Beyond GDP? Welfare Across Countries and Time
Type:
SIEPR Discussion Paper 10-001
Author(s):
Published:
09/1/10
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Abstract:
We propose a simple summary statistic for a nation’s flow of welfare, measured
as a consumption equivalent, and compute its level and growth rate for
a broad set of countries. This welfare metric combines data on consumption,
leisure, inequality, and mortality. Although it is highly correlated with per capita
GDP, deviations are often economically significant: Western Europe looks considerably
closer to U.S. living standards, emerging Asia has not caught up as
much, and many African and Latin American countries are farther behind due
to lower levels of life expectancy and higher levels of inequality. In recent decades,
rising life expectancy boosts annual growth in welfare by more than a full percentage
point throughout much of the world. The notable exception is sub-
Saharan Africa, where life expectancy actually declines.