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A New Cross-Country Measure of Material Wellbeing and Inequality: Methodology, Construction and Results

Author

Listed:
  • Arthur Grimes

    () (Motu Economic and Public Policy Research)

  • Sean Hyland

    () (Motu Economic and Public Policy Research)

Abstract

This paper advances a new framework for defining a country’s material wellbeing based on the distribution of consumer durables, building on the recent material wellbeing literature that calls for an increased focus on both the level and the distribution of consumption and wealth. Our framework is demonstrated using household-level data from the OECD PISA surveys, from which triennial metrics are constructed consistently for 40 countries since 2000. Comparisons with income-based alternative metrics suggest that our consumption-based measure captures important aspects of material wellbeing at both the micro and the macro level. Differences between the two approaches is shown to be associated with life-cycle smoothing, an important aspect that should be captured in material wellbeing estimates.

Suggested Citation

  • Arthur Grimes & Sean Hyland, 2015. "A New Cross-Country Measure of Material Wellbeing and Inequality: Methodology, Construction and Results," Working Papers 15_09, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:15_09
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    References listed on IDEAS

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    1. Simon Kuznets, 1934. "National Income, 1929-1932," NBER Books, National Bureau of Economic Research, Inc, number kuzn34-1.
    2. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
    3. G. Sirmans & Lynn MacDonald & David Macpherson & Emily Zietz, 2006. "The Value of Housing Characteristics: A Meta Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 33(3), pages 215-240, November.
    4. Graham, Liam & Oswald, Andrew J., 2006. "Hedonic Capital," IZA Discussion Papers 2079, Institute of Labor Economics (IZA).
    5. Arthur Grimes & les Oxley & Nicholas Tarrant, 2012. "Does Money Buy Me Love? Testing Alternative Measures of National Wellbeing," Working Papers 12_09, Motu Economic and Public Policy Research.
    6. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    7. John Bryant, 2003. "Demographic Change and New Zealand’s Economic Growth," Treasury Working Paper Series 03/04, New Zealand Treasury.
    8. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    9. James Foster & Luis Lopez-Calva & Miguel Szekely, 2005. "Measuring the Distribution of Human Development: methodology and an application to Mexico," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 6(1), pages 5-25.
    10. Federico Cingano, 2014. "Trends in Income Inequality and its Impact on Economic Growth," OECD Social, Employment and Migration Working Papers 163, OECD Publishing.
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    More about this item

    Keywords

    Material wellbeing; quality of life; national accounts; cross-country analysis; distributions; inequality; household durables.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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