Working Paper: NBER ID: w16352
Authors: Charles I. Jones; Peter J. Klenow
Abstract: We propose a summary statistic for the economic well-being of people in a country. Our measure incorporates consumption, leisure, mortality, and inequality, first for a narrow set of countries using detailed micro data, and then more broadly using multi-country data sets. While welfare is highly correlated with GDP per capita, deviations are often large. Western Europe looks considerably closer to the U.S., emerging Asia has not caught up as much, and many developing countries are further behind. Each component we introduce plays a significant role in accounting for these differences, with mortality being most important.
Keywords: Welfare; GDP; Economic Well-being; Consumption; Leisure; Mortality; Inequality
JEL Codes: O10; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mortality rates (I12) | welfare (I38) |
| lower inequality (D63) | welfare (I38) |
| higher leisure (Z39) | welfare (I38) |
| rising life expectancy (J17) | welfare growth (I30) |
| welfare growth (I30) | income growth (O49) |