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Beyond GDP and Back: What Is the Value-Added by Additional Components of Welfare Measurement?

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  • Sonja C. Kassenböhmer
  • Christoph M. Schmidt

Abstract

Recently, building on the highly polarizing Stiglitz report, a growing literature suggests that statistical offices and applied researchers explore other aspects of human welfare apart from material well-being, such as job security, crime, health, environmental factors and subjective perceptions. To explore the additional information of these indicators, we analyze data on the macro level from the German Federal Statistical Office combined with micro level data from the German SOEP (1991-2008) on the personal work situation and subjective feelings concerning several aspects of life. Employing the indicators suggested by the Stiglitz Report, we find that much of the variation in many well-being measures can indeed be captured well by the hard economic indicators as used in the literature, especially by GDP and the unemployment rate. This suggests that the hard indicators are still a reasonable and quite robust gauge of well-being of a country. And yet, we also see that these correlations are far from perfect, thus giving considerable hope that there is room for a broader statistical reporting.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 351.

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Length: 29 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp351

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Keywords: Stiglitz Commission; Stiglitz Report; Beyond GDP; welfare measurement; life satisfaction;

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References

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  1. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," NBER Working Papers 14282, National Bureau of Economic Research, Inc.
  2. Haisken-DeNew, John P. & Sinning, Mathias, 2007. "Social Deprivation and Exclusion of Immigrants in Germany," IZA Discussion Papers 3153, Institute for the Study of Labor (IZA).
  3. M. Fleurbaey., 2012. "Beyond GDP: The Quest for a Measure of Social Welfare," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
  4. Bruno S. Frey & Alois Stutzer, 2007. "Should National Happiness Be Maximized ?," Working papers 2007/02, Faculty of Business and Economics - University of Basel.
  5. John Micklewright, 2002. "Social Exclusion and Children: A European view for a US debate," Innocenti Working Papers inwopa02/19, UNICEF Innocenti Research Centre.
  6. Daniel Kahneman & Alan B. Krueger & David Schkade & Norbert Schwarz & Arthur Stone, 2004. "Toward National Well-Being Accounts," American Economic Review, American Economic Association, vol. 94(2), pages 429-434, May.
  7. Lars Osberg & Andrew Sharpe, 2005. "How Should We Measure The "Economic" Aspects Of Well-Being? ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 311-336, 06.
  8. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  9. Eric Neumayer, 1999. "The ISEW -- not an Index of Sustainable Economic Welfare," Social Indicators Research, Springer, vol. 48(1), pages 77-101, September.
  10. England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, vol. 25(1), pages 89-103, April.
  11. Osberg, Lars & Sharpe, Andrew, 2002. "An Index of Economic Well-Being for Selected OECD Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 291-316, September.
  12. Oswald, A.J., 1997. "Happiness and Economic Performance," Papers 18, Centre for Economic Performance & Institute of Economics.
  13. Stockhammer, Engelbert & Hochreiter, Harald & Obermayr, Bernhard & Steiner, Klaus, 1997. "The index of sustainable economic welfare (ISEW) as an alternative to GDP in measuring economic welfare. The results of the Austrian (revised) ISEW calculation 1955-1992," Ecological Economics, Elsevier, vol. 21(1), pages 19-34, April.
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Cited by:
  1. Christoph M. Schmidt & Nils aus dem Moore, 2014. "Wie geht es uns? Die W3-Indikatoren für eine neue Wohlstandsmessung," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 16, 03.
  2. Bargain, Olivier & Decoster, André & Dolls, Mathias & Neumann, Dirk & Peichl, Andreas & Siegloch, Sebastian, 2011. "Welfare, Labor Supply and Heterogeneous Preferences: Evidence for Europe and the US," IZA Discussion Papers 6102, Institute for the Study of Labor (IZA).
  3. Johannes Hirata, 2012. "Zum systematischen Stellenwert von Wirtschaftswachstum: Ziel, Mittel oder weder noch?," Working Paper Series of the German Council for Social and Economic Data 198, German Council for Social and Economic Data (RatSWD).

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