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Sustainable economic policy and well-being: The relationship between adjusted net savings and subjective well-being

Author

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  • Mubashir Qasim

    (University of Waikato)

  • Arthur Grimes

    (Motu Economic and Public Policy Research)

Abstract

We analyse the relationship between subjective wellbeing (SWB) and the World Bank’s measure of a country’s economic sustainability, adjusted net savings (ANS). We model SWB at individual level and at aggregated group level as a function of past ANS levels, after controlling for a country’s initial levels of SWB. The empirical models utilise World Values Surveys (WVS) data for self-reported life-satisfaction (our proxy for SWB). Our results show that ANS is negatively associated with future SWB outcomes over relatively short timespans (10-15 years) but this relationship is neutralised, or even reversed, for a longer timespan (20 years). The results demonstrate an important challenge in political economy. Governments that choose to save less in the short term may be able to spend more on the well-being of the current generation (i.e. current voters) but they diminish the reserves available to improve future generations’ well-being. At a more technical level, our results reinforce the concept that ANS is a useful sustainability indicator for infinite (or at least very long) time horizons, but it is not a good indicator of well-being developments over short time horizons.

Suggested Citation

  • Mubashir Qasim & Arthur Grimes, 2018. "Sustainable economic policy and well-being: The relationship between adjusted net savings and subjective well-being," Working Papers 18_06, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:18_06
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    4. Ellalee, Haider & Al-Qaysi, Israa I., 2023. "Digital Government a Pathway to Sustainable Development," MPRA Paper 118178, University Library of Munich, Germany, revised Aug 2023.
    5. Serap TAŞKAYA, 2020. "Impact of the Provinces’ Gross Domestic Product Per Capita on the Better Life Index: An Analysis at the Level of Provinces Abstract: Recent studies on determining the impact of income on quality of li," Sosyoekonomi Journal, Sosyoekonomi Society, issue 28(45).
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    Keywords

    Adjusted net savings; subjective wellbeing; intergenerational sustainability;
    All these keywords.

    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • N97 - Economic History - - Regional and Urban History - - - Africa; Oceania

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