Boosting per capita incomes has been the main focus of most government economic policy for a very long time. But obviously the well-being of individuals and households also depends on other factors, such as leisure time, environmental quality, health and distributive issues. The growing happiness literature has raised serious doubts as to whether money matters more than these other factors. A new OECD Economic Working Paper by Romina Boarini, Åsa Johansson and Marco Mira D'Ercole, Alternative measures of well-being, takes a sober look at the issue.
It reviews different measures of well-being and how they relate to levels, rates of change and international rankings of GDP per capita. It also looks at other measures of well-being. While fairly non-commital in its conslusions, it's a very useful overview of the (burgeoning) literature. Here's the abstract:
This paper assesses if GDP per capita is an adequate proxy as a measure of wellbeing or whether other indicators are more suitable for this purpose. Within the national accounts framework, other better measures of economic resources exist, but they are closely correlated with GDP per capita and are not as readily available. Illustrative calculations to 'extend' measures of economic resources to include leisure time, the sharing of income within households and distributional concerns suggest that cross-country ranking of based on these indicators and GDP per capita are generally similar, although they have evolved differently over time.
Across OECD countries, levels of most measures of specific social conditions are significantly related to GDP per capita while changes over time are not. However, survey based data on happiness and life-satisfaction across OECD countries are only weakly related to levels of GDP per capita.
Overall, measures of GDP per capita and economic growth remain critical for any assessment of wellbeing but they need to be complemented with measures of other dimensions of well-being to get a comprehensive picture of well-being.