GDP, Happiness and Wellbeing Flashcards
GDP (Gross Domestic Product)
The value of all goods and services produced in the economy at a given time
- How rich a society is based off real GDP per capita
Composite Indicators
UN uses Human Development Index (measures: life expectancy, school enrolment, adult literacy, GNI)
Genuine Progress Indicator: starts with GDP then adjusts for crime, income inequality, pollution and volunteer work
GDP and Happiness
- GDP is imperfect measurement of standard of living
Happiness economics: quantitative and theoretical study of happiness, well-being and quality of life; combining economics with other fields (sociology, health etc)
The Easterlin Paradox (1974)
In 1974, Richard Easterlin said that between 1946-70 americans had not become happier despite economic growth
- Paradox = At a point in time happiness varies directly with income, both among and within nations, but over time the long-tern growth rates of happiness and income are not significantly related
- Once income reaches a certain level, it is relative income in the country that matters
Veblen Effect
Happiness Economics
Direct negative effect of income inequality on happiness
Good psychological and physical health have a strong effect on SWB
U shaped relationship btw age and SWB
Unemployment has one of the largest negative impacts on SWB
Measuring Happiness
- Subjective wellbeing or happiness: Conviction that there is a quantity of happiness that individuals can experience and can be measured and modelled directly
- SWB data consist of the aggregated self-reports of individuals: what people say when asked.
Well-Being
Objective measures = traditional objective indicators such as level of education, unemployment, crime etc
Subjective measures = peoples self-reported well-being
Indices of Well-Being
Subjective measures of personal and social wellbeing
- Public policy and Institutions should respond to the results of these studies
