Quality of Life Indicators

Measuring economic welfare is not an exact science. Often in economics, we focus on GDP statistics (measuring national output). However, quality of life depends on many other factors apart from just GDP.

Quality of Life Indicators

GDP per capita

  • GDP – the total output of an economy. This is a guide to national output and influences the level of consumption. Higher GDP enables a country to alleviate levels of absolute poverty.
  • Distribution of Income in society. e.g. looking at the Gini Co-efficient. and how income is distributed. Some countries have high GDP per capita, but some people still live in poverty.
  • Employment / Unemployment. Unemployment is one of the main economic causes of poor life changes. Also, quality of employment, e.g. widespread part-time/temporary contracts may suggest underemployment in the economy.
  • Life Expectancy. Dependent on health care standards, environmental factors and cultural factors
  • Education Standards. One simple measure is the rate of literacy in an economy. For example, Sri Lanka has a higher rate of literacy than Saudi Arabia, despite a lower GDP per capita.
  • Housing. The standard and quality of housing and related amenities. Also, include the rate of homelessness.
  • Air Pollution. The quality of air can influence the quality of life and also health issues.
  • Levels of Congestion and Transport. Congestion can lead to time lost sitting in traffic jams as well as being frustrated. For example, average traffic speeds (11mph) in London (2010) are similar to 100 years ago when we still used the horse and cart
  • Environmental Standards. Quality and quantity of ‘green spaces’ where people can escape pressures of cities, e.g. London does quite well on this measure.
  • Wildlife Diversity. Protection of wildlife and areas of natural beauty important. e.g. a new road may reduce congestion but damage areas of outstanding natural beauty.
  • Access to clean drinking Water. Basic necessity is often taken for granted in West, a but, is big issue in the developing world.
  • Climate. Climate can make some areas inhospitable leading to defensive spending, e.g. spending on air-conditioning or heating. Global Warming could tip the ecological balance in some countries with fragile eco-balance.
  • Social Investment v Present Consumption. GDP doesn’t measure what is actually produced and consumed. A state with high military spending will have lower living standards than a country that invests heavily in public transport, education and healthcare.

Quality of life measures

Composite indexes include

  • Human development index (HDI)
  • Genuine Progress Indicator (GPI)

Human Development Index HDI

The Human development index looks at three main factors – living standards, health and education


More on Human development index HDI

Measure of economic welfare (MEW)

Genuine Progress Indicator GPI

Source: Ida Kubiszewski et al, “Beyond GDP: Measuring and Achieving Global Genuine Progress,” Ecological Economics, 93, (2013).

The GPI includes a wide measure of factors affecting the quality of life. In particular, it includes material well-being, but also time/leisure factors and the natural environment. The GPI measure includes:

GPI = A + B – C – D + I

  • A is income weighted private consumption
  • B is value of non-market services generating welfare
  • C is private defensive cost of natural deterioration
  • D is cost of deterioration of nature and natural resources
  • I is an increase in capital stock and balance of international trade
  • More on Genuine Progress Indicator (GPI)

World Happiness Report 2022

There is a global happiness report which takes into account

  •  GDP per capita
  • Healthy life expectancy
  • Freedom to make life choices
  • Generosity in society
  • Perceptions of corruption

The top 20 countries by happiness satisfaction are

1 Finland 7.821
2 Denmark 7.636
3 Iceland 7.557
4 Switzerland 7.512
5 Netherlands 7.415
6 Luxembourg* 7.404
7 Sweden 7.384
8 Norway 7.365
9 Israel 7.364
10 New Zealand 7.200
11 Austria 7.163
12 Australia 7.162
13 Ireland 7.041
14 Germany 7.034
15 Canada 7.025
16 United States 6.977
17 United Kingdom 6.943
18 Czechia 6.920
19 Belgium 6.805
20 France 6.687

Countries with the lowest reported satisfaction are

120 Tunisia 4.516
121 Pakistan 4.516
122 Palestinian Territories* 4.483
123 Mali 4.479
124 Namibia 4.459
125 Eswatini, Kingdom of* 4.396
126 Myanmar 4.394
127 Sri Lanka 4.362
128 Madagascar* 4.339
129 Egypt 4.288
130 Chad* 4.251
131 Ethiopia 4.241
132 Yemen* 4.197
133 Mauritania* 4.153
134 Jordan 4.152
135 Togo 4.112
136 India 3.777
137 Zambia 3.760
138 Malawi 3.750
139 Tanzania 3.702
140 Sierra Leone 3.574
141 Lesotho* 3.512
142 Botswana* 3.471
143 Rwanda* 3.268
144 Zimbabwe 2.995
145 Lebanon 2.955
146 Afghanistan 2.404

Further reading

3 thoughts on “Quality of Life Indicators”

  1. Excellent summary! Would you send me the sources youhave used for this summary? I would like to use it for teaching. Tks!

  2. Excellent summary! Would you send me the sources youhave used for this summary? I would like to use it for teaching. Tks!


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