The curse of narrowly defined objectives

Teachers and doctors strongly resist the introduction of a bonus culture: not just because they resent measurement of performance and accountability for their activities – although they do, and with little justification – but because they oppose importing the culture of assembly lines. They fear an environment in which they would be encouraged to focus on narrowly quantifiable objectives at the expense of the underlying needs of clients. Even if many teachers and doctors are incompetent and lazy, many others are seriously committed to the organisations for which they work, the subjects and specialisations to which they are devoted, and to a broader sense of professional ethics: and it is only people like these who establish the kinds of schools and hospitals we want as parents or patients. In education and medicine, both employees and customers sense that the disadvantages of the systemic consequences of large personalised incentives on values in organisations are likely to outweigh the benefits of such incentives for individual motivation. John Kay, When a bonus culture is just a poor joke, 'Financial Times', 28 April

Sadly, perhaps, in our complex, highly aggregated societies, we might have to accept the targeting of quantifiable objectives, for all their faults. In the western world, as in the former centrally planned economies, indicators are for the most part, narrow, unsystematic and unsophisticated; they are seldom strongly correlated with what their designers actually want to achieve, and still less so with societal well-being. The key is to use broad indicators, with which the best teachers and doctors would have no quibble and could indeed, help design: universal literacy and numeracy, for example, or longevity, perhaps adjusted to take account of quality of life. Such, of course, is the Social Policy Bond principle.

Even when following that approach policymakers will need to be guided by the limitations inherent in quantifiable indicators. The policy implication would be that government could usefully concentrate on those policy areas where numbers are unequivocally helpful. It is generally at low levels of health, educational level, housing, income, caloric intake etc, that increases are strongly correlated with an individual’s welfare. Beyond basic levels, individuals’ ultimate objectives are for the most part inescapably subjective. They cannot be measured, nor can the societal counterpart of social welfare, and government should recognise this limitation. It can never know as much about people’s well-being as other people: Lord Kelvin’s remark, that 'everything exists in some quantity, and can therefore be measured' is, of course, nonsense. A better guiding principle is that attributed to Albert Einstein: ‘Not everything that counts can be counted, and not everything that can be counted counts.’