OECD Statistics Working Papers

ISSN: 
1815-2031 (online)
http://dx.doi.org/10.1787/18152031
Hide / Show Abstract

The OECD Statistics Working Paper Series - managed by the OECD Statistics Directorate – is designed to make available in a timely fashion and to a wider readership selected studies prepared by staff in the Secretariat or by outside consultants working on OECD projects. The papers included are of a technical, methodological or statistical policy nature and relate to statistical work relevant to the organisation. The Working Papers are generally available only in their original language - English or French - with a summary in the other.

Joint Working Paper

Measuring Well-being and Progress in Countries at Different Stages of Development: Towards a More Universal Conceptual Framework (with OECD Development Centre)

Measuring and Assessing Job Quality: The OECD Job Quality Framework (with OECD Directorate for Employment, Labour and Social Affairs)

Forecasting GDP during and after the Great Recession: A contest between small-scale bridge and large-scale dynamic factor models (with OECD Economics Directorate)

Decoupling of wages from productivity: Macro-level facts(with OECD Economics Directorate)

 

Multi-dimensional Living Standards

A Welfare Measure Based on Preferences You or your institution have access to this content

English
Click to Access: 
    http://oecd.metastore.ingenta.com/content/5jlpq7qvxc6f-en.pdf
  • PDF
  • http://www.keepeek.com/Digital-Asset-Management/oecd/economics/multi-dimensional-living-standards_5jlpq7qvxc6f-en
  • READ
Author(s):
Romina Boarini1, Fabrice Murtin, Paul Schreyer, Marc Fleurbaey2
Author Affiliations
  • 1: OECD, France

  • 2: Princeton University, United States

11 Oct 2016
Bibliographic information
No:
2016/05
Pages:
53
http://dx.doi.org/10.1787/5jlpq7qvxc6f-en

Hide / Show Abstract

We compute a distribution-adjusted welfare measure that aggregates outcomes in three dimensions of well-being, namely income, employment and longevity. Aggregation weights reflect preferences of people on these dimensions. The welfare measure is calculated for 26 OECD countries and selected emerging economies, and covers about three decades. Relying on a single theoretical model of a hypothetical representative agent, we combine life satisfaction regressions to capture the full welfare losses of unemployment with a calibration approach to capture the value of longevity. We test for robustness of results over a series of datasets and specifications and find that the resulting estimated shadow prices of (one percentage point of) unemployment and one year of longevity average 2% and 6% of income respectively. While we assume an identical utility function for all individuals, shadow prices of unemployment and longevity vary both across countries and within countries across income groups. We find that economic growth differs significantly from the growth of our welfare measure. The latter grew faster than GDP thanks to the gains that countries experienced on longevity, but was also more volatile due to changes in unemployment. Rising income inequality exerts a negative effect on our welfare measure. Gains in longevity have almost the same impact on welfare as income growth, while the long-term impact of employment was smaller.
Keywords:
living standards, measurement, well-being, welfare
JEL Classification:
  • I18: Health, Education, and Welfare / Health / Government Policy ; Regulation ; Public Health
  • I31: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / General Welfare, Well-Being
  • I32: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / Measurement and Analysis of Poverty
  • I38: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / Government Policy ; Provision and Effects of Welfare Programs
  • J17: Labor and Demographic Economics / Demographic Economics / Value of Life ; Forgone Income
  • J18: Labor and Demographic Economics / Demographic Economics / Public Policy
 
Visit the OECD web site