Beyond GDP? Welfare Across Countries and Time

Abstract

We propose a summary statistic for the economic well-being of people in a country. Our measure incorporates consumption, leisure, mortality, and inequality, first for a narrow set of countries using detailed micro data, and then more broadly using multi-country data sets. While welfare is highly correlated with GDP per capita, deviations are often large. Western Europe looks considerably closer to the U.S., emerging Asia has not caught up as much, and many developing countries are further behind. Each component we introduce plays a significant role in accounting for these differences, with mortality being most important.