Growth, Income Distribution, and Well-Being: Comparisons Across Space and Time

Abstract

We use several well-being measures that combine average income with a measure of inequality to undertake international, intertemporal, and global comparisons of well-being. The conclusions emerging from the analysis are that our well-being measures drastically change our impression of well-being levels at the national and, more so, at the global level. They also significantly affect the ranking of countries, when compared to rankings based on real incomes. The impact of these measures on temporal trends in well-being is small on average, but significant for a number of countries where inequality changed considerably in past decades. These results appear not very sensitive to the data on inequality which this analysis is based upon. However, since the inclusion of inequality has an important impact on well-being comparisons, it is of great importance to generate intertemporally as well as internationally comparable data on inequality that are necessary for such comparisons.

JEL Classification: I31, D63