Why Are We Not Making More Progress on the Sustainable Development Goals?

During this event, devoted to asking big questions, I would like to offer a reflection from my perspective as an economist. As you probably know, economics is more about practical issues, so this is a nice challenge for me. I will also tell you something about economics as a discipline. After all, we represent various academic disciplines and wish to learn from one another. As for introducing you into economics, this (almost) always entails making a distinction between preferences and constraints. Whereas preferences are ‘what people want’, constraints are ‘what they have to deal with’. For instance, you may wish to do otherwise, but you can spend a euro only once. In addition, economists usually presume that decision makers act according what is in their best interest and that there is some kind of equilibrium when people interact with one another. At such juncture, we argue that a market is in equilibrium.

In addition, economists like to think in terms of outcomes. For example, we are interested in how much everyone consumes. This, taken in itself, is a quantity that can easily be measured, which is useful when it comes to documenting what is happening in the economy. We are much less inclined to think about the processes that get us there, and here lies a point of interest, or even of questioning them. I think it is actually something economists should think about more, because how we feel about the world in fact often depends on the processes and experiences that brought us where we are. Such experiences often fall outside of the scope of our models and cannot be measured easily, but the point Alkeline van Lenning made earlier indicates well that they should not be neglected. One might have little in terms of economic or monetary value, but nevertheless have a lot in terms of happiness. This introduces another type of value-discourse: what is important is how we treat one another when we make decisions, and how we live our lives, not just how much we consume. To put it differently, the classic focus in economics might benefit from broadening.

Another defining characteristic is that economists like to think about how to make the pie bigger. At the same time, we tend to stay away from the question how the pie should be divided. As a matter of fact, attention for morality is an element lacking in most economic theories. We seem to be very good at always finding a way around it. This is not entirely disconnected from the reflection on what economists are. Sometimes they are represented as scientists, on other occasions they appear as engineers, and at times they are seen as plumbers, as Huei-Chun Su (Oxford University) and David Colander (Middlebury University) recently wrote in the Journal of the History of Economic Thought.

Such distinctions prove to be quite useful as a way to describe this particular academic craft. Economists are scientists, as they provide a general framework to think about all sorts of things. They are also engineers, in the sense that they apply a general and broad framework to particular situations. In the end, economists can rightfully be called plumbers. They go into detail and solve small, well-defined problems, and design a certain policy or implement a specific mechanism.

So much for the general picture. As I have said, economists tend to stay away from the big questions. One reason is that many of these big questions, such as the meaning of life or morality, lie outside their area of expertise. Maybe these questions are indeed too big for us. Instead, we like to think about more concrete questions such as: what makes people happy? What we like about this is that it is a well-defined question, which can be answered using data. Another way to put this is to say that economists like to keep it simple.

Is this a problem? When I received the invitation for this event the organizers alluded to the Sustainable Development Goals as a reference point. That is interesting, as we do not look at them every day, I believe economists in fact have a lot to say about these global goals for our common future. Take number one, ‘No Poverty’, for instance, or perhaps number five, on ‘Gender Equality’. A huge amount of research exists on both these topics, in particular on how exactly we can make progress. This is a valuable evolution. It is good news that economics can in fact contribute to such aims by showing what works and what does not, and economists feel comfortable doing that. For instance, there is a large portion of research that explain viable possibilities to have more money and resources entering countries in need, so to help them develop themselves and decrease the degree of poverty.

In fact, looking more closely at the seventeen global goals from my perspective as an economist, it is altogether quite clear ‘how’ they can be realized, which leads me to the bigger question I would like to put forward: When research is available and options are mapped and known, ‘why’ are we not making more progress?

Might there be some inconvenient truth that keeps us from making progress? Perhaps it is so difficult and the huge work needed to take significant steps forwards stalls, because it requires us to divide the pie differently? Mindful of Alkeline van Lenning’s reference to the ‘colonization of the future’ we may need to consider giving more to future generations, giving more to other people around us, and with the eye-opener of a planetary gaze, perhaps give more to other parts of the world? This raises further questions: maybe people are unwilling to agree to that? Could it be that we agree on the goals themselves, but simply cannot agree on who should pay for them?

Striking examples of this contradictive attitude are seen when young people say that they are firmly against child labor, yet they buy their goods at cheap market retailers like Primark and H&M. The same unease can be felt when we notice that many of us will state that they care about the environment, but nevertheless fly to our holiday destinations. The inconvenience in these truths is hard to deny.

So, might there be, in the discourse of my field of scholarship, a discrepancy between what economists call ‘stated preferences’ on the one hand and ‘revealed preferences’ on the other? When people are asked what they find we ought to do, they will provide with all kinds of great answers. These are stated preferences. But once they have to pay for it, somehow the answers and behaviors change. That is what we call revealed preferences. Personally, I struggle with this gap, and as economists we are inclined to contribute to examining the question by asking everyone how much it would be worth to them, in monetary value, in euros, to make progress on these goals. Imagine we do that, and imagine a majority of people indicating that, while they find achieving the global goals important, others should have to pay for it. The big question remaining then is: what should we do? Finding an answer to that seems crucial.