Saturday, 8 September 2018

Problems with the "Living Standards Framework"

In the latest issue of Insights from the New Zealand Initiative Matt Burgess writes on the problems he's been having with the "new Living Standards Framework upgrade for Siri, based on work by the experts in the New Zealand Treasury". He writes,
In fact, the new Siri was quite limited. Throughout its years of development, managers had asked that the geniuses writing the code include some way to understand trade-offs between the five living standards objectives. In the end it was decided that “opportunity cost” was simply an intellectual concept, had no practical use, and attempting to include it could break the whole application.

And anyway, hardly anybody in the building had even heard of opportunity cost – how important could it be? – and so the application shipped without it.
This gets at one of the two basic questions about Treasury's "Living Standards Framework" I've had for some time now. Just how do they plan to trade-off one dimension in the framework against another? The second question is, Given that all the dimensions seem positively correlated with economic growth, what the point? Why not just concentrate on economic growth?

Maybe future upgrades to Siri will come with answers to these questions. We can hope.

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