DP8225 Beyond GDP and Back: What is the Value-added by Additional Components of Welfare Measurement?

Author(s): Sonja C Kassenboehmer, Christoph M Schmidt
Publication Date: February 2011
Keyword(s): beyond GDP, happiness, Sen, Stiglitz, sustainability, welfare measurement
JEL(s): D60, E01, I30
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8225

Building on the Stiglitz report, a growing literature suggests to explore other aspects of human welfare apart from material well-being, such as job security, crime, health, environmental factors and subjective perceptions. To explore the additional information of these indicators, we analyze data on the macro level from the German Federal Statistical Office combined with micro level data from the German SOEP (1991-2008). Much of the variation in many well-being measures can indeed be captured well by GDP and the unemployment rate. These correlations are far from perfect, thus giving considerable hope that there is room for a broader statistical reporting.