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

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  • Kassenböhmer, Sonja C.

    ()
    (Melbourne Institute of Applied Economic and Social Research)

  • Schmidt, Christoph M.

    ()
    (RWI)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5453.

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Length: 31 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5453

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

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  1. John Micklewright, 2002. "Social exclusion and children: a European view for a US debate," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 6430, London School of Economics and Political Science, LSE Library.
  2. England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, Elsevier, vol. 25(1), pages 89-103, April.
  3. Marc Fleurbaey, 2009. "Beyond GDP: The Quest for a Measure of Social Welfare," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 47(4), pages 1029-75, December.
  4. Eric Neumayer, 1999. "The ISEW -- not an Index of Sustainable Economic Welfare," Social Indicators Research, Springer, Springer, vol. 48(1), pages 77-101, September.
  5. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(445), pages 1815-31, November.
  6. Bruno S. Frey & Alois Stutzer, 2006. "Should National Happiness be Maximized?," CREMA Working Paper Series, Center for Research in Economics, Management and the Arts (CREMA) 2006-26, Center for Research in Economics, Management and the Arts (CREMA), revised Mar 2007.
  7. Stevenson, Betsey & Wolfers, Justin, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," IZA Discussion Papers 3654, Institute for the Study of Labor (IZA).
  8. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  9. Daniel Kahneman & Alan B. Krueger & David Schkade & Norbert Schwarz & Arthur Stone, 2004. "Toward National Well-Being Accounts," American Economic Review, American Economic Association, American Economic Association, vol. 94(2), pages 429-434, May.
  10. 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, International Association for Research in Income and Wealth, vol. 51(2), pages 311-336, 06.
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  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, 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, 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," EUROMOD Working Papers EM5/11, EUROMOD at the Institute for Social and Economic Research.
  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, German Council for Social and Economic Data (RatSWD) 198, German Council for Social and Economic Data (RatSWD).

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