DP17052 Beyond Development and Wellbeing: Experimenting with the Low Substitution Approach for Social Progress
Social progress indices are key for assessing wellbeing and sustainable development of countries and societies. A pivotal neglected question is the appropriate level of substitution between ‘subjective’ - attitudes of individuals - and ‘objective’ - external standards- dimensions of social progress. Each dimension has its own rationale, history, and indicators. Our starting point is that the two perspectives have a special significance – jointly. Surprisingly, we do not find in the literature an approach that robustly represents this acknowledgment. Our approach addresses this lacuna, and advocates measuring social progress as a composition of the two components with a very low degree of substitution. Employing the constant elasticity of substitution function (CES), we empirically demonstrate the ramifications of this approach across assessments and rankings of countries. We show that the low substitution measurement matters the most for the middle- ranked countries. Representing social progress using two distinct subjective and objective components, with a low substitution elasticity is a robust measurement, that reflects an appealing conception of social progress.