REITH ZOOM DISCUSSION 3, On Measuring Value
26 February 2021

Topic: Measuring value

Key:

[z3nn] is identification numbers for topics (not yet included in Topics file.

[Other material in square brackets is material that did not occur in the actual discussion, but might have occurred to me while I was transcribing the conversation.]
Started recording part way through. From that point, I have sometimes edited this to give the full exact words spoken (usually indicated by "double quotes", and there are occasional timestamps. Before then, it is more notes.

Present: AB [host], CA, JC, RG, NO, TB

Contents of Discussion 3, On Measuring Value

--- On Measuring Value

# AB asked RG to explain about his caution on measuring value.
# RG: Paper Gunton et al. 2017 was a thought-piece, drew of Dooyeweerd's aspects critique of Ecosystem Services (ESS).
Used LACE: listen, affirm, critique and enrich (c.f. creation, fall, redemption!)
# Critiqued the ESS framework. Critiquing unthinking use of financial services perspectives for the natural world.
# 'Nature' doesn't exist as such; there is Creation which includes humans and others. The non-human Creation are not there to serve us. Looked at Psalm 104. Creatures not serving man.
# So we were critical about coverting them to money.
# [Affirm:] One of the good things about ESS: it recognises a wide plurality and diveristy of kinds of good things. e.g. purification of water, taking up of pollution by trees. Helps prevent simplistic valuations.
# [Critique:] Critical about turning them into money. Appreciate the many ways humans benefit. So we cannot just add them up as figures.
# Aspects of value to us:
# Started with biotic aspect: food, oxygen, etc.
# Psychical benefits: [lost it]
# Cognitive benefits: studying the Creation
# Lingual: [lost it]
# Formavive; innovation, culture
# Social: recreation together
# Economic: not just aaout money but making most of a place; about prioritising
# Jural: justice, duty to others, to grandchildren, etc
# Ethical: love the environment. Almost in reverse: we serve the ecosystem r.t. it serve us
# Pistic: idologoies.. Jesus Christ. Gift of creation.
# This was presented as a general framework that was left open
# We could put numbers on each, they have some validity, as long as recognise the different things.
# RG sent the paper.

# CA: written a number of things down. [CA then began going through them, and we occasionally would break off for discussion.]

--- On Indicators

# CA. 1. Sometimes, we tend to look at things in the wrong way
# Bible: we cannot have two masters, wealth or God. so we sometimes veer to two extremes. So: why don't we have both of them? e.g. instead of asking about GDP, ask 'how much of the wealth is used for a good purpose' [*** GHU]

# Sometimes we have to ...
[--- started recording ---]
# CA: [about one use of measuring] By measuring, I can see ***.
# These numbers help me see how I have improved, how far I have come. e.g. towards 2050 zero emissions; what are the measures I have taken. **
# Also we can look back: I have taken these measures [to change things]; am I improving? **
# They help me judge whether I am improving and what is the performance looking like? **

--- About Economic Activity Doing Good

# CA: e.g. Genuine progress indicators, which have components of GDP and human development inside. [z301] So: Can we come up with something that has an economic benefit and a social benefit.
# e.g. microcredit: helping poor people; they can do some work, but at same time giving them some kind of economic return.
# other example: The stakeholder versus shareholder theory. In past, talked about maximising shareholders wealth, so that they won't leave us, and remain our owners, so must make sure that share price doesn't drop. So the shareholders became the god and managers would do everything revolved around that. So everything they do was just focusing on profit.
# But now after financial crisis, because we focused on profit (lots companies disappeared because their focused on profit and doing creative accounting and they collapsed() [z302][sin]
# We've seen all this, so now saying, Let's look at things differently. Let's look at it from a stakeholder perspective.
# e.g. those living around the factory, affected by pollution or unhappy with water state. If we look after the stakeholders, if we look after the environment for what is important to people, then people are going to be happy.
# So I that company is ethical [z303]; so I will be a loyal customer.
# A win-win situation. Because you get the people who are supporting you while also helping environment and people.

# Also. Example: If a bank manager, what do customers want? if he says "70% want mortgage from us", now that that is wrong because it says he is focusing only on how many mortgages I can sell. Instead he could be saying "how many customers will have a home?" Now he is not motivated only by selling that mortgage. ***
# Because some people cannot afford it. So he might say, "Think again. Now let us look at this other house, smaller houses you can afford. It's not about me trying to sell you that big house and then make up something." [z304]

# CA: That goes back to measurement. Helping us how to look at achievement, not a retribution.
# Not just about governance and achievement, but about stewardship and improvement. [z305] (This is what JC was trying to talk about before: stewardship.)
# That is the goal setting, that performance management, that budget setting, it's basically all the tools we have been looking at to see how far we have come, where we can go, what else we need to do to improve.

# AB: CA seems to saying that measurement helps us see how far we've come and how far we've got to go.
# Before CA continues, does anyone want to respond?

--- On the Profit Motive

# NO: Agree with the first part. We tend to look at extremes (the binary nature of our brain).
# And I do think we need to create some index or value measurement that will measure good. (I'm working on one for financial statements that measure what an enterprise contributes.) [z306] ***GHU
# But don't want to THROW BABY OUT WITH BATHWATER.
# The PROFIT MOTIVE and markets themselves have produced immense amount of good. when you look at world health, and the innovation and the capabilities that we have at least in the developed communities, as opposed to what was the state 50 years.
# [motivation?]***
# NO: I think there's a risk that if we drift away from shareholder interest we'll end up with the same type of progress that we've had. [z307]

--- Fixing the Market

# NO: What we need is to FIX THE MARKET. Because that's the common touchpoint where all this comes together. *** [z308]
# Go back to book 'The Value of Everything' by Marianna Mazzucato. Companies that produce the good are one thing, and traders and people who are just dealing in financial securitization are another. And btw, what precipitated the 2008 financial crisis was all this collateralization etc. [Productive v Unproductive; Makers v Takers] [z309]
# So we need to fix the market and penalise those who are just trading and not producing real value, as part of the measurement process that we need to go through. [z310]
# NO: We need to be careful about what we let the market do. [z311]
# AB: c.f. CA: good [AB: Now I think that fixing the market is not about good but about essentials v useless, because "Productive" can do harm. 17 June 2021]

# NO: Compliment RG on what he went through.
# NO: thank publicly AB on summarising the 600 pages of Dasgupta. I found the summaries very helpful.

--- Changing the Market and Its Activity

# JC: NO and CA were both hitting on idea that market activity should change. [z312] The market is only people and people can readily change as we all know [Not sure whether that was sarcasm or not]
# That relegates to what you're worshiping.
# e.g. stockbrokers create more money flow, more capital flow, and suddenly you're able to extend the use of that capital, for further participants. And there's a little scene in a movie, where Paul Bettany plays a stockbroker and he says, to another junior stockbroker, "You are necessary. If people want to go around this world and buy houses and cars that they cannot afford, the stockbroker is necessary to put their finger on the weight to tip the scales so that more capital flows." And that's what it is. [z313]
# What we're trying to understand is that, to move the market, is to move capital flow.
# That's all it is, just capital flow. It's very complex because it's humanity.
# [Need for clarification and critique: JC seems to speak only of "capital flow". Not sure I understand what are the precise meaning-limits of this. Nor whether it is even appropriate to speak only of that.]

# [About what we might seek to discuss ***:] "I just wanted to share that, if we're trying to figure out how to SHEPHERD and STEWARD capital flow in a different way, that's going to be a little too much. [AB: I wonder why he said it's too much.] But to MEASURE something. to measure how people can move that capital flow in a different way could be something interesting."
# Lecture 3: Mark Carney talks about the R0. The R1, the replication of the virus - so is there a way there can be a measurement that can be attached to capital expenditures in certain areas that create an impact in the things we care about, the things that are 'good'. [z314]

# CA: You're not just talking about capital flow; you're doing a Benthamite calculus about what "we can state these things are good or bad". So, We're now trying to move capital flow and human values. (It is not an impossible task, it's a hopeful task.) [z315]
And frankly, captial flow is the only thing that actually measures those things at this point. [z316]
# That's what investment bankers do; they move human values. It's strange.

# AB: Why do you say capital is the only thing we can measure. [Actually AB had misunderstood. It's not that capital flow is the only thing we can measure but rather than capital flow is what does the measuring.]
# JC: [00:16:23]

--- How To Tell If Working

# JC: Because of these conversations, I asked an investment banker *** [z317]. "He told me that the only way you can tell if a thing works is to put money into it, to judge the impact of the good. Investment bankers do that. They put the capital into the necessary formations of stock certificate bonds or whatever is necessary for a corporation [ ! ] to move, they invest in certain activities so that certain activities go, so figuring out how to attach value to the flow of capital instead of trying to change market movement. He said, there's no way to really attach the impact outside of further capital creation and further capital value creation." *** [z318]

# [AB qn? Is JC saying that (the investment banker was saying that) money is the best, or the only, measure of good? I can see that maybe at least in principle money is able to express any kind of value, regardless of whether we are aware of that value or not, because overall money indicates people's actual (financially-enabled) behaviour and choices and even beliefs underlying those, rather than what people /say/ they do or what theoreticians believe they do. e.g. Share price expresses a lot of different things and contexts because (in theory at least) lots of different shareholders with different beliefs. Further discussion: However:

]

# [AB: But is the investment banker's view (a) correct, (b) comprehensive, i.e. the whole truth? While there might be some partial truth and even fundamental truth there, do not too many investment bankers actually allow selfishness, pride, greed and unconcern rule their investment decisions? And who says that the investment banker has a good view of what is worth putting investment into? e.g. Why have so few invested in LDNs?]

# [AB: is that really so; are there not other ways to see something is good?]

# JC: [So I was thinking] "Is there something that we could create that would be a "this impacted the ecology and economy in this way; this impacted the biodiversity of this thing in this way" Like a catchment."
# And the only thing I could think of is the R0. "Either the accuracy of the impact of this capital flow created this type of time-stamped reaction or time-stamped activity within a certain environment." We talked about that for a little bit.
# I just want to give my thoughts on what you all are saying.
# JC: [On the validity and value of certain discussions:] If we want to move capital flow and human values [00.17.53] I will love and serve and pray for all of you but I will be of no value, because I think that's an impossible task. [00.17.58]
# [==== Clarification: By "move capital flow", does JC mean "radically change our understanding of capital flow", or does he mean "move money around" or something else?]

# NO: "I don't necessarily agree. I agree with the investment banker in that what he is used to is the historical financial accounting that we do, which is transaction based [z319]*** but with the underlying assumption that when two parties get together and you buy a car for $10,000 at some point there's an agreement that that's the relative value of the car. "
# "But what we're trying to do now - and I think this is where finance has failed to come into the 21st century, is say "There is a value beyond cost" There is a value of what cost has created. "
# Example [of an alternative measure than money, e.g. the day ***]: factories: [00.19.05] "You'll see signs up saying e.g. '2000 days without a lost time injury'. Insurance companies will discount your premium based on the fact that you've had good safety procedures and no occupational injuries etc. Well, time without injury is something I can put a number to." [z320] ***
# "Or we could even say, 'A day - save so many days of the environment' and we agree that a day is worth, let's say, a day is worth $200, we can come to some standards of measurement."

[AB: Very interesting. Not just money, but number-of-days-without-injury is another way of measuring some kind of value. In this case, the biotic value, and also perhaps formative-juridical value in the sense of having procedures. Shame that NO then reverted back to money - but I think he was just fishing around in his mind for how to explain it in response to the investment banker. Can we have standards of measurement without /necessarily/ reverting to money (even though we can do so when we wish). Number-of-days is still quantitative measurement of an economic thing i.e. a resource in that a day is a resource in which to get work done that will indirectly contribute to the finances of the company. But it is not itself a financial resource. Very interesting. ] *** [z321]


# "And I think that's what we've got to try to find and get to if we want to put some value or some sense of worth into what the market is doing." *** [z322]
[00.20.05]

--- The Lack of Care in Markets

# "The market is become incredibly efficient in creating capacity, creating jobs [!], creating businesses. those that succeed, succeed, those that fail, fail, but it's become incredibly efficient. In fact, we try to issue paper now on anything that we can think of." [z323].
# "But what we are not measuring is the outcome *** - the outcome of those activities in human terms and in environmental terms. And that's what we've got to come to grips with. We have to have a new measurement. And I think that's something I certainly believe needs to happen. Or else we'll just continue to exploit everything." *** [z324]
[00.21.03]

--- On Governments

# CA continues.
# What the government should be doing.
# CA: government acts as gatekeeper, trying to match what they are making to what the nation needs. What people value. [z325]
# CA: On "The poor cannot afford good." e.g. If for ecological purposes I have to be vegan. But if I am poor being vegan is going to be expensive for me. So are Organic products, fair trade products and ethical fashion. If I want to support such things, I cannot afford to do so if I am poor. So when we talk about price, and supply meeting demand: when don't want to buy from Primark (cheap clothes cheap, factories in LDNs employing kids etc.) So, if poor, I have to buy their products. This is making up a demand and so there is a supply. *** [z326]

[AB: But what makes it absolutely imperative that I buy fashion?]

# CA: [similar point made a little later] If society says we must eat fruit and veg - it's cheaper to buy junk food, than the cost of fruit and veg.
# AB: That seems to link with what someone said about how the market works. Somehow bad things seem to be cheap. Why does system make the good expensive? Can the market be made to work the other way round so that good things can be cheaper. Or might it be that when people go to Primark and buy fast fashion, they don't actually need fast fashion, and it's just their choices? So what is it? *** [z327]

[AB: To do with people buying non-necessary things, rather than good e.g. better food. ]

[00.27.28]

# NO: "I think I mentioned the market needs to change,"
# (a) "because the market is the common control point." [z328] ***
# (b) "And I don't believe we're going to change people's values, because people's values change from day to day and week to week. 1000 or 500 years ago the Catholic Church tried to make sure everybody's values were the same. It didn't work."
# "But the market is where everything is finally adjudicated. And we do have evidence." e.g. In USA, we have taxes on tobacco and alcohol and that does affect the purchases, and the and use of cigarettes has to gone down. So these taxes have worked.
----- rg left.
[00.28.50]
# JC: Thank you for bringing that up CA. A "reinforcing mechanism with the lower cheaper goods and creating a higher demand for them. Mars candy is built on that model. Low-cost candy reinforces market pattern."
# But would CA be open to the idea of a government supplementing better foods. Instead of a penalisation or tax system, is anyone aware of a government tax structure that makes us go to e.g. Wholefoods (an organic healthy foods store in USA)? e.g. A health road system, where they supplement the roads and infrastructure, where they say "I want to make the nation's health an infrastructure *** [z329] that I invest in; I'll match that dollar for dollar the purchase of Wholefoods." Would you be up for that kind of model? *** [z330]
# CA: In UK we have free food fruit and veg initiative for kids in school. balanced diet. And now during pandemic we have packages.
# CA: If we really want not to put a pressure on the NHS because the drugs are going to cost more, we need to do something to educate people to eat more fruit and veg. You can subsidise the fruit and veg, can help the farmers. All this is going to help. e.g. a supermarkets was giving discounts for fruit and veg for people who are poor. [z331]
--- 5 pm

[00.32.30]
# NO: in USA we tried that, e.g. food stamp. Billions of dollars provided for the poor to buy food; but they load up their grocery carts with coke, pepsi, frozen pizzas, etc. and junk food. So in these disadvantaged areas: higher obesity and COPID, they don't eat right.
# NO: Reasons partly economic, partly because they don't have the mindset: convenience is more important to them than eating right [z332]
[how far is that true: for what proportion of people?]
[-- JC left]
# NO: is there a limit to what these programes can do to alleviate disadvantage? [z333]

--- The Spiritual Aspect

# AB: Almost a spiritual thing, of what people value. change heart of people e.g. welsh revival 1904: after giving themselves to Christ people didn't want to get drunk, commit crime, etc. because their hearts were changed. Without change in the heart neither system will be good, but change the heart of people and both systems will be good. [z334]
# NO: agree . Maybe it gets back to what CA was saying about creating an indicator of good or value, because society today consumer society, which emphasises pleasure, consuming, best car, convenience, women don't make meal because takes too much time. [z335]
# So, right track to spiritually change people. esp. bringing them to Christ would be marvellos. [z336]
[if people don't come to Christ, what point is there: much, because God intended the whole creation to work well together, and Christ's people ripple out]
# But how do we alter this consumer society. balance.
# AB: Jesus said, we don't need all these things [Jesus] [z337]
# CA: but if I want to be prudent and save my money, how do I do that? I cannot do both. Have to choose; cannot do both if I don't have much money. [z338]
# AB: Would it be good to discuss: How much is enough money? [z339]

--- Two Sides to Value

# AB: TB? Engineer.
# TB: Value in two places.
# one to the consumer, e.g. how I may buy organic etc. Value to me, consumer.
# Other is value to wholesale side the commercial value, the stock that firms hold. eg. even though we don't shop at Primark, they will still have stock, and the value is still going to be less price than good clothes. [z340] ***
# What metric of value to business. how we put a value on that. cost that puts to the business.
# e.g. reputation [z341]
[00.40.00]
# where does that metric comes from. This is where Dooyeweerd comes in: e.g. when I am looking at electromagnetic exposure, what is the value to the world of the pollution it might cause?
# Apply also to primark.
# AB: links with what RG was saying.
# TB: yes, decoupling economy from ...

# AB: What people think about what RG was saying? (about caution)

# NO: thought RG ideas were interesting. want to read the RG's paper.
# NO: agree we shouldn't put a value on nature itself. BECAUSE that can be abused quickly. *** [z342] depending on who sets the value.
# also there are places in world that have geographic resources that others don't. e.g. grassland in USA. *** [z343]
# So, value needs to be put on WHAT WE DO. whether individually or from a coproprate perspective. e.g. what is our BEHAVIOUR. [z344]
# this is what Mark Carney was talking about: the financial world has to be more responsible for the outcome of the activity it engenders. [z345]
# grappling with how it gets measured for that purpose. [z346]

--- On Technology and Humans

# NO: these are the KIND OF QUESTIONS we need to deal with at this time in history. bwcause we are experiencing an era of change and revolution that we've not experienced before. [z347] - question
# NO: not only 4th Industrial revol. with internet, but 5th Industrial revol. with biogenetics and AI. 4th and 5th Industrial revolutions. *** [z348]
# NO will send comments. ***
# NO: what is the human condition, what is the value we will place on this [4th, 5th Ind Rev?] as well as on environment?
[00.45.20]
# because we are reaching the point where we can now genetically alter ourselves. SCARY, BECAUSE it is messing with God's creation. *** [z349]
# NO: I'm not a catholic but I do like much of what they have in their doctrine of PERSONHOOD, that we are body. mind and soul integrated, and we cannot carve these into different pieces; that's a sin. e.g. abortion (don't know that I want to go that far).
# [Re humans:] A professor (with some religious affiliation) once said "we are not a kind of thing". He was professor of Phenomenology and Existentialism. When we look at things as an object, as a thing, we tend to depersonalise them. Humans are persons, not just a kind of thing, to be arb... [z350]
# AB: Dooyeweerd: humans not qualified by any aspect, in the way kinds of things are.
# NO: Christ said 'what does it profit a man and lose his soul'. We in God's image. Sounds arrogant, but it's not. We are God's creatures, but creatures of a different order. c.f. saying human life sacred. [z351]
[00.49.40]

# AB: ten minutes to go.
# AB: We've been through a lot.
# AB: As christians we have been producing stuff relevant to, contribute to, economics.
# TB: yes. But the specifics of how that translates. Is there a definitive publication we can point to? See what's been submitted there.

--- Some More Topics To Discuss

[see also where 'Questions' are mentioned earlier.]

# CA: has more to say; she will send them. AB asked CA to mention one or two.
# CA: asked QUESTIONS of myself and gave answers. [z352]
# CA: 1. One was How do we measure value:

  • measuring improvement
  • how do we show we are being valueable

  • how do we show that what we are delivering is of value.

  • Did we deliver benefits?

    # CA: 2. also looking at some of the surveys that have been done.
    # e.g. number of people who have benefited from healthcare services. Called 'Net Promoters Score'. [z353]
    # NO: heard of that
    # For senior managers. For them to measure whether the decisions they are making are aligned with the organisation's value; for this they use the Quarterly Pulse Survey. e.g. how happy are you at work, or e.g ~Have I access to everything I need to perform" or "I have racognition in my role", etc. these are all examples of what the QPS looks at. Used by senior management.
    [00.55.36]

    # CA: 3. Also, Values: we cannot measure them, because some are matters of the heart. But we can measure them via OUTCOMES. e.g. loyalty: number of years people have been in service. [c.f. NO outcomes]
    # "Latent construct", a construct difficult to measure, but we can come up with proxies to measure them. e.g. CSR, how do you measure that. e.g. the company is socially conscious, it values the environment, it is not only into profit, has a fair attitude towards competition. We have values for likability, competence, etc. customer loyalty, etc. based on proxies.
    # If we can come up with these, we can come up with core virtuous values. then align them to actions. Come up with "Behavioural standards and coach" then we can have increased ethical behaviour.
    # NO: add one comment. think that's great. this stuff is actually being used in commercial world.
    # NO: BUT what's missing is a universal standard [z354]. the reason why finance works is that we have a dollar etc. that is the universal measurement point. So what we've got to find on the other side of equation, is a universal measurement point. e.g. an hour or day, some increment of time. if we found a standard and put them all on one hour or day. TB: one potato. MO: then that begins to allow comparability between one institution and another. [z355] ***
    # NO: I'm trying to work on those new financial values.

    # CA: e.g. ROI. NO: financial. CA: yes, but e.g. I am government, and I want to reduce obesity so I can put investment into fruit and veg for kids, and maybe I use subsidy to farmers. so investment to come up with outcome. So I want to benchmark this. to see if people got better or wrose. If worse, my ROI is not working for me. *** [z356]
    # TB: and that would have to be wholesale. to see whether things have gone up.

    # NO: so what's important about this is that the measurement we use in what's called an index. Unfortunately, we use dollars, which is a number. profits, loss, assets, liabilities. but in medicine we use longitudinal measurements. populations when we want to see improvement, we look longitudinally: we can measure the index at two points and see if IMPROVED. [z357]
    # so the values we construct have to use indexes. so we need to look at an index of health. [z358]
    [01.03.49]
    # CA: or we can look at investment last and this year, and see how we progressed. NO: e.g. looking at the population index.
    # NO: BTW the UK gove does lot better on this. looks at outcome.

    # AB: OUTCOMES mentioned several times.
    # CA: are we meeting our commitments.

    # AB: Ending the meeting. Thank you all.
    # I feel there's a gap, a bunch of issues we have not discussed.

    # [We did not discuss when not to measure]

    # [AB: but why do we want to see that? What's the meaningfulness of doing so?]

    # TB: Christian Academic Network.
    # AB: To put link round to whole group.

    # TB: all comes back to finding a philosophical line that gives a meaning to e.g. metrics.
    # NO: Closed in prayer. About love and wisdom. And grace.

    REFERENCES

    Mazzucato M. 2020. The Value of Everything. See Comments on Mazzucato.

    Last Updated: 47-18 June 2021 some corrections made, ref given. 1 July 2021 added label days.as.measure. 31 August 2021 contents.