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

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  • Kassenboehmer, Sonja C.

    () (Monash University)

  • 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.

Suggested Citation

  • Kassenboehmer, Sonja C. & Schmidt, Christoph M., 2011. "Beyond GDP and Back: What is the Value-Added by Additional Components of Welfare Measurement?," IZA Discussion Papers 5453, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5453
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    References listed on IDEAS

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    1. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-1831, November.
    2. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
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    4. 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).
    5. 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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    7. England, Richard W., 1998. "Measurement of social well-being: alternatives to gross domestic product," Ecological Economics, Elsevier, vol. 25(1), pages 89-103, April.
    8. 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, June.
    9. 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.
    10. M. Fleurbaey., 2012. "Beyond GDP: The Quest for a Measure of Social Welfare," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    11. 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.
    12. Eric Neumayer, 1999. "The ISEW -- not an Index of Sustainable Economic Welfare," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 48(1), pages 77-101, September.
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    Cited by:

    1. Olha Hlushchenko, 2016. "Well-being funding: essence and estimation method," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 2016(2), pages 45-55.
    2. Olivier Bargain & André Decoster & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2013. "Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 789-817, October.
    3. Delhey, Jan & Kroll, Christian, 2012. "A "happiness test" for the new measures of national well-being: How much better than GDP are they?," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2012-201, Social Science Research Center Berlin (WZB).
    4. 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.
    5. 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).
    6. D.P. Doessel & Ruth F.G. Williams, 2012. "The New Welfare Measures," Working Papers 2012.07, School of Economics, La Trobe University.
    7. Jörg Döpke & Andreas Knabe & Cornelia Lang & Philip Maschke, 2017. "Multidimensional Well-being and Regional Disparities in Europe," Journal of Common Market Studies, Wiley Blackwell, vol. 55(5), pages 1026-1044, September.
    8. Schmidt, Christoph M. & aus dem Moore, Nils, 2014. "Wie geht es uns? Die W3-Indikatoren für eine neue Wohlstandsmessung," RWI Positionen 56, RWI - Leibniz-Institut für Wirtschaftsforschung.
    9. repec:zbw:rwipos:056 is not listed on IDEAS
    10. repec:gam:jsusta:v:9:y:2017:i:4:p:568-:d:95321 is not listed on IDEAS
    11. repec:eee:joecag:v:9:y:2017:i:c:p:78-89 is not listed on IDEAS
    12. Erich Oltmanns & Albert Braakmann & Joachim Schmidt, 2014. "Monitoring Subjective Well-Being: Some New Empirical Evidence for Germany," SOEPpapers on Multidisciplinary Panel Data Research 696, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    Keywords

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

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

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