Measuring National Well Being

Cyclist on High Street
(From my Oxford Cycling photos)

The Office of National Statistics has an interactive site for people to contribute to concepts of what should count as ‘national well-being’. The ONS is currently developing a new index for well being and is inviting people to take part. Measuring National Well Being

What is National Well-being?

  • It is effectively our living standards, our quality of life. Are we happy?

From an economic perspective, we tend to start with GDP, Gross Domestic Product. This measures the value of National income. GDP per Capita is a measure of average incomes. Higher GDP, ceteris paribus, implies a higher standard of well being because we can consume more goods and services.

However, raw GDP is only a  partial guide to ‘well being’. We need to consider much more than just average incomes:

Things That Could Be Included in National Well Being

Existing Statistics

  • Rate of Unemployment – especially higher weighting for long term and youth unemployment.
  • Economic Inactivity – due to sickness or discouragement.
  • Income distribution – What is the level of inequality
  • Level of reported crime – Does higher GDP encourage more crime?
  • Rates of accidental deaths – Premature deaths, e.g. over 2,300 die on British roads every year.
  • Rates of suicide
  • Life Expectancy – health standards
  • Divorce Rates
  • Consumer Confidence

Other Factors That could be included

  • Levels of reported pollution
  • Levels of congestion – time spent in traffic jams.
  • % of open green space (with easy access)
  • Charitable giving – Do we help others who are less fortunate?
  • Participation in sport – are we healthy or lethargic?
  • Participation in cultural events. – Numbers going to opera / museum / football?
  • Transport options available – Is there good public transport?
  • Attitude to pets / animals – are we kind to animals?

For every statistic, we could evaluate its importance.

  • For example, you could argue that a higher divorce rate is a bad thing as it suggests relationships breaking down. On the other hand, you could argue a higher divorce rate allows people to leave love-less marriage and move on in life.
  • This shows this kind of statistic would be   hard to incorporate.

Measuring the Intangibles

  • Environmental factors such as how clean the city is
  • Architecture. To some people this modern block of flats would reduce living standards. To others it represents progress a utilitarian project to offer most efficient way of building.

The more factors you include the more debate there will be about their relative importance.
But, what factors would you want to include in an index of national well being?

There are already several different measures which seek to include a wider variety of factors which influence living standards.

1 thought on “Measuring National Well Being”

  1. If the government imposes a very high tax on the profits of the companies investing in the country, what would happen to aggregate supply curve in the country? Draw a graph to show this effect.

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