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A Comparison of the EU-15 Countries Based on the Stiglitz Report’s Recommendations

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  1. A Comparison of the EU-15 Countries Based on the Stiglitz Report’s Recommendations G. MadoniaDepartment of International Business and Economics, University of Greenwich, Old Royal Naval College, Park Row, Greenwich, London SE10 9LS

  2. What I do • Measure different dimensions of ‘well-being’ for the EU-15 countries for 1999, 2004 and 2009 • Well-being is measured to match the criteria set out in the Stiglitz Report (2009) using a variety of different indicators • I compare the rankings of the EU-15 countries according to GDP per capita with these different dimensions, as well according to a summary measure of wider well-being

  3. What the Report does • The Stiglitz Report focuses on the pros and cons of GDP: good for measuring economic production & monitoring economic activity, less so for measuring people’s well-being • It refers to 8 dimensions of well-being: Material living standards, Health, Education, Personal activities including work, Political voice and governance, Social connections and relationships, Environment (present and future) and Insecurity (physical and economic) • It produces 12 Recommendations: on countries’ material performance (eg use income, consumption and wealth not GDP), on assessing people’s QoL (health, education, inequalities, environment but also look at outputs not inputs), and on sustainability. Considers both objective and subjective measures (eg surveys).

  4. Previous literature • Papers after Stiglitz • Easterlin (2010), Noll (2011) , Rojas (2011), Madonia, Cracolici and Cuffaro (2012) • Related literature on social indicators • Measuring economic and social performance via construction of composite indicators: Hobijn and Franses (2001), UNDP (1990), Sagar and Najam (1998), Osberg and Sharpe (2002), Marchante and Ortega (2006), Berenger and VerdierChouchane (2007) etc

  5. My analysis • Measure different dimensions of well-being using available data from Eurostat , World Bank and OECD • Where there are multiple indicators PCA is used to group the different indicators together into a composite measure • Compare rankings and correlations across different measures over different time periods and with the implications of GDP per capita

  6. GDP comparisons over time

  7. GDP ranking

  8. Dimensions of wider well-being • Material Well-Being: • Real adjusted gross disposable income of households per capita • Final consumption expenditure of households in PPS per capita • Household Net Financial Wealth (ratio of NFA to Liabilities over Gross Disposable Income with some adjustment for change in net equity of households in PFs reserves) • GINI coefficient, measure of income inequality • Average number of usual weekly hours of work in main job, proxy for leisure

  9. Dimensions of wider well-being 2 • Quality of Life: • Health: Life expectancy at birth, Infant mortality rate, Standardized Death Rate • Education: Total Participation Rate in Education, Ratio of Total Graduates in ISCED 5_6 to population, Percentage of the population aged 25 to 64 having completed at least upper secondary education, PISA Test Math, PISA Test Science, PISA Test Reading • Personal Security: Fatal accidents at work, Crimes recorded by the police • Economic Security: Unemployment rate, long-term unemployment rate, Youth unemployment, Risk of Poverty and Exclusion After Social Transfers

  10. Dimensions of wider well-being 3 • Environment: • Co2 Ratio • Spending on the environment • Sustainability: • Adjusted Net Saving % of GNI

  11. Country rankings of material well-being vs GDP

  12. Country rankings by material well-being & GDP

  13. Country rankings by quality of life and GDP

  14. Country rankings by quality of life & GDP

  15. Country rankings of material well-being vs Quality of Life

  16. Country rankings of environment quality vs GDP

  17. Country rankings by environment quality & GDP

  18. Country rankings of sustainability vs GDP

  19. Country rankings by sustainability & GDP

  20. Country rankings of wider well-being vs GDP

  21. Country rankings by wider well-being and GDP

  22. Conclusion • I examine the wider well-being of EU-15 countries in 1999, 2004 and 2009 using proxies for the various concepts suggested by the Stiglitz Report. • Some aspects of wider well-being do not appear well represented by GDP, particularly the environment and sustainability and to a lesser extent QoL. • Though there seems to be some positive link between GDP and wider well-being, it is far from uniform. • Further research needed to explore additional indicators and different weighting schemes.