APPENDIX 1 DEVELOPMENT OF MEASURES OF AUSTRALIA'S PROGRESS


WHY THE ABS DEVELOPED MEASURES OF AUSTRALIA'S PROGRESS

Recent years have seen continued public interest in assessing whether life in Australia, and other countries, is getting better, and in the interrelationships between economic, social and environmental aspects of life. Although most regard Gross Domestic Product (GDP) as an important measure of economic progress, there are many who believe that it should be assessed in conjunction with other, non-economic, measures of progress.

Through its publications, electronic releases of data and other means, the ABS provides an array of statistics relevant to assessing all aspects of progress. However, the size of the information base means that it is not so accessible to many people. The ABS developed the suite of Measures of Australia's Progress (MAP) products with the aim of providing a concise set of statistical evidence to help people assess whether life in Australia is getting better.

PROCESS OF DEVELOPING HEADLINE INDICATORS

When MAP was first developed, the ABS undertook an extensive process to determine what measures of progress to include. Broadly, the indicators presented in MAP were chosen in four key steps:

• We defined three broad domains of progress (society, economy and environment)
• We made a list of potential progress dimensions within each of the domains
• We chose a subset of dimensions for which indicators would be sought
• We chose an indicator (or indicators) for each of those dimensions. In particular, potential 'headline' indicators were identified which have the capacity to encapsulate major features of change in the given aspect of Australian life.

The eventual selection of indicators in MAP was guided by expert advice and by the criteria listed below. The decision on how many indicators to present was based on statistical grounds – for example, is it possible to find one or a few indicators that would encapsulate the changes in the given aspect of life? Is it possible to sum or otherwise combine indicators? And is the indicator supported by quality data?

Once the ABS had drafted its initial list of candidate headline indicators, extensive consultation was undertaken to test whether the list accorded with users' views. Whether a reader agrees with the ABS choice of headline indicators or not, he or she is able to look at the whole suite of indicators in each full edition of MAP and assign a weight to each, according to his or her own values, to make an assessment of whether life is getting better.

It was also decided that the indicators should focus on the outcome rather than the inputs or underlying causes of change (such as other influences that generated the outcome, or government and other social responses to the outcome). For example, an outcome indicator in the health dimension should if possible reflect people's actual health status and not, say, public and private expenditure on health treatment and education. Input and response variables are important to understanding why health outcomes change, but the outcome itself should be examined when assessing progress.

One criterion was regarded as essential to headline indicators – that most Australians would agree that each headline indicator had a 'good' direction of movement (signalling progress, when that indicator is viewed alone) and a 'bad' direction of movement (signalling regress, when that indicator is viewed alone). For instance, the number of divorces could be considered as an indicator for family life. But an increase in that number is ambiguous – it might reflect, say, a greater prevalence of unhappy marriages, or greater acceptance of dissolving unhappy marriages. This good-direction / bad-direction distinction raises unavoidably the question of values and preferences.

Applying this criterion depends crucially on interpreting movements in one indicator, assuming that the other indicators of progress are unchanged. For example, some would argue that economic growth has, at times, brought environmental problems in its wake, or even that the problems were so severe that the growth was undesirable. Others would argue that strong environmental protection might be retrograde to overall progress because it hampers economic growth. However, few would argue against economic growth or strong environmental protection if every other measure of progress was unaffected: that is, if economic growth could be achieved without environmental harm, or if environmental protection could be achieved without impeding economic growth. Of course, although keeping other things equal might be possible in theory, it seldom, if ever, occurs. The links between indicators are important, and the article: Relationships between domains of progress in this issue discusses some of these links.

Criteria for choosing headline indicators

In the view of the ABS, ideally a good headline indicator should:

• be relevant to the particular dimension of progress
• where possible, focus on outcomes for the dimension of progress (rather than on the inputs or processes used to produce outcomes)
• show a 'good' direction of movement (signalling progress) and 'bad' direction (signalling regress) – at least when the indicator is considered alone, with all other dimensions of progress kept equal
• be supported by timely data of good quality
• be available as a time series
• be available at a national level
• be sensitive to changes in the underlying phenomena captured by the dimension of progress
• be summary in nature
• preferably be capable of disaggregation by, say, geography or population group
• be intelligible and easily interpreted by the general reader.

For some dimensions of progress, it is not yet possible to compile an ideal indicator meeting all these criteria. In these cases an example of a relevant indicator, which sheds light on one aspect of the dimension of progress, has been presented.