GreenBiz Reads

There are better ways to measure progress

From "The Optimist's Telescope" by Bina Venkataraman. Published by arrangement with Riverhead, a member of Penguin Random House LLC. Copyright 2019 by Bina Venkataraman.

The Optimist's Telescope book coverCaution pays off in the long run for communities that face a high risk of natural hazards. For example, Wharton economist Howard Kunreuther calculated in 2009 that if Florida, New York, South Carolina and Texas simply updated residential building codes by applying current standards to old properties, they could save tens of billions of dollars in hurricane damages. A report commissioned in 2017 by the U.S. government showed that for every dollar people, communities and governments spend preparing for earthquakes, floods and hurricanes, $6 is saved in responding to the disaster and rebuilding after the fact. Many disaster experts believe that communities and societies now actually save far more — as much as $11 for every $1 spent — when they take the precaution to build wisely and protect residents and property, because of the rising tolls from disasters in a warming climate.

Unfortunately, it’s not a clear-eyed calculus of present and future costs that guides most community decisions. There are immediate rewards, and distractions, that motivate political leaders and even entire societies to disregard the future.

The way communities and societies measure progress, for one, often favors shortsighted decisions — and masks the devastation wrought by disasters.

Since the mid-20th century, gross domestic product has been the dominant way to gauge the well-being of a country. Yet it is a fallacy that GDP measures a nation’s true welfare.

It is an especially poor proxy when a country is destroying its natural resources and barreling toward civil unrest while its economy temporarily grows. In this way, GDP growth can actually hide that a country is on a reckless path. Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen offer the example of a poor country that awards a mining lease to a company without securing enough royalties or putting into place laws to prevent harm to human health from air and water pollution. GDP may rise while the well being of the country and its people declines. Traffic jams might increase GDP because of greater use of gasoline, and at the same time degrade the quality of people's lives by raising their stress levels and endangering their health. Destructive earthquakes or cyclones actually can boost a country's GDP in the immediate aftermath, because of the spending for recovery, even if they wreak permanent humanitarian and economic damage. This temporary jolt has been documented after natural disasters around the world.

Sen and Stiglitz note that even GDP per capita, the common measure of progress for people within a country, obscures inequality. From 1999 to 2008, for example, GDP per capita was rising in the United States even though most individuals over that period saw a decline in their income, adjusted for inflation. In hindsight, we know that inequality was growing on the eve of the financial crisis, even as income overall was growing.

Societies of the past have imploded rapidly, Jared Diamond writes, just after reaching their peak power and size. Why were people in those civilizations taken by surprise? A key reason is that the signs of imminent decline — such as critical resources being depleted — were masked by short-term fluctuations in resource levels. This is similar to how, for a few decades, the rise of superbugs was masked by the temporary solution of new antibiotics being invented, and to how cabdrivers are deluded by meeting daily targets even when missing their yearly goals. It’s a problem of fixation on the dashboard. Diamond writes about how the former inhabitants of Easter Island likely did not notice from year to year the long-term trend of deforestation that destroyed their living civilization by the 18th century. Annual forest cover change, he argued, would have been barely detectable, the larger trend belied by the slow-growing saplings sprouting on denuded lands. Entire communities and societies can be distracted by single gauges on the dashboard.

Tyler Cowen, an economist at George Mason University, points out that GDP fails to capture critical aspects of countries’ well- being, including health, environmental amenities and resources, leisure time and the work done by households that is not bought or sold, such as caring for the elderly and children. It captures only the goods and services that are bought and sold each year.

Cowen advocates a "wealth plus" measure that would replace GDP, and reflect all that contributes to human welfare and a society's well-being. It’s not so straightforward, however, to measure caregiving, equitable access to wealth, resource conservation or leisure time as it is to count the number of manufactured widgets sold. The difficulty of pinning down such numbers, in large part, has prevented a saner metric from supplanting GDP. From Sen and Stiglitz’s point of view, any singular target is unlikely to capture what ought to be measured in a society. I tend to agree that we need to use multiple metrics — and even find ways to look beyond numeric targets altogether to ask deeper questions about where a society is headed.

Another reason communities and societies fail to exercise adequate foresight about future disasters is that what pays off in the future often does not pay off politically today. Candidates and elected officials get credit for responding to crises after they happen, not for the hidden act of averting a crisis altogether. The Sept. 11 World Trade Center attack made New York City mayor Rudy Giuliani Time magazine’s "Person of the Year" and launched him into the national spotlight. Had he been somehow able to prevent an attack in the first place, it’s likely fewer people would have noticed. Part of the reason for this, of course, is that the horrors of the Sept. 11 attacks in the United States were not fathomable to most people until after they had happened. Leaders of communities and societies, and voters, suffer from the same failures of imagination that all of us do in our lives, whether we're trying to imagine old age or our next camping trip. While we cannot anticipate everything, some risks are obvious and should be on our radar.

Failures of imagination have occurred like a nightmare in my work. In late 2014, I joined a group of doctors, scientists and policy experts who met in Boston during the Ebola epidemic. It was the peak of the American public's fears about the deadly virus, which was spreading beyond West Africa, with cases that had just cropped up in Texas and New Jersey. The epidemic eventually killed more than 10,000 people worldwide, most of whom lived in Liberia, Sierra Leone and Guinea.

The group's charge was to come up with ways to respond to the crisis to pass along to the White House. But I could not help feeling frustrated that we’d gotten into this mess in the first place. It was not until eight months after the outbreak emerged in West Africa that the World Health Organization deemed it a global emergency — a designation that triggers nations around the world to take aggressive action to stop an epidemic. During those months, some of the worst damage wrought by the Ebola epidemic might have been prevented by a stronger response to contain and treat the cases that had emerged. Only after nearly 1,000 people had died and the epidemic was fast spreading across borders did the WHO name it a global emergency.

Emails later published by the Associated Press revealed that officials knew of the potential danger and scope of the epidemic months before the designation, and were warned of its scale by the nonprofit Doctors Without Borders, which provides medical treatment to people in war-torn and remote regions of the world. The World Health Organization’s leaders, however, were worried about declaring the emergency because of possible damage to the economies of the countries at the epicenter of the outbreak. In 2015, Michael Osterholm, an infectious epidemiologist at the University of Minnesota, compared this excuse to not calling the fire department when several houses are on fire because you're afraid the fire trucks will create a disturbance in the neighborhood.

The human toll and economic devastation in West African countries turned out to be far worse than any intervention would have been. Humanitarian aid pledges rose to billions of dollars, the Liberian economy faced near collapse, and airlines marked multi-million dollar losses in the year of the outbreak. Thousands of people died tragically and needlessly. The outcome was not unforeseeable, however. As the outbreak was emerging, experts and world leaders armed with the tools of epidemiological research and historic outbreak records could have conceived of it. But the outcome lay outside what they actively imagined. Competing immediate concerns, however minor, infected their thoughts. 

The historian Barbara Tuchman has defined folly, the kind that has led countries to fight lowing wars and destroy triumphant empires, as a society's failure to act on knowledge that leaders perceived at the time — even when there were feasible alternatives and no single tyrant was in power. when the Trojans accepted the wooden horse, when Montezuma sent gifts to Cortés, when America invaded Vietnam — the choices in Tuchman's estimation were "marches of folly." Societies and leaders of each era knew better but acted as if ignorant. To me, the response to the Ebola epidemic fit that mold.