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Measuring and Promoting Wellbeing How Important Is Economic Growth? Essays in Honour of Ian Castles AO and a Selection of Castles’ Papers

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Measuring and Promoting Wellbeing How Important Is Economic Growth? Essays in Honour of Ian Castles AO and a Selection of Castles’ Papers Measuring and Promoting Wellbeing How Important is Economic Growth? Essays in honour of Ian Castles AO and a selection of Castles’ papers Measuring and Promoting Wellbeing How Important is Economic Growth? Essays in honour of Ian Castles AO and a selection of Castles’ papers Edited by Andrew Podger and Dennis Trewin for the Academy of Social Sciences in Australia. Published by ANU Press The Australian National University Canberra ACT 0200, Australia Email: [email protected] This title is also available online at http://press.anu.edu.au National Library of Australia Cataloguing-in-Publication entry Author: Podger, A. S. (Andrew Stuart), author. Title Measuring and promoting wellbeing : how important is economic growth? : essays in honour of Ian Castles AO and a selection of Castle’s papers / Andrew Podger and Dennis Trewin. ISBN: 9781925021318 (paperback) 9781925021325 (ebook) Series: Australia and New Zealand School of Government monograph. Subjects: Castles, Ian. Festschriften--Australia. Economic development--Social aspects. Economic development--Sociological aspects. Quality of life--Economic aspects. Well-being--Economic aspects. Other Authors/Contributors: Trewin, D. J. (Dennis John), 1946- author. Dewey Number: 306.3 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of the publisher. Cover design by Nic Welbourn and layout by ANU Press Printed by Griffin Press This edition © 2014 ANU Press Contents Preface . ix Andrew Podger and Dennis Trewin Contributors . xi 1 . Economic Growth, Wellbeing and Protecting the Future: An Overview of the Castles Symposium . 1 Andrew Podger, Dennis Trewin, William Gort Part One: The Role of Economics in Defining and Promoting Wellbeing 2 . Economic Growth and Wellbeing: Ian Castles’ Contribution . 21 Michael Keating 3 . Ian Castles: Scholar as Truth Teller . 29 William Coleman 4 . Economics and Anti-Economics . 39 Ian Castles 5 . Economic Growth: Is it Worth Having? . 107 Ian Castles and Treasury Part Two: Measuring Real Income and Wellbeing 6 . Measuring Progress: The International Context . 163 Brian Pink, Sue Taylor and Hannah Wetzler 7 . The Four Approaches to Measuring Wellbeing . 191 John Hawkins 8 . The Need for Wellbeing Measurement in Context . 209 David Gruen and Duncan Spender 9 . The Wellbeing of the Australian People: Comments on the Treasury’s Framework . 223 Jonathan Pincus 10 . Subjective Wellbeing and the Mismeasure of Progress . 243 Richard Eckersley 11 . Measuring Wealth and Welfare: Why HDI and GPI Fail . 253 Ian Castles 12 . Measuring Economic Progress: From Political Arithmetick to Social Accounts . 271 Ian Castles 13 . The Mismeasure of Nations: A Review Essay on the Human Development Report 1998 . 281 Ian Castles 14 . Measuring Economic Progress . 297 Ian Castles 15 . Reporting on Human Development: Lies, Damned Lies and Statistics . 341 Ian Castles 16 . International Comparisons of GDP: Issues of Theory and Practice . 369 Ian Castles and David Henderson Part Three: Measuring Inequality 17 . What Can We Learn from International Evidence on Trends in Income Distribution? . 399 Henry Ergas 18 . Changes in Inequality in Australia and the Redistributional Impacts of Taxes and Government Benefits . 423 J Rob Bray 19 . What Difference Does Government Make? Measuring Redistribution in a Comparative Perspective . 477 Peter Whiteford 20 . Money Income Distribution and Redistribution in Australia, Sweden and the United States 1984 . 517 Ian Castles 21 . Living Standards in Sydney and Japanese Cities: A Comparison . 577 Ian Castles Part Four: Climate Change and Limits to Growth 22 . Climate Change and Related Issues: Ian Castles’ Contributions in Perspective . 609 David Henderson 23 . Addressing Wellbeing in the Long-Term: a Review of Intergenerational Equity and Discount Rates in Climate Change Analysis . 629 Mark Harrison 24 . Limits to Growth … Again . 663 Jeff Bennett 25 . Scientists, Statisticians and the Prophets of Doom . 673 Ian Castles 26. Global Warming and the ‘Scientific Consensus’ 1939–2001 683 Ian Castles 27. Ian Castles and the IPCC – Selected Letters . 693 28 . The Stern Review: A Dual Critique . 721 Part I: The Science Robert M Carter, CR de Freitas, Indur M Goklany, David Holland and Richard S Lindzen Part II: Economics Aspects Ian Byatt, Ian Castles, Indur M Goklany, David Henderson, Nigel Lawson, Ross McKitrick, Julian Morris, Alan Peacock, Colin Robinson and Robert Skidelsky Preface Andrew Podger and Dennis Trewin The underlying theme of the symposium held by the Academy of Social Sciences in Australia (ASSA) and the ANU Crawford School of Public Policy on 21/22 November 2012 was whether economic growth was worth having. Ian Castles argued throughout his illustrious career that economic growth should be an outcome of good policy not a policy objective in its own right. A second theme was the role that broader wellbeing indicators play in informing and shaping public policy. The event brought together a number of distinguished former public servants, politicians and academics as well as current policy advisers including departmental officials from Treasury and the ABS and several eminent Australian economists and other social scientists. The objective was to review contemporary developments in measuring and promoting economic growth and society wellbeing, and the role of economic growth, whilst reflecting upon the work in these fields by Ian Castles AO. This symposium was held in memory of Ian Castles, who passed away in 2010. As a long-time senior member of the public service, including as Secretary of the Department of Finance, Australian Statistician and Under Secretary in the Department of Prime Minister and Cabinet, and subsequently as an academic at ANU and Deputy President of ASSA, Ian dedicated much of his professional career to pursuing a rigorous appraisal of measures and drivers of economic growth and wellbeing. He was also an important advocate for the social sciences, particularly economics and official statistics. Despite the constraints of public service, Ian’s contributions over 40 years include an impressive array of fine writings and publications available to the public, a selection of which are included in this collection and were provided as background to the symposium. An overview of Ian’s work is provided in Michael Keating’s chapter in this book, a speech he gave at the opening dinner. The context of the symposium and this book is the more recent developments both in Australia and overseas in the measurement of wellbeing and the use of such measures in public policy, and also the renewed debates about ‘sustainability’ and whether continued economic growth might present unacceptable social and environmental costs for future generations. To facilitate careful examination of these developments and debates, the symposium and this book explore in some detail three dimensions of the issues involved: ix Measuring and Promoting Wellbeing: How Important is Economic Growth? • measuring real income and wellbeing; • measuring inequality; and • the possibility of limits to growth, particularly because of climate change, if the wellbeing of future generations is to be protected. Before coming to these matters, however, the book commences with an overview of the symposium, followed by some broader reflections on the role of economics in defining and promoting wellbeing, including Mike Keating’s appreciation of the contributions made by Ian Castles. We have included here two of Ian Castles’ most significant contributions not well known beyond close colleagues or not known to be his work. The first, Economics and Anti-Economics, was a paper he presented in 1984 to an ANZAAS conference but never published. The second, Economic Growth: Is it Worth Having?, was published as Treasury Economic Paper No 2 in 1973 without attribution to Castles, but known to have been written by a small team Castles led at the time. Central to both papers was Ian’s conviction that economics as part of the social sciences can and should be used to improve the wellbeing of people however wellbeing is defined by individuals and collective public policy. While firmly supporting wider concepts of wellbeing, there was almost unanimous agreement among the symposium participants that economic growth is worth having as it is closely linked to improvements in most other aspects of wellbeing and provides opportunities for further action to improve society wellbeing. We hope this book will promote better understanding of the concepts and measurement of economic growth and wellbeing, support further improvements to the contribution of the social sciences to wellbeing in its broadest sense, and encourage further research. Andrew Podger Dennis Trewin (Editors) x Contributors Jeff Bennett, FASSA, is Professor in the Crawford School of Public Policy at The Australian National University. He is also a Distinguished Fellow of the Australian Agricultural and Resource Economics Society. Professor Bennett has published widely in the economics of environmental, natural resource and agricultural issues. In particular his research focuses on the estimation of non- marketed environmental values for policy analysis and the role of the private sector in the provision of environmental management services. He has a PhD from The Australian National University. Rob Bray is a research fellow in the Social Policy, Evaluation, Analysis
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