Israel to Introduce Quality-of-life Indices to Aid Public Policy Decisions

State is determined to be a global trendsetter with its plans to use quality-of-life measures to improve government decision-making process

The government will issue a report titled "Well-being, sustainability, and resilience indicators" in the next few weeks. The report outlines a groundbreaking set of measures to create a set of policies that have not been implemented anywhere else in the world. The collaborative effort of nine key ministries - including the all-important Prime Minister's Office and Finance Ministry - could put the spotlight on Israel as a center for public-policy innovation.

The government is aiming high. No other national government has ever integrated quality of life indices into its decision-making process. The initiative was taken by the Environmental Protection Ministry and is being headed by the ministry's director general, David Leffler, along with PMO Director General Harel Locker and Prof. Eugene Kandel, head of the National Economic Council.

This represents the first attempt at changing the Israeli government's way of thinking, by replacing the indicators by which it measures its own performance. Until now, it has almost exclusively used clear-cut quantitative economic indicators such as gross domestic product for measuring growth, the deficit, government debt, and unemployment rates – all of which have guided decision making among First World countries for the past 80 years.

Three developments converged over the past decade to spark a change in outlook in Israel and abroad: the global economic crisis, which exposed the weakness of existing policy-making tools and measures such as growth and GDP; increasing recognition of the need to take into account the world's resources; and, in Israel, the outbreak of the summer 2011 social-justice protests. "The protest had an impact on understanding multiple perspectives in weighing government policy," the PMO now admits. "This sharpened our need to consider more facets of policy."

The new approach, as reflected in a paper written for the French government in 2009 by Nobel laureate Joseph Stiglitz, highlights the weakness of quantitative-economic measures used in the world today. For example, GDP also includes undesirable activities: Massive prison construction, however undesirable the need, still registers as growth, but the enormous economic contribution made by housewives in providing a supportive environment for working spouses and bringing up children is ignored. GDP doesn't include the great economic benefit of the volunteer community or social activity, either.

GDP, which concentrates solely on growth, also completely ignores inequality and the distribution of output among households, as well as the question of damage to be sustained by future generations. Building profitable factories that pollute might generate immediate growth but will probably stifle growth in years to come.

In a nutshell, GDP only measures change in growth without accounting for the inventory of economic wealth, so growth based on the consumption of existing wealth can be quite damaging but isn't reflected in the figures.

Considering sustainability

Stiglitz's report and others published around the world have begun to talk about growth in terms of sustainability – growth that can be maintained by future generations – and resilience – growth allowing the population and country to prepare for dealing with crisis situations.

The outcome has been the introduction of quality of life, sustainability and resilience indices that several countries have already begun to publish and monitor. Australia was the first in 2002, followed by countries such as Canada, Italy and Britain. The Organization for Economic Co-operation and Development recently issued a report recommending ways to measure quality of life.

Israel is a latecomer to this trend but, in its unconventional manner – likely due to the government's deep shock from the social-justice protest – jumped straight to the front of the queue. Unlike other countries developing quality of life indices, it is determined to make these indicators part of the government decision-making process. In other words, the presumption is that redefining how the government measures its performance will change the way it works.

In drawing up the new quality of life indices, the report says a decision was made to focus on nine "domains of measurement," with each assigned a team. The nine domains are: Income and economic capital; civic engagement and governance; employment and work-leisure balance; education and skills; environment; health; personal and social well-being; personal security; and infrastructures and housing.

The employment and work-leisure balance team, for example, will include existing measures such as unemployment, but will also add questions concerning salaries and social benefits, percentage of workers in part-time jobs, availability of jobs for young mothers, the sense of job security, and equal opportunities in getting hired.

The Central Bureau of Statistics is fully involved with the work of the nine teams and will be tasked with implementing their decisions on new indices. Many actually already exist and are published regularly, but on an individual basis and rarely rate more than a brief mention in the news media. The intention is to group them together, along with new indices, and provide packets of measures illustrating various aspects of the quality of life in Israel.

After six months of work, the teams have now formulated the main questions and initial proposed indices to track them. All the proposals will be presented to the public, before the final choices are made for each domain at the end of the first quarter of 2014.

General agreement has already been reached among the nine teams on three guidelines. One is that the indices must be both quantitative and subjective. The measure of how content people are with the amount of their leisure time, for example, is subjective but has a large impact on quality of life.

The second area of agreement concerns the importance of focusing not just on the average but also on the distribution, in order to reflect the level of inequality among the population. Therefore, it is recommended to put more emphasis on the median rather than on the average, as well as focusing on distribution extremes to measure how different groups are faring. And while health-care indices should give more weight to the elderly, for example, education indices should be more geared toward young families.

The third agreement is to place more emphasis on results rather than inputs or output. In complete contrast to the current practice of focusing on how much of its budget the government allocates for any purpose, the nine key ministries want to switch to taking a practical no-nonsense approach – measuring only what is achieved, and not how much was invested.

But along with agreement, there is also a fundamental dispute among the nine teams concerning how many indicators are chosen. Each team is expected to come up with eight to 10 indices, potentially adding up to an unwieldy 90 indices that the government would need to follow. The general consensus is that this is too complex an undertaking for the government to effectively handle.

One solution, used in Canada, is to publish a unified quality-of-life index made up of sub-indices. The drawback is that some of the measured fields could tend to disappear in the overall picture. Also, choosing which sub-indices to include in the index and how to weigh them would be determined politically.

A compromise is gaining some headway - all 10 or so indices in each domain would be published, but just one or two of them defined as key indicators or headline indices. The package of nine to 18 key indicators would be what the government concerns itself with.

The government has also turned to the OECD for help in trying to determine the reciprocal effects between the various domains. For example, if the government decides to improve results on the educational indices, would this have any influence over indices dealing with income, civic engagement or satisfaction with the amount of leisure time? Would employment have an effect on health? These are very complex questions and reflect another presumptuous aspect of the process – interlocking responsibilities between ministries in certain areas, such that each one wouldn't necessarily be solely answerable for its own policies.

The ultimate goal is to design a measurable policy tool that the government can refer to in the decision-making process. Today, only Britain is the only other state trying to design a government decision-making support mechanism, but nothing like this has yet been actually implemented. Israel, therefore, could become a global pioneer.

Ofer Vaknin