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A Measure of Well-Being Efficiency Based on the World Happiness Report

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  • Sarracino, Francesco

    (University of California)

  • O'Connor, Kelsey J.

    (STATEC Research – National Institute of Statistics and Economic Studies)

Abstract

We estimate a measure of well-being efficiency that assesses countries' ability to transform inputs into subjective well-being (Cantril ladder). We use the six inputs (real GDP per capita, healthy life expectancy, social support, freedom of choice, absence of corruption, and generosity) identified in the World Happiness Reports and apply Data Envelopment Analysis to a sample of 126 countries. Efficiency scores reveal that high ranking subjective well-being countries, such as the Nordics, are not strictly the most efficient ones. Also, the scores are uncorrelated with economic efficiency. This suggests that the implicit assumption that economic efficiency promotes well-being is not supported. Subjective well-being efficiency can be improved by changing the amount (scale) or composition of inputs and their use (technical efficiency). For instance countries with lower unemployment, and greater healthy life expectancy and optimism are more efficient.

Suggested Citation

  • Sarracino, Francesco & O'Connor, Kelsey J., 2022. "A Measure of Well-Being Efficiency Based on the World Happiness Report," IZA Discussion Papers 15669, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp15669
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    Cited by:

    1. John F. Helliwell, 2022. "Reflections on Measuring and Improving Productivity When Subjective Well-being Is the Objective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 43, pages 81-85, Fall.

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    More about this item

    Keywords

    efficiency; World Happiness Report; subjective well-being; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D60 - Microeconomics - - Welfare Economics - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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