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Beyond GDP: Using Equivalent Incomes to Measure Well-Being in Europe

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  • Koen Decancq

    () (University of Antwerp
    Université catholique de Louvain
    KU Leuven)

  • Erik Schokkaert

    () (Université catholique de Louvain
    KU Leuven)

Abstract

Abstract It has become widely accepted that focusing exclusively on income growth may lead to a too narrow-sighted measure of changes in well-being. People care about other dimensions of life, such as their health, employment, social interactions and personal safety. Moreover, an exclusive focus on income growth remains blind to the distribution of income and well-being in the society. We propose therefore a set of five principles for a richer measure of well-being. In particular, we advocate the use of a measure based on “equivalent incomes”, which satisfies these principles. We discuss and illustrate how this equivalent income approach can be implemented in Europe, using the ESS data for 2008 and 2010. We find that introducing inequality aversion and including other dimensions in the analysis leads to a remarkably different perspective on the growth of well-being in Europe.

Suggested Citation

  • Koen Decancq & Erik Schokkaert, 2016. "Beyond GDP: Using Equivalent Incomes to Measure Well-Being in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 21-55, March.
  • Handle: RePEc:spr:soinre:v:126:y:2016:i:1:d:10.1007_s11205-015-0885-x DOI: 10.1007/s11205-015-0885-x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Koen Decancq, 2017. "Measuring Multidimensional Inequality in the OECD Member Countries with a Distribution-Sensitive Better Life Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, pages 1057-1086.
    2. ONDER Harun & PESTIEAU Pierre & PONTHIERE Gregory, 2017. "The domestic welfare loss of Syrian civil war: an equivalent income approach," CORE Discussion Papers 2017025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Koen Decancq & Alexander Michiels, 2016. "Measuring Successful Aging with Respect For What Matters To Older Persons," Working Papers 1604, Herman Deleeck Centre for Social Policy, University of Antwerp.
    4. Arnaud Joskin, 2017. "Working Paper 04-17 - Qu’est-ce qui compte pour les Belges ? Analyse des déterminants du bien-être individuel en Belgique
      [Working Paper 04-17 - Wat telt voor de Belgen? Analyse van de determinante
      ," Working Papers 1704, Federal Planning Bureau, Belgium.
    5. Oznur Ozdamar & Eleftherios Giovanis, 2016. "The Link between Health Condition Costs and Standard of Living: A Structural Equation Modelling," Working Papers 1060, Economic Research Forum, revised 11 Jan 2016.

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