The Deceitful Nature of

Socio-Economic
Indicators

Jacobo Schatan

Jacobo Schatan examines

social indicators used in
Chile in order to expose
what he sees as the highly
hypocritical nature of Gross
National
Product
as
a
measurement of growth.
He sketches a different set
of social indicators which he
suggests will truly reflect
and serve the advancement
of society.

Some basic premises

One of the greatest
challenges faced today by
social scientists is that of
demonstrating
how
deceitful
are:
(a)
the
western-imposed
socioeconomic
development
models, and (b) the tools
utilized
to
extol
these
models, namely the vast
array
of
statistical
indicators of economic and
social progress.
For
many
decades,
technical
conferences,
expert groups, academic
research ventures and other

instances have been trying

to improve the statistical
methods for collecting and
processing information, and
also to streamline concepts
and objectives in order to
achieve a higher degree of
accuracy
in
both
measurements
and
interpretation. However, in
spite of the impressive
technical advancement

Made in the elaboration of

such statistical indicators
no similar progress has
been made in the task of
truly
indicating,
in
the
sense of making known (1)
the veritable reality of
living
conditions
or
standards pertaining to vast
segments of the population
in different countries. Thus,
aggregate numerical signs
have come to blur analysis,
interpretation and follow-up
action
concerning
that
reality.
Gross National Product
(GNP) and other global
economic
and
social
indicators cannot, for sure,
give recognition to the
persistent impoverishment

and increasing deterioration

in living standards of vast
segments,
within
the
framework
of
marked
overall economic growth.
For many years, economists
of
different
schools
of
thought have maintained
that economic growth a
concept
they
wrongly
equated with the no less
ambiguous
one
of
development

would
automatically redress the
problems associated with
poverty, on the basis of the
fallacies of the trickle-down
theory.
Reality
has
shown,
however,
that
under
contemporary
social
schemes,
economic
and
technological advancement
have
been
usually
accompanied by increasing
poverty
and
human
suffering among growing
segments of the population.
Distribution of the material
fruits of such progress is
not at all equitable in most
societies. Moreover, the socalled economic progress
is also accompanied by
massive
destruction
of
natural resources.
Aggregate
indicators
of both economic growth
and social change do not
show, therefore, the true
evolution of the gap that
exists between standards of

living of different social

groups, nor do they account
for the continuous erosion
of the material base that
sustains
life
on
planet
earth.
Probably
there
is
nothing
conspiratorial
among statisticians of so
many institutions devoted
to the task of building and
processing indicators of all
kinds, when they let us
believe that their numbers
represent the true reality,
while knowing, or at least
perceiving, that such reality
is quite different. Maybe,
they are doing their best to
approach reality, if they
cannot get further it could
be due to the lack of funds,
to technical restrictions, or
simply
because
it
is
impossible to compress a
complex reality into the
strait
jacket of a single
ratio
or
a
group
of
numerical
rations.
Nevertheless, the fact is
that published results or
average indicators tend to
lend
themselves
to
manipulation,
which
will
show progress when there
is retrogression or positive
trends
when
they
are
negative. All this, with the
likely purpose, of giving
credence to socio-economicpolitical systems, that are
not as equitable, or as free
as they are purported to be.

We
examine
here
several
social
indicators
used in Chile, among the
many
covered
by
the
Central Bank of this country
in its publication Economic
and Social Indicators, 19601988. The analysis of the
highly hypocritical nature of
GNP indices refers to the
case of Chile, although in all
instances the observations
can be applied to any other
country
where
such
indicators are utilized, in a
largely aggregated form.
The conclusive part of this
paper, sketches a different
systems of building, social
indicators that may truly
serve the advancement of
society.

GNP: The art of deception

Perhaps
the
most
widely used indicator to
measure economic progress
and, so it is said, social
progress as well) is that
concerning the variations in
the Gross National Product
(GNP), in per capita or
global terms.
A society,
whose GNP grows, say, at a
rate of 6 to 10 percent a
year, during several years,
is considered to be a
society that progresses
on
a
sustainable
and
ostensible basis. Chile is a
nation
that
has
been

showing, very high growth

indices, for a number of
years: for 1977, `78, `79,
`80 and `81, for 1984, `86,
`87, `88 and 89. For ten
year rates have oscillated,
between
nearly
to
10
percept a year.
The only
major exceptions were 1982
and 1983 when the global
crisis provoked a serious
retrogression in absolute
terms.
Chile has been
presented as a model
that should be imitated by
other Latin American and
Third
World
countries.
However, recent information
provided by the National
Institute of Statistics, for
the period 1978-1988, show
that such growth was so
inequitable, that only those
families belonging to the
top
income
decile
significantly improved their
monthly
revenues,
the
following decile improved
somewhat
and
the
remaining 80 percent of the
population
stayed
practically as it was 10
years before. This means
that the results of all the
effort made by the Chilean
society as a whole during
those ten years benefited
almost
exclusively
the
upper 20 percent, which
appropriated 85 percent of
all the increment recorded
by the national income
during that period.

But there were some

curious results in the survey
of household incomes and
expenses conducted every
ten years, approximately?
Both
the
poorest
and
richest deciles augmented
their incomes by a similar
proportion of nearly 90
percent. However, whereas
for the lowest decile this
meant an absolute increase
of family income of about
five
thousand
pesos
a
month, for the richest decile
the increment was of 180
thousand pesos, that is, 36
times over the former. For
intermediate
deciles

second
to
sixth-the
increment was of not more
than two to three thousand
pesos a month, 1/60 th to
1/90th of that received by
the richest decile.
The
parallel increase between
rich and poor was strongly
hailed
by
the
Pinochet
government, which tried to
obtain
political
benefits
from
the
high
relative
improvement shown y the
poorest of the poor (who,
by the way, were the
beneficiaries of some adhoc
policies
geared
to
groups living in extreme
poverty,
particularly
in
relation
to
housing).
Nevertheless such a trick
did not achieve much, since
it became fairly obvious to
those
who
studied
the

figures more carefully that

income
concentration
during
tat
period
was
monstrous, to say the least.
Nevertheless such a trick
did not achieve much, since
it became fairly obvious to
those
who
studied
the
figures more carefully that
income
concentration
during that period was
monstrous, to say the least.
Furthermore,
such
concentration was only the
continuation and deepening
of a trend which had been
observed in previous years,
at least since 1974 when
the
military
government
started applying its new
economic
model.
The
situation of the poor was
critical enough in 1978, and
was to become much worse
in the following decade.
What do we see on the
two sides of the invisible
wall that separates the
Chileans who win and those
who
lose
in
this
development game? On
the side of those who win
we can observe a standard
of life that is similar to that
of the rich in the rich
nations, with degrees of
ostentation and waste that
boarder on intolerable. On
the other side we can
observe
all
kinds
of
deprivation and misery that
are also border, or go
beyond the intolerable. The

neo-liberal
model
of
development
is
characterized by the fact
that economic growth goes
hand
in
hand
with
increasing exclusion of vast
segments of the population.
The shift towards an export
economy, inserted in the
world economy, has meant
a
profound
change
in
production
methods.,
which, with the help of new
technologies,
including
robotics,
new
materials,
biotechnology, etc., have
resulted
in
a
reduced
participation
of
human
labour per unit of final
product.
This coupled to
the
continuing
highdemographic
growth
in
Chile
and
other
Latin
American nations
has in
turn, resulted in swelling
pockets of unemployment
and underemployment. At
the same time, due to the
adjustment
policies
fostered by the IMF and the
World Bank to deal with the
issue of Latin Americas
foreign debt during the
1980s, real salaries have
dramatically
decreased,
consumption
subsidies,
have
been
eliminated,
public tariffs have gone up,
state enterprises have been
privatized and public social
spending
has
been
drastically curtailed.
In
summary,
the
so-called

modernization
process
has
ultimately
produced
very rich people on the
extreme and very poor on
the other; the two of them
making heavy demands on
the ecosystem.
Such
development
process
has
not
only
widened the gap between
rich and poor, it has also
exacerbated
and
accelerated the pace of
material
waste
and
resource
destruction.
Premature obsolescence of
all kinds of products has
become
a
necessary
ingredient
for
modern
economic growth.
Goods
have to be replaced quickly,
so that new goods can be
produced and brought to
the
market.
The
superfluous nature of these
products lies in the fact that
not only was it unnecessary
to replace the goods as they
could still be utilized for
some additional time, but
also they were of a nonessential nature. It is well
known, on the other hand,
that productive processes in
general consume energy
and other resources, many
of which are non-renewable
and give rise to various
kinds of pollution.
We
can
assert,
therefore, that a substantial
part of what goes in and

comes out of the productive

processes is useless and
even
negative.
Nevertheless,
from
a
statistical point of view all
those artificial increments
to the national product are
counted positively.
No
deduction is allowed for the
destruction
of
basic
resources,
or
for
the
degradation of air, water
and
soils
caused
by
pollutant
productive
processes.
Most
significantly, the resulting
human suffering is finally
unaccounted.
On
the
contrary,
the
expenses
incurred
in
combating
pollution, or in alleviating
suffering,
are
actually
counted positively.
Absurd
human
behavior tends to augment
the GNP. Let us take, for
instance the case of food.
While many millions, are
starving in the Third World,
others, mainly, but not only,
in the First Word. Consume
in excess of what would be
necessary
for
their
biological
welfare
and
physical activities.
Such
excessive
food
intake
causes
a
number
of
illnesses that have to be
cured. Thus, not only land,
capital, human labour and
other resources have been
wasted in the production,
processing and distribution

of that excessive food, but

also many resources have
been
wasted
in
the
treatment of illnesses that
could have been avoided:
hospitals,
medicines,
pharmacies,
doctors,
nurses, and so on are used
to
cure
diabetes,
hypertension
and
other
vascular diseases, many of
which are a direct result of
food over-consumption. All
of these expenditures are
added to the GNP!
So, we are perfectly
right to deeply distrust the
GNP
and
other
global
economic indicators, since
they tend to hide what is
really happening in the
submerged
sections
of
human societies.
But our
distrust should not remain
confined
to
economic
indicators alone; as we shall
see in the following sections
our misgivings comprise a
good number of commonly
used social indicators.
We shall first deal with
some health indicators, and
subsequently
we
will
examine a few of the
indicators assembled by the
Central Bank of Chile under
the
heading
Well-being
indicators.
Health indicators, what do
they mean?
(i)

Life expectancy

This indicator is widely

used
to
monitor
improvements in standards
of
living.
Whether
measured at birth or at a
late stage in life, the larger
the number of years that an
average
individual
is
expected to live, the better
are suppose to be his/her
living conditions. The mere
fact that a person born
today in Chile is expected to
live 72 years is considered
to be a sufficient proof that
such person will be enjoying
a much better life than, say,
30 years ago, when life
expectancy in this county
was 58 years.
It is true that the
revolutionary advances in
medicine during the second
half of the century have
helped to prolong the life of
children and adults in a
dramatic fashion.
People
live
longer
because
antibiotics, antipolio, other
vaccines and a number of
other wonder drugs have
made it possible to cure or
keep
under
control
numerous
illnesses
that
used to be fatal. But the
question that immediately
arises is: are we sure that
those extra years are or
will be enjoyable years?
As with may other domains,
there is nothing in the
books that can assure us
that more is better.

This is the challenge faced

by
the
indicator
under
analysis.
Let us be clear on this
point.
We
are
not
questioning the desire of
human beings to live longer,
since it is inherently human
the
wish
to
attain
immortality. What we are
suggesting is that the life
expectancy index as such is
not an appropriate measure
of well-being, since it omits
differentiation
among
various population groups
and does not take into
account the quality of life
before and during those
extra years added by the
medical/pharmaceutical
advances.
Many texts have been
written about the miserable
conditions that characterize
old age even in richer
nations. Solitude, poverty,
and even physical abuse of
elders
by
their
own
children, are quite common.
Urban societies of today
have lost the traditions of
respect and care towards
the aged that characterized
the simpler, rural societies
of the past. On the other
hand, because legislation in
most
countries
forces
people to retire at about 65
years
of
age,
the
lengthening of life tend to
swell the number of inactive

citizen that are supported

by pension and medical
schemes, which are in turn
financed by contributions
made by a relatively smaller
active population.
Thus,
they are being increasingly
felt as a burden to the
younger
members
of
society. Of course there are
marked differences among
members of the elderly
generation,
stemming
mainly from their economic
situation. It is common to
see wealthy North American
octogenarians playing golf
or cruising the world seas.
But they constitute a tiny
minority;
for
the
vast
majority of elders the story
is usually the opposite,
even in the US or other rich
countries.
There is no doubt, a
direct link between wellbeing after 65 and the
previous working life.
If
you
were
poor
and
miserable at 15, 30 or 50,
living
in
a
slum,
malnourished with irregular
and low-paid employment,
etc, the chances are that
when you become 65 and
older you will be even more
miserable. We have to also
consider
the
opposite
trends in body and mental
health.
While
physical
health has on the average,
actually
improved,
as
reflected
in
the
life

expectancy index, the latter

has seriously deteriorated.
It is well documented that
nervous
and
mental
disorders
have
greatly
increased, in both rich and
poor societies, due to the
mounting stress caused by
cumulative
daily
shocks
suffered mostly by urban
inhabitants, in relation to
work(2)
(competitiveness,
job insecurity, regulations,
etc.),
to
transportation
(length of time, crowding,
abuse, noise, etc)(3) and
also to living conditions at
home (crowding, lack of
privacy,
noise,
lack
of
adequate sanitary facilities,
etc),
not
to
mention
violence and drug/alcohol
abuse. This is probably the
result of tensions existing
within
a
super
industrialized
society,
almost totally urban and
extremely
competitive,
although the phenomenon
is also being felt with great
intensity in many Third
World countries.
Such
an
indictor
should be disaggregated
into main age and income
segments, to be able to see
how
various
population
groups are faring in the
well being game.
We
might, perhaps, think of
devising
ill-being
subindicators, to qualify the

various
portions of
well-being

the