Measuring Well-being and Societal Progress
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Latest revision as of 08:54, 13 December 2011
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Abstract
For many years, using a monetary measure like GDP per capita as a proxy for the population’s well-being made much sense, at least for developed countries. GDP per capita provides an accurate measure of a country’s capacity to deal with the material needs of its residents. And so long as the basic necessities of life remain scarce, additions to GDP per capita can be expected to equate closely with improvements in meeting the population’s basic needs, and hence in greater well-being.
The consensus on the use of GDP per capita as a good proxy measure of well-being is, however, becoming less obvious also for economists, as the more developed societies move from a situation of scarcity to a situation of plenty. The intuitive notion that, once a certain level of material needs has been met, further increments in economic growth will not yield the same improvements in the well-being of the citizens is backed up by numerous studies that indicate that this divergence between added income and added well-being holds true both within and across societies. At the same time, concerns have emerged on how economic growth led in many countries to environmental depletion, an element that is not included at all in GDP.
Several studies have been published over the last two decades on alternative measures of well-being/ quality of life/sustainable development/ societal progress, all terms closely related to each other. Academic researchers, official statisticians and international organisations have proposed alternative measures, which can be classified according to different criteria. A consensus has not emerged yet on the best way to go, but with the “Istanbul Declaration” – signed in June 2007, at the end of the II OECD World Forum on “Statistics, Knowledge and Policy” by the European Commission, the OECD, the Organisation of the Islamic Conference, the United Nations, the United Nations development Programme and the World Bank – one can say that the need to go “beyond GDP” is now fully recognised at political level.
This paper presents a synthetic review of different approaches to the measurement of well-being. The review does not quote all initiatives and proposals, but provides an overview of what alternative approaches propose and some empirical evidence, as well as some information about research projects currently underway in the international statistical community. The first part of this paper considers four approaches to measuring well-being, especially looking at the social side of it.1 First, it presents evidence on the importance for well-being of social indicators and on the extent to which they are correlated with GDP per capita. Second, it reviews monetary measures of economic resources derived from national accounts. Third, it looks at ways in which these monetary measures can be adjusted to take into account other factors that influence well-being, in particular leisure time, household size and aversion to inequality. Finally, it considers subjective measures of happiness and life satisfaction.
The second part of the paper deals with more recent initiatives undertaken at international level to measure sustainable development, especially to incorporate environmental concerns and phenomena. Finally, the third part describes recent OECD initiatives: the main conclusions of the recent Istanbul Forum and the content of the Global Project launched by the OECD to measure the “Progress of Societies”.
Link to full text
Measuring Well-being and Societal Progress
