International inequality in subjective well‐being: An exploration with the Gallup World Poll

In this paper we compute inequality measures over the distribution of a subjective well‐being variable constructed from a life satisfaction question included in the Gallup World Poll in almost all countries in the world. We argue that inequality in subjective well‐being may be a better proxy for the degree of unfairness in a society than income inequality. We find evidence that inequality in subjective well‐being has an inverse‐U relationship with per capita GDP , but it is monotonically decreasing with respect to mean subjective well‐being. We argue that this difference might be associated to inequality aversion in the space of utility.     

The OECD Better Life Initiative: How's Life? and the Measurement of Well‐Being

This paper presents the framework used by the OECD for defining and measuring well‐being, developed as part of the OECD Better Life Initiative launched in 2011. This framework measures well‐being by considering 11 dimensions covering both current material conditions and quality of life, while also recognizing the importance of taking account the sustainability of well‐being in the future. This framework has been populated with indicators for each dimension, whose selection has relied on international standards on measurement and was made in consultation with experts and National Statistical Offices of OECD countries. The paper also discusses the pros and cons of various approaches for presenting and disseminating information on multidimensional well‐being to different audiences—including the OECD Better Life Index, an interactive web tool. The paper concludes by illustrating the progress made in developing measures of well‐being and outlines the statistical agenda ahead to improve existing indicators and develop new ones.     

HOW HAS THE CRISIS OF 2008–09 AFFECTED SUBJECTIVE WELL‐BEING? EVIDENCE FROM 25 OECD COUNTRIES

This paper uses life satisfaction data of almost 140,000 individuals in 25 OECD countries to study how changes in the rates of GDP growth, unemployment, and inflation during the macroeconomic crisis of 2008–09 have affected subjective well‐being. The relative contributions of the three macroeconomic variables to individuals’ life satisfaction are used to assess how each country performed on balance during the crisis. This approach follows a recent trend of using subjective well‐being data for monitoring economic performance and for policy appraisal. We find that in the countries most strongly affected by the crisis, the effects on an average citizen's well‐being may be of a similar magnitude as the effects of the most serious personal life events. The main driver of these effects is the drop in GDP, whose impact is aggravated by the increase of unemployment. Though the inflation rate went down in several of the countries, the effect was too weak to significantly reduce the negative effect of the changes in GDP and unemployment. The results show that GDP fluctuations are important drivers of subjective well‐being.     

Viewpoint: Measuring and understanding subjective well‐being

Abstract Increasing attention is being paid in academic, policy, and public arenas to subjective measures of well‐being. This promising trend represents a shift towards measuring positive outcomes in psychology and greater realism in the study of economic behaviour. We describe the main measures of subjective well‐being (SWB) and provide examples of policy‐relevant research findings, including new accountings of the differences in individual‐level SWB assessments around the world and across Canada. These suggest a consistent pattern of life circumstances linked to SWB and highlight the importance of social factors whose role has otherwise been hard to quantify in income‐equivalent terms.     

Accounting for Sustainable Development over the Long‐Run: Lessons from Germany

We construct long‐run sustainability indicators based on changes in Comprehensive Wealth – which we refer to as Genuine Savings (GS) – for Germany over the period 1850–2000. We find that German sustainability indicators are positive for the most part, although they are negative during and after the two World Wars and also the Great Depression. We also test the relationship between these wealth changes and a number of measures of well‐being over the long‐run: changes in consumption as well as changes in average height and infant mortality rates. We find a positive relationship between GS and our well‐being indicators over different time horizons, however, the relationship breaks down during WWII. We also test if the GS/Comprehensive Wealth framework is able to cope with massive disinvestment at the end of the Second World War due to war‐related destructions and dismantlement. We find that negative rates of GS were by and large avoided due to the accumulation of technology and growth‐friendly institutions. We demonstrate the importance of broader measures of capital, including measures of technological progress, and its role in the process of economic development; and the limits of conventional measures of investment to understand why future German consumption did not collapse.     

Natural resource accounting for Indian states — Illustrating the case of forest resources

Our main objective is to set out and apply a SEEA-based methodology to reflect the true value of forest resources in India's national and state accounts. We establish that a “top-down” approach using available national databases is both feasible and desirable from a policy perspective. In this paper, we address four components of value creation in forests: timber production, carbon storage, fuelwood usage, and the harvesting of non-timber forest products. The results of our analysis suggest that prevailing measures of national income in India underestimate the contribution of forests to income. The income accounts of the Northeastern states in particular are significantly understated by these traditional (GDP/GSDP) measures. We are also able to identify some states which performed poorly in the context of our sustainability framework, reflecting natural capital losses due to degradation and deforestation. Our results highlight the need to integrate natural resource accounting into the national accounting framework in order to generate appropriate signals for sustainable forest management and for the conservation of forest resources which are widely used by the poor in India, as well as being significant stores of national wealth.     

MEASURING NON‐ECONOMIC WELL‐BEING ACHIEVEMENT

Income per capita and most widely reported, non‐ or non‐exclusively income based human well‐being indicators are highly correlated among countries. Yet many countries exhibit higher achievement in the latter than predicted by the former. The reverse is true for many other countries. This paper commences by extracting the inter‐country variation in a composite of various widely‐reported, non‐income‐based well‐being indices not accounted for by variations in income pre capita. This extraction is interpreted inter alia as a measure of non‐economic well‐being. The paper then looks at correlations between this extraction and a number of new or less widely‐used well‐being measures, in an attempt to find the measure that best captures these achievements. A number of indicators are examined, including measures of poverty, inequality, health status, education status, gender bias, empowerment, governance and subjective well‐being.     

Forecasting GDP at the Regional Level with Many Predictors

In this study, we assess the accuracy of macroeconomic forecasts at the regional level using a large data set at quarterly frequency. We forecast gross domestic product (GDP) for two German states (Free State of Saxony and Baden‐Württemberg) and Eastern Germany. We overcome the problem of a ‘data‐poor environment’ at the sub‐national level by complementing various regional indicators with more than 200 national and international indicators. We calculate single‐indicator, multi‐indicator, pooled and factor forecasts in a ‘pseudo‐real‐time’ setting. Our results show that we can significantly increase forecast accuracy compared with an autoregressive benchmark model, both for short‐ and long‐term predictions. Furthermore, regional indicators play a crucial role for forecasting regional GDP.     

Income or Consumption: Which Better Predicts Subjective Well‐Being?

The positive relationship between income and subjective well‐being has been well documented. However, work assessing the relationship of alternative material well‐being metrics to subjective well‐being (SWB) is limited. Consistent with the permanent income hypothesis, we find that a consumption‐based measure out‐performs (surveyed) income in predicting subjective well‐being. When objective measures of consumption are combined with self‐assessments of a household’s standard of living, income becomes insignificant altogether. We obtain our result utilizing household‐level data from Statistics New Zealand’s New Zealand General Social Survey which contains measures of income, SWB and a measure of material well‐being called the Economic Living Standard Index that combines measures of consumption flows and self‐assessments of material well‐being.     

Mothers’ Milk and Measures of Economic Output

Thoughtful economists have long been aware of the limitations of national accounting and GDP in measuring economic activity and material well-being. Feminist economists criticize the failure to count women's unpaid and reproductive work in measures of economic production. This paper examines the treatment of human milk production in national accounting guidelines. Human milk is an important resource produced by women. Significant maternal and child health costs result from children's premature weaning onto formula or solid food. While human milk production meets the standard national accounting criteria for inclusion in GDP, current practice is to ignore its significant economic value and the substantial private and public health costs of commercial breastmilk substitutes. Economic output measures such as GDP thus are incomplete and biased estimates of national food production and overall economic output, and they distort policy priorities to the disadvantage of women and children.     

Policy and performance in customs: Evaluating the trade facilitation agreement

This paper links cross‐country variation in trade facilitation policies to prominent indicators of national customs and logistics performance. We test the hypotheses that the policy data explain variation in the performance indicators, independent of other country characteristics that are plausibly exogenous to changes in trade facilitation policies. We use a LASSO procedure to choose among the many potential explanatory variables in the model. In general we find that country characteristics related to geography, income, and the general quality of governance better explain cross‐country variation in customs and logistics performance than do the measures of trade facilitation policy.     

Chinese economy in the new era

The “new era”, a term introduced by President Xi Jinping, may also be identified as the Xi era, during which China will be transformed from a moderately well‐off to a strong and wealthy nation. In the new era, the Chinese Government will deepen economic reform, widen economic opening and enhance the quality of economic growth. / Our projections show that by 2020, Chinese real GDP per capita, in 2017 prices, will exceed US$10,000, an economic development milestone. By 2031, Chinese real GDP will surpass US real GDP (US$29.4 trillion vs US$29.3 trillion), making China the largest economy in the world. However, Chinese real GDP per capita will still lag behind the US significantly, amounting to only one‐quarter of that of the United States. By 2050, Chinese real GDP will reach US$82.6 trillion, compared to US$51.4 trillion for the United States. However, in terms of real GDP per capita, China will still lag significantly behind, at US$53,000, slightly less than the current level of US real GDP per capita, compared to US$134,000 for the United States.     

Poverty is a Public Bad: Panel Evidence From Subjective Well‐Being Data

Previous research has found that subjective well‐being (SWB) is lower for individuals classified as being in poverty. We extend the poverty‐SWB literature by focusing on aggregate poverty. Using panel data for 39,239 individuals living in Germany from 2005–2013, we show that people's SWB is negatively correlated with the regional (state‐level) poverty ratio while controlling for individual poverty status and poverty intensity. This suggests that poverty is a public bad. The negative relationship between aggregate poverty and SWB is more salient in the upper segments of the income distribution and is robust to controlling for the rate of unemployment and per capita GDP. The character of poverty as a public bad suggests that poverty alleviation is a matter not only of distributive justice, but of allocative efficiency.     

Data envelopment analysis for measuring economic growth in terms of welfare beyond GDP

Recent discussions about the definition of growth in terms of welfare beyond GDP suggest that it is of urgent need to develop new approaches for measuring the economic performance of firms and national economies. The new concepts should simultaneously take into account economic as well as social and environmental goals. First we present several approaches to productivity measures. Then we extend the data envelopment analysis models with environment indicators in order to measure the so called eco-efficiency and social indicators to take into consideration social performance. For illustration, we perform the analysis of 30 European countries for the year 2010. The last section concerns itself with the possibilities of inter-temporal analysis of the proposed models and their use in ex-ante evaluation of different policy scenarios.     

Rice market integration in the Mekong River Delta1

In the last decades Vietnam has become a major supplier in the world's rice market. This position is the result of the policy reforms that have been implemented in the agricultural sector. This paper assesses the impact of the liberalization policies and focuses on the spatial price differences in the domestic rice market. The results show that price patterns correlate strongly in the Mekong River Delta. Even prices in other regions are integrated with price patterns in the South. Interestingly, private traders in the Mekong Delta are only indirectly responsible for the latter result. They satisfy local demand and deal with state‐owned enterprises (SOEs). In the framework of the national food security policy, the state‐owned food companies ‘subsidize’ transactions between the South and the North. Moreover, the state‐owned food companies still dominate export transactions. The latter issues constitute two major queries for policy makers involved in the liberalization of the rice market, as further policy measures should not jeopardize the interests of domestic rice consumers.     

CHINA'S ECONOMIC GROWTH: WHAT DO WE LEARN FROM MULTIPLE‐BREAK UNIT ROOT TESTS?

This paper investigates China's economic growth by performing multiple‐break unit root tests on the data of national and sectoral output and output per worker to identify their steady‐state and transitional growth paths. The evidence generated suggests that the growth behaviour of the Chinese economy is consistent with endogenous growth theory. The results of multiple‐break unit root tests are then explained within the endogenous growth framework, using historical observations on how the evolution of economic institution/environment causes changes in some institutional parameters and hence in the steady‐state growth rate of GDP per worker.     

The growth effects of tax rates in the OECD

This paper explores the merits of macro‐ and micro‐based tax rate measures within an open economy “fiscal policy and growth” model. Using annual data for 15 OECD countries we find statistically small, non‐robust long‐run growth effects of macro‐based average tax rates on capital income and consumption, but some evidence for average labour income tax effects. Changes in “micro” marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.     

How Do Digital Technologies Drive Economic Growth?

This paper seeks to provide new empirical evidence that demonstrates the importance of digital technologies in promoting economic growth, drawing on the literature on advances in growth and leveraging a broader and more robust country‐level panel dataset. In particular, this paper estimates the long‐run economic impact of digital technologies using mobile phone penetration and internet usage as broad indicators. The empirical results suggest that, between 2004 and 2014, the diffusion of digital technologies significantly improved economic output in Australia and abroad, contributing to steady‐state gross domestic product per capita growth of approximately 5.8 per cent on average. These findings could serve as the starting‐point for predictions about the likely impact of future technologies, providing a better understanding for policy‐makers in prioritising initiatives that will continue to lift living standards in the coming years.     

Would You Like to Know What Makes People Happy? An Overview of the Datasets on Subjective Well‐Being

This article provides a guide for young economists wishing to conduct well‐being research. It describes the different data sources commonly used in the study of people's subjective well‐being, as well as provides a brief discussion on the types of well‐being measures available within each dataset.     

Equity in Poverty Program Evaluations

Poverty‐reducing programs often use indicators other than household income to transfer resources to the poor which has important implications in terms of equity of the program. This paper offers a decomposition methodology to analyze the horizontal and vertical equity components of a redistribution policy for subgroups defined according to policy‐relevant characteristics. Our measures are derived by comparing the cost of inequality in terms of equally distributed equivalent poverty gaps in the pre‐transfer income and post‐transfer income distributions. An application to the poverty‐reducing program Oportunidades in Mexico in 2006 reveals that the use of indicator variables more strongly correlated with pre‐transfer incomes in rural households can improve the redistributive effect while it also points out the difficulties of the program in targeting different levels of support among the poor, both within and between groups.