You may not know it by name, but the X:Y problem is a concept that I’m sure you’re familiar with. When your best efforts don’t seem to solve your problems, you may be in X:Y territory.

A century ago, the development of the assembly line was underway, allowing the efficiency and cost-effectiveness of automobile production to increase dramatically.

The visionary concept spawned a quote famously attributed to Henry Ford: "If I had asked people what they wanted, they would have said faster horses."

In retrospect, it appears that they had missed the point. They thought that they wanted faster horses, but what they needed was a better transportation solution.

This is a perfect example of an X:Y problem. People were aiming for X, but the real solution was Y.

Sometimes what we target is not the best way to achieve our goal; a little forward thinking allows us to actually achieve the better outcome.

Last week the quarterly statistics around GDP growth were released. GDP is the standard measure of an economy’s health - the total value of goods and services created in the country. Strong GDP growth is seen as good, poor growth is seen as bad. This is the X in the X:Y problem, the modern equivalent of asking for a faster horse.

With GDP up 3.1%, the numbers were positive, but the measurement hid what we really care about.

Prices in general rose by 1.9%, and the population increased around 1.6%, so together this means that the average Australian's slice of GDP actually dropped by around half a percent in real terms.

Did those numbers mean anything to you? Is your life now 3.1% better?

The headline economic statistic obscures the real-world circumstances of everyday Australians; It doesn’t reflect our real values. When natural disasters strike, GDP booms as people spend on rebuilding their destroyed communities… Not exactly a good measurement of desired outcome then, and not a suitable target for directing policy.

We at the Science Party believe there are better ways to measure outcomes that reflect what we really all desire.

It has been said that the solution to X:Y problems is just asking “Y?” five times, and in this case after asking why only a few times, we would realise that we don’t really care about GDP, so long as we can all lead happy, rich, fulfilling lives. Alternative measures such as healthy lifespan, sustainable national income, or measures of equality could provide policymakers with much better targets to direct their decisions.

What do you think our headline target should be, and what other X:Y problems are clouding our view of the future?

About the Author:

Aaron Hammond is an engineer driven by curiosity and a belief in innovation and knowledge. He has been endorsed by the Science Party and nominated for the federal by-election for Perth, running on an platform to bring consistency and sensibility back to politics.

https://www.scienceparty.org.au/support_aaron_hammond

References:

[1] The Future of GDP - Credit Suisse:
http://publications.credit-suisse.com/index.cfm/publikationen-shop/research-institute/the-future-of-gdp-en/

[2] Measures of Consumer Price Inflation - RBA:
https://www.rba.gov.au/inflation/measures-cpi.html

[3] Australian Demographic Statistics, Sep 2017
http://www.abs.gov.au/AUSSTATS/[email protected]/mf/3101.0

[4] Key Economic Indicators Snapshot - RBA
https://www.rba.gov.au/snapshots/economy-indicators-snapshot/