The published version of Jones and Klenow paper is out:
Beyond GDP? Welfare across Countries and
Time by Charles I. Jones and 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 datasets. While
welfare is highly correlated with GDP per capita, deviations are often large.
Western Europe looks considerably closer to the United States, 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.
Non-Technical Summary:
“The two economists
try to move beyond GDP and build a measure of economic welfare that uses data
on consumption, leisure, any inequality evident in those two variables, and
life expectancy in a country….
The results end up
being quite interesting. While there is a very strong correlation between the
two authors’ measure of welfare and GDP per person, comparisons between
countries are different than if we used GDP per person. If policymakers were to
compare the United States to France by average consumption, for instance, then
France’s living standard is only 60 percent of the U.S. level. But using a
measure that includes France’s lower inequality, lower mortality rate, and more
leisure, France’s welfare-based living standard is about 92 percent of the U.S.
level, with inequality, mortality, and leisure all boosting the relative
standard equally.”Related:
The debate surrounding the usefulness of GDP as a measure of economic well-being:
http://www.pbs.org/newshour/making-sense/column-gdp-useful-measurement-doesnt-show-whole-picture/
http://www.pbs.org/newshour/making-sense/column-gdp-useful-measurement-doesnt-show-whole-picture/