|
Standard economic measures such as gross domestic product
per capita and median family income were not designed to
gauge the material quality of life. They don’t, for
instance, take into account inequality of income or damage
to the environment. To get a better sense of how people experience
everyday life, scholars have devised more sophisticated indices.
One of the best examples comes from Lars Osberg of Dalhousie
University in Nova Scotia and Andrew Sharpe of the Centre
for the Study of Living Standards in Ottawa.
New measures of well-being
They have measured economic well-being over time for 14 countries,
using four
classes of indicators: consumption (both private and governmental),
wealth (which includes such diverse factors as housing and
the social cost of environmental degradation), economic equality
(measured by income distribution and degree of poverty),
and security about future income (measured by, for example,
risk of unemployment and illness). Their data for five of
these countries show the US with a somewhat less favorable
trend since 1980 than that of Norway, but better than that
of the UK and Sweden (see left chart).
Some of the variations in the chart represent cyclical changes
in business activity. The longer-term trends reflect a variety
of factors. The favorable direction for Norway, for instance,
results from higher consumption, wealth and security, whereas
the poor performance of Sweden stems largely from increases
in inequality and insecurity, combined with a mediocre increase
in consumption.
Raising important questions
The usefulness of the index is in raising questions such
as, “Why is the US at a lower level than Norway?” One
component of the index suggests part of the answer (see
right chart). These may in turn point out other disparities.
Why, for example, is financial security in the US lower
than in Canada in spite of a more robust US economy? Data
on the component of economic equality might prompt one
to ask why it is falling in most of the 14 countries.
The Osberg-Sharpe indicators measure average quality of
economic life and so tell us nothing about the poor or the
rich. Economist Timothy M. Smeeding of Syracuse University
and sociologist Lee Rainwater of Harvard University have
explored this aspect by measuring the economic prospects
of children whose income is at the 10th, 50th and 90th percentiles
of income distribution – in other words, poor, average
and rich. Their data, for which over 13 industrial countries
for the early and mid-1990s, show that the US is the best
place to be a rich child, but for the poor child the best
place is Norway, which makes substantial cash payments to
families. Poor children in the US have worse prospects than
their counterparts in all studied countries but the UK. The
prospects of the average child, however, are better in the
US than any of the other countries except Switzwerland and
Canada (the completed data for the 13 countries can be seen
at www.sciam.com).
Source: Lars Osberg and Andrew Sharpe and the Centre for the
Study of Living Standards
Copyright 2003 Rodger Doyle. Reprinted with
permission.
<< top >>
Do you have a comment or feedback on
this article? Email
us and let us know what you think.
|
