by Daniel Bell
Indicators of economic opportunity and social mobility. More than thirty years ago, in An American Dilemma, Gunnar Myrdal wrote: “We should ... have liked to present in our study a general index, year by year or at least decade by decade, as a quantitative expression of the movement of the entire system we are studying: the status of the Negro in America.... But the work of constructing and analyzing a general index of Negro status in America amounts to a major investigation in itself, and we must leave the matter as a proposal for later research.”41
Three decades later, we still have no “general index” of the status of the black in America. In a strict methodological sense, perhaps no “comprehensive indexes” are possible, but we can assemble specific indicators. Thus, where once it seemed impossible to conceive of a “value” figure for human assets, the creation in recent years of a “lifetime-earning-power index” gives us a measure to reflect the improvements in income associated with increased education, improvement in health, and reduction of discrimination. Data on social mobility, developed by sociologists, can tell us whether there is a genuine equality of opportunity in the United States and can identify the barriers (e.g. inadequate school opportunities) to that equality. Economists have a term, “opportunity costs,” which allows us to calculate not only direct costs but the gains forgone from the use of those resources if they had been employed elsewhere. “Social opportunity” costs may allow us to reckon the possible gains by the utilization of hitherto unused human resources and to weigh, in terms of social costs and social benefits, alternative social policies.
These proposals have an underlying assumption: that the society would be in a better position to appraise its achievements, its needs, and its shortcomings by being able to specify broad national goals. The definition of such goals has to be a continuing process in which a system of social accounts would serve as a tool to identify the greatest areas of needs.
The Tools of Planning
On January 20, 1968, the very last day of the Democratic administration, Wilbur Cohen, Secretary of Health, Education and Welfare, quietly released a document called Toward a Social Report. It was the first effort by any government to set up a set of social indicators for measuring the performance of the society in meeting social needs. Despite the awkward symbolism of making the report public in the waning hours of the Great Society, it is clear that the idea of a social report is one whose time is coming. No society in history has yet made a coherent and unified effort to assess those factors that, for instance, help or hinder the individual citizen in establishing a career commensurate with his abilities, or living a full and healthy life equal to his biological potential; an effort to define the levels of an adequate standard of living, and to suggest what a “decent” physical and social environment ought to include. The document Toward a Social Report is the first step in the effort to make that assessment.
Inevitably, the idea of a Social Report brings to mind the Economic Report and raises questions about parallels and differences. Each January, the Council of Economic Advisers produces its annual report, whose economic indicators chart growth, productivity, employment, and inflation, and whose accounting scheme measures the distribution of income and spending among government, firms, and private individuals in terms of investment and consumption. The economic report has become a necessary tool for public policy-making. But for social policy it is highly inadequate, and in some ways even deceptive. The economic report, though presenting data on the incidence of poverty, understandably says little about the social attitudes—apathy, alienation, or resentments—bred by deprivation. It cannot, in its self-limiting scope, deal with the quality or amenities of life, such as better health, the degree of congestion, the availability of social services, and the invasion of privacy. These gaps, and the need to find measures that could chart their extent, have prompted the effort to set up social indicators as a necessary complement of economic measures. Without such social indicators, policy-making becomes increasingly deficient in its ability to judge alternatives.
The movement to set up social indicators, though recent, has a long history as an idea and appears in the earliest reflections on the consequences of private economic activities, principally in the recognition of the divergence between the private costs borne by a firm or individual entrepreneur and the costs to others, or to the community, which such individuals generate but do not bear. Though the idea of social costs is implicit in the writings of the classical economists, it was the socialist writer Sismondi who first made the idea explicit, and formulated some remedies. In his Neiv Principles of Political Economy (1819), Sismondi argued that the true object of economics is man, not wealth. Observing the costs of unemployment that were borne by the community in the form of poorhouses and hospitals, he proposed that employers guarantee their workmen security against intermittent work, sickness, and destitution in old age. As Schumpe-ter remarks, in his History of Economic Analysis:
The more limited modern idea of the “guaranteed wage” may with justice be said to have been visualized by [Sismondi]. The originality of his suggestions stands out in one point: his idea was to turn the social costs of labor-saving improvements into business costs of employers.
It was not until a hundred years later, as I pointed out previously, when A. C. Pigou wrote his Economics of Welfare (1920), that the phenomenon of social costs was integrated into the system of neoclassical economics. Yet, except for the work of K. William Kapp, later formulations in welfare economics tended to play down the idea of social costs that Pigou had emphasized. This was due to the fact that the “new” welfare economics, taking up a different issue from Pigou, conceived of the welfare of the community in terms of the sum total of utilities of individuals, and denied even the possibility of a combined or a communal welfare function similar to the ordering principle of individual preferences. Kapp’s work, The Social Costs of Private Enterprise (1950) (the first of this scope that I know of), returned to the earlier examples of Pigou, and in comprehensive fashion sought to assess, in quantitative and money terms, the social costs of work (occupational injuries, disease, and the like), air pollution, water pollution, the depletion of natural resources and energy resources, erosion and deforestation, technological change, unemployment, and advertising. The book was written within the framework of “institutional” economics, and had a normative (i.e. political) intent; given the mood of the economists of the time about refined mathematical models, it was neglected. But the concept is clearly laid out, and the idea of measuring social costs (or what economists today call “externalities” and “diseconomies”) is an important dimension of the effort to set up social indicators.
A second, different source of the interest in social indicators goes back to the work of the sociologist William F. Ogburn and his desire to measure the rates of social change. Ogburn was intent on establishing statistical series that would improve the methods of extrapolation and correlation as means of predicting the future.42 But his broader interest was in social planning, and he realized that one needed an accurate “fix” on social trends in order to do any useful social planning. The benchmark work in this respect (neglected for nearly thirty-five years) was the volume Recent Social Trends (1933), consisting of twenty-nine chapters, many of them summarizing monographs of greater length, which covered every facet of American life.
The volume was an outgrowth of the President’s Research Committee on Social Trends, which had been established by President Hoover in 1929, under the chairmanship of Wesley Clair Mitchell, with Ogburn as director of research. The intention was to issue an annual report on social trends, but during the depression this effort was abandoned.43
What is remarkable about the volume Recent Social Trends is how well a number of the analyses stand up. The chapter on medicine, for example, dealt with the rise of specialized medical practice, the divergence between research and general practice, and the consequences of geographical concentration; if heeded, it would have gone ar to avert the pres
ent crisis in the delivery of health care. The chapter on metropolitan communities was an accurate foreshadowing of postwar suburban problems.
In the late 1930s, a governmental agency, the National Resources Planning Board, prompted by Louis Brownlow and Charles Mer-riam, undertook substantial monographic studies on technology, population, and the cities, which were intended as guides for the preparation of public policy. These were published, but were ignored because of World War II. None of these efforts was resumed after the war.
In one sense, it is surprising how belated the movement for social indicators has been. Despite the New Deal, and despite the apparent interest in social trends before World War II, they received scant attention afterward. One reason was the shift within the sociological profession itself. The kind of “institutional” sociology practiced by Ogburn at the University of Chicago, as well as “institutional economics,” was displaced by an interest in abstract theory; in sociology, notably, by “structure-funcrionalism” and its preoccupation with the problems of order and integration in society, rather than with change.
A second reason, perhaps, was the preoccupation in government with economic indicators and the development of macroeconomics. Though the ideas of national income, GNP, and economic accounting go back to the “political arithmetic” of Sir William Petty in the seventeenth century and the tableau économique of François Qiies-nay in the middle of the eighteenth century, their development in quantitative and aggregative form—by such men as J. R. Hicks and Simon Kuznets—came only in the 1930s, when economic theory began to shift its attention from the firm to the national economy. It was only in 1942 that the U.S. Department of Commerce, at the instigation of Robert R. Nathan, began publishing national-income data, whereas the concept of GNP was first broached by Franklin D. Roosevelt in his budget message in 1944.
Thus, during the late 1940s and the 1950s, the sociologists neglected social-trend analysis, while on the government level the chief interest was in the shaping of macroeconomic data and the formulation of the economic advisory process in the Council of Economic Advisers.
It was only in the Kennedy years and after, as concern with domestic social problems increased—poverty, race, health, environmental pollution, persistent unemployment (which some alarmists attributed to “automation”), housing, and the like—that interest in social measurement and social-trend analysis reawakened. Fconomists began to apply cost-benefit analysis to some of these problems and became aware of the immense difficulty in measuring social costs and social benefits. Political scientists and economists began to formulate Program Planning Budget Systems as a means of rationalizing diverse government programs and of weighing the effectiveness of alternative systems. Sociologists became interested in urban planning, education, race, and long-range forecasting for purposes of social planning. The new interest in social indicators arises from a merger of all of these concerns.
In 1966, John Gardner, the Secretary of Health, Education and Welfare, became sufficiently intrigued with the idea of social indicators to convince the President that the idea was worthwhile, and an official message from the President formally assigned this task to HEW.44 In the fall of 1966, a Panel on Social Indicators was set up, chaired by William Gorham, Assistant Secretary of HEW in charge of program evaluation, and myself. When Gorham left HEW in 1968 to become head of the new Urban Institute, he was replaced by Alice Rivlin, an economist from the Brookings Institution, as Assistant Secretary and co-chairman of the panel. The Deputy Assistant Secretary, Mancur Olson, was in charge of the creation of the social indicators. The panel, composed of forty-one social scientists and an equal number of government statisticians and technicians, prepared a large volume entitled “Draft Materials for a Social Report.” The major task of preparing the final document was the responsibility of Dr. Rivlin and Mancur Olson.
WHAT IS A SOCIAL INDICATOR?
Given the initial comparisons with the Economic Report, and the hope of sociologists that the development of social indicators would lead to a system of social accounts, it is important to stipulate the nature—and limits—of the document Toward a Social Report. The document was not trying to achieve some kind of definitive assessment of American society. For as the first pages of the introduction and the appendix on the deficiency of existing statistics indicate, no one is in a position to make any such assessment because we do not have the measures to do so. If anything, a close reading of the document would caution anybody against using the existing data to make any authoritative statements, hopeful or pessimestic, about “the state of American society.” Toward a Social Report is only a first step in developing measures that might allow us to do so.
The primary point is that the existing government data—which are all that are available to anybody—are organized primarily for administrative purposes, and not for analysis; from such data it is difficult to draw conclusions which are of normative value. Take the question of health. Given the increasing amounts of money we have been spending, is the country healthier or not? We do not know. No one knows. Our statistics tell us the amount of money spent on health care, how many doctors, nurses, and hospitals we have, but there is no measure of any result. Part of the difficulty is that our data collection is oriented to “inputs” and not to evaluation. The larger difficulty is a conceptual one, because there has been no agreement on how one measures health. Traditionally, the government has used a measure of “life-expectancy.” But on reflection it is clear that this is hardly adequate, because such a simple index does not take into account the number of sick days or days in bed that a person experiences. In fact, and paradoxically, as a larger and larger percentage of the population lives out its full years, the amount of sickness may be expected to increase, because old age has its inescapable infirmities; and the increase in the number of the aged has been a sizable factor in the rise of hospital costs. One of the things that the Panel on Social Indicators sought to do was to establish a more sophisticated index of health by estimating the number of “free-of-bed-disability” days a person has during the year. In creating, for the first time, such an index, two questions remain: How valid is it (and this is a technical question for the demographers and health scientists to argue about)? And if such an index is valid, what is the historical time period for meaningful comparisons? But so far no one can say with any precision what kind of correlation exists between various expenditures on health and the actual state of the nation’s health.
A second, and equally obvious, area is that of crime. Any literate person is aware or the monstrous deficiencies of the FBI crime “index.” For one thing, it does not “deflate” for changes in price (a $50 larceny of twenty years ago and a $50 larceny today are counted under the rubric of “major crimes,” even though a stolen item costing $50 today was worth $30 twenty years ago and therefore such thefts were not counted then: in effect an inflationary bias is built into the index, making comparison hopeless); nor does the FBI relate crime to age-specific rates (about 70 percent of all crimes are committed by the young, and if there are more young people in the population, as is the case today, the number of crimes will increase). Aside from such deficiencies, there is the most difficult fact of trying to make sense of the FBI “index”—it jumbles murder, rape, assault, burglary, larceny, car theft, and the like to produce a gross total that inevitably, because of the larger number of car thefts and such, will always tell us that there is more “crime” today than ever before. This tells us, in effect, almost nothing—and for the purpose of telling us exactly what is happening, it is misleading.
The problem of constructing a relevant crime index highlights the general problem of constructing social indicators. The chief virtue of the national income statistics, for example, is that they are aggregative. Over any period of time, the output of some goods increases whereas that of other goods decreases, but the national income account summarizes this diversity into a single number and tells us, on balance, whether an economy has grown or declined over time. I
t does so because there is a single linear measure—money—into which these changes can be aggregated, and the different economic items can be “weighted” by relative price. But how does one compare murders (which until recently were decreasing in the United States) with car thefts (which have been soaring)? How does one aggregate them into a single meaningful figure? What is needed is a common measure, and in this case the panel (utilizing the work of Marvin Wolfgang of the University of Pennsylvania) sought to do so by “weighting” each crime by the relative legal penalties associated with it, and also by the discernible opinion of the public on the relative heinousness of different crimes. (Interestingly, the most comprehensive opinion survey correlates .97 with the average length of prison sentences for the same crime.) Thus, it may be that rapes are given a weight of “30” and car thefts “2,” so that length of prison sentence—the penalty time, like money—becomes the linear basis for an aggregative index. If this new index is valid, then in time we might be able to say whether crime is actually increasing in the country or not, and by how much.
But not all questions can now be solved, even in this primitive fashion. In the 1968 yearbook of the Department of the Interior, Stewart Udall wrote: “Gross National Product is our Holy Grail ... but we have no environmental index, no census statistics to measure whether the country is more livable in from year to year.” Mr. Udall asks for a “tranquility index, a cleanliness index, a privacy index.” Such things are easy to ask for, but how does one define tranquility (is it simply the absence of noise, or is it “peace of mind”?) and how does one measure it? The social indicators panel did work out a “materials balance framework” to set up a combined air-pollution index (which aggregates five different kinds of air pollutants), a water-pollution index, and a measure of pollution by solid wastes. And again these become, for the first time, benchmarks available for the purpose of future comparisons. But we have no way of knowing whether air pollution is worse now than before, when cities burned coal in industrial plants and in the cellars of homes, while rail engines belched smoke into the skies. Similarly, on such questions as participation (is there an increase or decrease in memberships in voluntary associations?) and alienation (how does one compare the unrest of some affluent youth against the material satisfactions of blue-collar workers owning their own homes?) we simply do not have any easy answers to whether things are worse or better than before.
