coyle is a prolific scholar, and her work features prominently in this book: by my count, nearly one in ten citations are to her own research. This sometimes produces discursions that are usually fascinating. But it can also be distracting, as when Coyle veers from analysis into autobiography. Why are we looking at the author’s photo from a 1982 Harvard economics department picnic?
For readers wanting to entertain their friends and family, The Measure of Progress is replete with fascinating observations. Comparing the number of hours the typical British worker had to toil to buy particular goods and services, Coyle reports that the time required to finance a vacuum cleaner halved from 1990 to 2019, while the time cost of beef doubled. We learn that video now accounts for two-thirds of all internet traffic, with just six companies responsible for half this traffic. We are reminded that inequality characterises not only the gap between superstar workers and everyone else but also the gap between firms, with superstar firms increasingly outpacing the rest of the business sector.
At times, it is unclear who Coyle is writing for. She discusses some of the most famous lines in economics: John Maynard Keynes’s observation that the inhabitant of London, on the cusp of the first world war, “could order by telephone, sipping his morning tea in bed, the various products of the whole earth” and Paul Krugman’s comment that “Productivity isn’t everything, but, in the long run, it is almost everything.” Turn the page, though, and out pop equations such as (zC/Y*dC/C)–(hN/Y*dN/N). Who exactly is the reader who needs Keynes explained yet relishes this algebra?
These reservations aside, I took four strong big-picture messages out of The Measure of Progress. First, the digital economy is increasingly challenging statisticians. Most of us are online content creators. Crowdsourced Wikipedia is the world’s leading encyclopaedia. Open-source code is used by almost every software developer. Another aspect of the digital economy that likely falls outside national statistics are the average prices Coyle reports for personal data on the dark web: US$30 for a credit card with CVV, US$60 for a hacked Gmail account, US$2200 for a bank account login. Economists recognise the value of data, notes Coyle, “but the slog of working out how to do the empirics is still novel territory.”
The second message of The Measure of Progress is the impact of globalisation on national statistics. The word “statistics” has its origins in the word “state,” but an increasing share of commerce crosses national borders. Since 1950, world trade volumes have increased by a factor of forty-three. To make an Apple iPhone takes raw materials and manufacturing know-how from at least forty-three nations (that number again). The same holds for services. Indian firms specialise in the design-drawing stage of the construction industry. The Philippines delivers call-centre services to firms in English-speaking nations. Thousands of Kenyan workers do content moderation for social media firms. Accurately capturing the value-added that takes place within national boundaries is trickier than ever.
Third, Coyle makes a strong case for a better accounting of wealth, or capital. Capturing human capital in the form of diplomas and degrees is relatively straightforward. Measuring social capital — the ties of trust and reciprocity that bind communities — is not so easy. Statistical agencies are also beginning to measure the value of the country’s natural assets. Earlier this year, the Australian Bureau of Statistics published the first National Ecosystem Accounts — reporting, among other things, that Australia has 4.3 million kilometres of rivers and streams, and that the carbon-retention value of native forests and grasslands has more than doubled since 2015. Measuring assets — financial, human, and environmental — usefully complements the flow measures of income and expenditure that comprise GDP.
The fourth major insight of The Measure of Progress is about the value of time. Average Australian life expectancy equates to around 30,000 days, and few wish to waste these precious moments. Coyle notes that the washing machine was underrated as an invention because many of those who benefited from it were “housewives,” for whom the benefit often came in terms of time rather than money. She also notes that comparisons of wellbeing across countries often focus solely on incomes, failing to account for leisure time.
One study estimates that while Western Europeans have lower incomes than people in the US, the gap in living standards narrows considerably once leisure hours are included in the calculation. Yet sometimes new technologies can impose a “time tax,” such as when supermarkets replace staffed checkouts with self-scanning checkouts or when companies replace helplines with chatbots. In Coyle’s view, a time-use accounting framework would provide insights into both production and consumption.
Australia receives few mentions in Coyle’s book, which is in some ways a pity, as certain aspects of our economy and statistical systems challenge her broad conclusions. While Coyle reports that the physical weight of economic output in Britain is falling, Australia’s is increasing: rising from 355 million tonnes in 2000 to 811 million tonnes in 2018. With a robust mining industry, we are not representative of Coyle’s “weightless world.”
The creation of a Measuring What Matters framework now sees the Australian Bureau of Statistics track fifty dashboard indicators, grouped under five themes: healthy, secure, sustainable, cohesive and prosperous. And contrary to Coyle’s suggestion that “occupational classifications have not kept up with current changes in the labour market as AI and other digital tools spread,” the ABS last year updated its occupational codes, using artificial intelligence to construct draft task descriptions (which were then reviewed by humans).
Like sewage systems and road markings, bees and internet cables, robust national statistics are a vital but oft-overlooked aspect of modern society. Few people care how they are designed, and fewer still want to read about how they might be improved. Yet, as Diane Coyle shows, statistics are not just numbers on a page, but the lens through which we see progress itself — and a vital tool for building a fairer society and a stronger economy. •
The Measure of Progress: Counting What Really Matters
By Diane Coyle | Princeton University Press | $49.99 | 320 pages
