Prostate Restored
Prostate Restored
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Material living conditions (income, consumption and material conditions) Leisure and social interactions. Economic security and physical safety. Governance and basic rights.
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Read More »The need for measurement beyond GDP Quality of life is a broad concept that encompasses a number of different dimensions (by which we understand the elements or factors making up a complete entity, that can be measured through a set of sub dimensions with an associated number of indicators for each). It encompasses both objective factors (e.g. command of material resources, health, work status, living conditions and many others) and the subjective perception one has of them. The latter depends significantly on citizens’ priorities and needs. Measuring quality of life for different populations and countries in a comparable manner is a complex task, and a scoreboard of indicators covering a number of relevant dimensions is needed for this purpose. National accounts aggregates have become an important indicator of the economic performance and living standards of our societies. This is because they allow direct comparisons to be made easily. Gross Domestic Product (GDP), one of these aggregates, is the most common measure of the economic activity of a region or a country at a given time; many decision and policy makers use it as the standard benchmark, often basing their decisions or recommendations on it. It includes all final goods and services an economy produces and provides a snapshot of its performance. GDP is very useful for measuring market production (expressed in money units). However, although it was not intended as an indicator of social progress, it has been considered to be closely linked to the well-being of citizens. The following are a number of reasons why GDP is not sufficient for this purpose, and therefore needs to be complemented by other indicators. Other measures of income reflect better households' situations While GDP is very useful for measuring market production and providing an indicative snapshot of an economy at a given time, it does not provide a comprehensive picture of how well-off the citizens of a society are. As described in the J. Stiglitz, A. Sen and J.P. Fitoussi Report on Measurement of Economic Performance and Social Progresscitizens’ material living standards are better monitored by using measures of household income and consumption, and ideally joint measures of income, consumption and wealth at individual level should be used. Stiglitz, Sen and Fitoussi argue that the income of a country’s citizens is ‘clearly more relevant for measuring the well-being of citizens’ than domestic production[1]. In many cases, household incomes may develop differently from real GDP and therefore provide a different picture of this aspect of citizens’ well-being. As shown in Figure 1, for the period 2005–2018, GDP (in real terms) in the EU-27 reached its peak in 2007- 2008 and plunged to a record low a year later, in 2009. This sharp decrease reflects the beginning of the financial crisis. The decrease is however not reflected in the part of national accounts income that is generated by the household sector, during the first years of the crisis. On the contrary, households’ adjusted gross disposable income for the same period (2007-2009) has slightly increased, and started to decrease slowly the next year, reaching the lowest point in the period analysed in 2012-2013. One of the reasons for this apparent inconsistency is that social transfers (social security benefits, reimbursements etc.) seem to have absorbed and softened the effect of the crisis (at least during the first few years). Starting in 2014 the trend is positive for both indicators, but it can be noted that growth is at a slower pace for the part of the Gross National Product that households can benefit from. Source: Eurostat Figure 1: GDP versus gross disposable income of households, EU-27, in volume/real terms, 2010 or 2008=100, 2005-2019: Eurostat Increasing GDP today, depleting resources for tomorrow Social, environmental and economic progress does not always go hand in hand with an increase in GDP. For example, if a country decides to cut down all its forests, it will dramatically increase its timber exports, thus increasing its GDP. If GDP were the only indicator of quality of life, this would mean that the population of this country would have greatly improved its well-being. However, the deforestation would have a significant impact on the population’s quality of life in the mid and long term: loss of natural habitat, soil erosion and more. GDP definitely measures quantity, but not necessarily other aspects of production (such as distribution and potential impacts for the future). GDP is an aggregate measure and as such cannot inform us about wealth distribution amongst the population Even if ‘quantity’ were the only relevant measure of economic performance and quality of life, GDP would still not tell us the whole story about living standards. A significant increase in a society’s average GDP does not automatically translate into better living standards for most of its citizens. The increase could benefit only a small part of society, leaving many groups of citizens at the same level in terms of wealth, or even worse off than before. Consequently, overall measures of economic and social well-being must also include distribution indicators in order to provide a more realistic picture of the living standards and quality of life of a society’s citizens. GDP and other economic measures need to be complemented with indicators covering other important domains in order to measure well-being Moving beyond economic performance, a more comprehensive, wide-ranging approach is needed when trying to define and measure quality of life. While it remains very difficult to provide an overall definition with specific measurable indicators, quality of life definitely includes more than just economic production and GDP figures. It should also be stressed that some of the indicators included in this scoreboard are subjective. They therefore reflect the perceptions of individuals, their own assessment of different aspects of life and overall quality of life and their often different priorities. This type of data can only be obtained through surveys. Different examples throughout Europe show that GDP does not always go hand in hand with other indicators that contribute to a better quality of life. Luxembourg had by far the highest GDP per capita in 2019 (81 100 PPS), but this is partially due to the high percentage of cross-border commuters in its workforce, who contribute to GDP production but are not accounted for when calculating the per capita figures. Luxembourg was followed by Ireland (60 100 PPS), Denmark, the Netherlands and Austria (all three of them between 39 000 and 40 000PPS).At the other end of the spectrum, Bulgaria has the lowest GDP per capita (16 400 PPS), followed by Croatia (20 000 PPS) and Greece (21 000 PPS). While Romania’s GDP per capita is the fifth lowest in the EU (21 500 PPS, compared to the EU-27 average of 31 100 PPS) it has the lowest percentage of people with arrears on their mortgage or rent payments (0.4 % in 2018). Spain and Italy’s GDP per capita are lower than the EU average, but they rank first in life expectancy (83.5 and 83.4 years respectively) throughout the EU. Germany has one of the highest GDP per capita figures in Europe (37 700 PPS), but it also has the second widest gender pay gaps (20.9 % in 2018) in the EU. These are only a few examples that demonstrate the need to complement GDP and other economic indicators with a wider range of data, in order to be able to get a broader picture.
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Read More »Conclusion As highlighted above, it remains difficult to measure the quality of life of (European) citizens but preliminary results show it is worth going beyond GDP figures. A multidimensional approach is necessary to get a more comprehensive view of quality of life and avoid any misleading conclusions.
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