Quality of life enters the balance sheets

Measuring happiness: Expansion of the official figures to embrace 'environmental evaluation' could trigger a pricing frenzy
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The Independent Online

It is not enough for the Government to publish bare economic statistics to indicate whether the nation is progressing or declining. Now we are entering the world of "environmental valuation".

The Department of Transport has published newly collated research on tranquillity - a factor previously regarded as "unquantifiable" - and fringe economic organisations are now predicting an opening of the official floodgates for other "quality of life" measurements.

In the DoT's review, which is being used as the starting point for further study, the growth of "environmental evaluation" is acknowledged as about to expand. Noise, local air pollution, global warming and the costs of transport were all discussed in the Government report. The entry of the Government's own statistical bureaucracy into a field still arguing about the merits of putting a price on such factors as happiness, stress, fear and even hope and expectation, brought praise from the New Economic Foundation (NEF), one of the groups which argue that new forms of assessment are urgently needed as the millennium approaches.

The head of the NEF's indicators programme, Alex Mac-gillivray, said: "Now that tranquillity has been given a value, maybe happiness is next."

The NEF argues that with concern over the quality of life, the old-style gross national product measurement of monetary flow is misleading and offers no guide to the state of the environment.

Mr Macgillivray, describing the controversial field of environmental evaluation said: "There are basically two camps. One group, such as those headed by Professor David Pierce at University College London say you should measure everything. The other school, with advocates like Michael Jacobs at Lancaster University, say there is inherent danger in quantification."

This group, he said, worried that if a factor could not be measured, such as happiness, it would be discarded as meaningless or less important. Sexual satisfaction could fall into this category.

The NEF says that by focusing on GNP some factors are just not accounted for. Health, individual well-being and collective security are ignored by conventional economic statistics.

By using an Index of Sustainable Economic Welfare (ISEW) the NEF believes it has a pragmatic way of measuring quality of life. "We now need to open up this field of study. The DoT's published report this week essentially begins the debate," said Mr Macgillivray.

In the latest NEF survey, gains in personal income are alleged to have been cancelled out by increasing levels of social and environmental damage. The annual cost of water, air and noise pollution is estimated at around pounds 22bn. This is set against GNP and regarded as "waste" by the NEF.

The environmental cost of commuting is estimated by the NEF at pounds 168 per year (double the figure of 20 years ago); the cost of air pollution is put at pounds 316, water pollution at pounds 58, noise pollution at pounds 18, and the cost to each individual of depleting non-renewable resources such as North Sea oil is put at pounds 1,008.

Long-term environmental damage is said to cost each individual an annual pounds 1,405. The cost of ozone depletion, put at pounds 227 a head at the beginning of the Seventies, is now estimated at pounds 876.

The personal levels measured by the NEF survey were described as "conservative" by the researchers. The cost of commuting or noise pollution in a densely populated city such as London or Birmingham may need to be doubled to reflect the realities of urban life.

With building societies currently estimating the average cost of a home at pounds 61,000, similar techniques of environmental compensation could be used to evaluate previous "unanalysables".

If the house price fell - due to destruction of a good view, increased levels of litter, bad neighbours, rising crime rates and accompanying higher levels of stress, depletion of local facilities such as shops or recreation - the "damage" to the price could thus be given as a percentage of the figure.

One building society told the Independent that such measurements were now being considered and could be used to indicate improvements or decline that backed up more than just the "bare price" of a home.

Looking into the future, Mr Macgillivray said: "It may be that in 2020 we will hear news readers leading programmes with government statistics on happiness and satisfaction. The first step has now been taken."