{ "title": "Measuring the Essence of the Good Life", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball", "canonical": "https://www.imf.org/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball", "overlayPath": "/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/index.md", "summary": "The recognition that GDP cannot encompass many dimensions of well-being has prompted efforts to develop measures that reflect a more complete account of what people care about.", "sections": [ { "heading": "Overview", "content": "- GDP measures the total output of goods and services in an economy but has flaws when used to gauge the well-being of a nation’s residents.\n- Real (inflation-adjusted) per capita GDP in the United States rose from $58,333 in the fourth quarter of 2019 to $58,454 in the second quarter of 2021, yet this rise may not reflect broader social, emotional, and human costs of the COVID-19 pandemic.\n- The article argues for a complementary multi-dimensional measure of national well-being rather than replacing GDP with another one-dimensional metric." }, { "heading": "Limitations of GDP as a Well-Being Measure", "content": "- GDP omits nonmarket aspects of well-being such as leisure time, relationships, and emotional experiences like anxiety and sense of purpose.\n- Market prices used in GDP do not account for differential welfare impact of spending across households (for example, a dollar spent by a family in poverty versus a billionaire’s family).\n- Data availability historically constrained broader indices; for example, the HDI’s dimensions reflect what was widely measured in 1990." }, { "heading": "The Human Development Index (HDI)", "content": "- The HDI is described by the UNDP as “the geometric mean of normalized indices for each of the three dimensions” (a long and healthy life, being knowledgeable, and having a decent standard of living).\n- The geometric mean implies that a percentage change in HDI is the equally weighted average of the percentage changes of its components.\n- The HDI provides a single, simple number that summarizes country performance but is arbitrary in its choice of dimensions and weights." }, { "heading": "Toward Less Arbitrary, Stated-Preference-Based Indices", "content": "- Aim: include many more than three dimensions of well-being and weight them based on the values of people in the country.\n- Surveys can overcome data constraints by capturing dimensions in real time; HDI performance during the pandemic is unknown because the latest HDI numbers available at the time of writing are for 2019.\n- Single-question happiness measures miss aspects people consider when making choices; multiple survey questions reintroduce the weighting problem." }, { "heading": "Proposed Survey-Based Approach and Methodology", "content": "- Weights recommended are relative marginal utilities—estimated from stated preferences in specially designed surveys.\n- Previous work (Benjamin, Heffetz, Kimball, and Szembrot, 2014) asked about 136 aspects of well-being intended to comprehensively reflect proposed aspects of well-being.\n - An actual index should comprise fewer aspects and avoid or adjust for conceptual overlaps.\n - The published illustration used 18 of the 136 aspects to show results.\n - The weight on the top aspect—freedom from corruption, injustice, and abuse of power—is normalized to 1.00.\n- Two types of survey questions to construct personal well-being indices:\n - Ratings: respondents move a slider from 0 to 100 to indicate their level of an aspect of well-being over the past year.\n - Trade-offs: respondents choose between two options in which levels of one or more aspects are slightly higher or lower than the reported rating; national policy choice questions are an illustration.\n- Construction logic: substitute reported levels from ratings for quantities and use estimated weights from trade-offs in place of prices, analogous to consumption measurement in national accounts." }, { "heading": "Methodological Advances and Remaining Challenges", "content": "- Calibration questions address large differences in how people use rating scales (e.g., some use 0–100, others 50–100); calibration ratings can correct for some scale-use differences across individuals and potentially across time.\n- Heterogeneity in trade-offs: demographic characteristics (such as age and education) and overall well-being likely affect trade-offs; systematic tendencies can be used to create reasonable weights without estimating each individual’s weights separately.\n- Inequality adjustment: the index should account for inequality in personal well-being, not merely aggregate personal indices; societal aversion to well-being inequality requires employing a level of inequality aversion to transform personal indices before totaling to a national index." }, { "heading": "Key Findings from the Stated-Preference Results", "content": "- Many top-weighted aspects are capabilities in Sen’s sense and help make a good life possible.\n- Several important aspects of well-being with weights at least 75 percent of the top aspect are missing from many existing measures such as the HDI.\n- Some widely collected aspects have relatively low weights compared with top aspects:\n - “People not feeling anxious” is weighted less than a quarter of the top aspect.\n - For HDI-relevant aspects: “people’s health” and “people’s financial security” have almost three-quarters the weight of the top aspect.\n - Knowledge, skills, and access to information; understanding the world; long lives; and average income have weights no higher than 54 percent of the top aspect." }, { "heading": "Policy Implications and Recommendations", "content": "- Policymakers and development practitioners should carefully consider which metrics they monitor and how those metrics are weighted: “What gets measured, gets treasured” and “What we give weight to, we value.”\n- A theoretically grounded national well-being index should:\n - Include multiple components beyond GDP and HDI dimensions.\n - Use survey-based stated preferences to derive weights that reflect population values and marginal utilities.\n - Correct for scale-use differences via calibration questions.\n - Incorporate demographic heterogeneity in trade-offs to generate feasible weights.\n - Adjust for inequality in personal well-being with an explicit inequality aversion transformation before aggregation.\n\nSource: Measuring the Essence of the Good Life, F&D Magazine, December 2021.\n\n---\n\n Content in this bundle\n\n- قياس جوهر الحياة الكريمة\n - قياس جوهر الحياة الكريمة (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - قياس جوهر الحياة الكريمة (PDF){rel=\"external\" type=\"application/pdf\"}\n- Medir la esencia de una buena vida ● Finanzas y Desarrollo ● Diciembre de 2021\n - Medir la esencia de una buena vida ● Finanzas y Desarrollo ● Diciembre de 2021 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Medir la esencia de una buena vida ● Finanzas y Desarrollo ● Diciembre de 2021 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Quantifier l’essence du bonheur\n - Quantifier l’essence du bonheur (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Quantifier l’essence du bonheur (PDF){rel=\"external\" type=\"application/pdf\"}\n- Measuring the Essence of the Good Life\n - Measuring the Essence of the Good Life (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Measuring the Essence of the Good Life (PDF){rel=\"external\" type=\"application/pdf\"}\n- ЧЕМ ИЗМЕРИТЬ хорошую жизнь\n - ЧЕМ ИЗМЕРИТЬ хорошую жизнь (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - ЧЕМ ИЗМЕРИТЬ хорошую жизнь (PDF){rel=\"external\" type=\"application/pdf\"}\n- 美好生活的衡量指标 ● 《金融与发展》● 2021年12月号\n - 美好生活的衡量指标 ● 《金融与发展》● 2021年12月号 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 美好生活的衡量指标 ● 《金融与发展》● 2021年12月号 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/bundle-manifest.json)", "Authors: DANIEL BENJAMIN, KRISTEN COOPER, ORI HEFFETZ, MILES KIMBALL", "Published: December 2, 2021", "GDP measures the total output of goods and services in an economy but has flaws when used to gauge the well-being of a nation’s residents.", "Real (inflation-adjusted) per capita GDP in the United States rose from $58,333 in the fourth quarter of 2019 to $58,454 in the second quarter of 2021, yet this rise may not reflect broader social, emotional, and human costs of the COVID-19 pandemic.", "The article argues for a complementary multi-dimensional measure of national well-being rather than replacing GDP with another one-dimensional metric.", "GDP omits nonmarket aspects of well-being such as leisure time, relationships, and emotional experiences like anxiety and sense of purpose.", "Market prices used in GDP do not account for differential welfare impact of spending across households (for example, a dollar spent by a family in poverty versus a billionaire’s family).", "Data availability historically constrained broader indices; for example, the HDI’s dimensions reflect what was widely measured in 1990.", "The HDI is described by the UNDP as “the geometric mean of normalized indices for each of the three dimensions” (a long and healthy life, being knowledgeable, and having a decent standard of living).", "The geometric mean implies that a percentage change in HDI is the equally weighted average of the percentage changes of its components.", "The HDI provides a single, simple number that summarizes country performance but is arbitrary in its choice of dimensions and weights.", "Aim: include many more than three dimensions of well-being and weight them based on the values of people in the country.", "Surveys can overcome data constraints by capturing dimensions in real time; HDI performance during the pandemic is unknown because the latest HDI numbers available at the time of writing are for 2019.", "Single-question happiness measures miss aspects people consider when making choices; multiple survey questions reintroduce the weighting problem.", "Weights recommended are relative marginal utilities—estimated from stated preferences in specially designed surveys.", "Previous work (Benjamin, Heffetz, Kimball, and Szembrot, 2014) asked about 136 aspects of well-being intended to comprehensively reflect proposed aspects of well-being.", "Two types of survey questions to construct personal well-being indices:", "Construction logic: substitute reported levels from ratings for quantities and use estimated weights from trade-offs in place of prices, analogous to consumption measurement in national accounts.", "Calibration questions address large differences in how people use rating scales (e.g., some use 0–100, others 50–100); calibration ratings can correct for some scale-use differences across individuals and potentially across time.", "Heterogeneity in trade-offs: demographic characteristics (such as age and education) and overall well-being likely affect trade-offs; systematic tendencies can be used to create reasonable weights without estimating each individual’s weights separately.", "Inequality adjustment: the index should account for inequality in personal well-being, not merely aggregate personal indices; societal aversion to well-being inequality requires employing a level of inequality aversion to transform personal indices before totaling to a national index.", "Many top-weighted aspects are capabilities in Sen’s sense and help make a good life possible.", "Several important aspects of well-being with weights at least 75 percent of the top aspect are missing from many existing measures such as the HDI.", "Some widely collected aspects have relatively low weights compared with top aspects:", "Policymakers and development practitioners should carefully consider which metrics they monitor and how those metrics are weighted: “What gets measured, gets treasured” and “What we give weight to, we value.”", "A theoretically grounded national well-being index should:", "**قياس جوهر الحياة الكريمة**", "**Medir la esencia de una buena vida ● Finanzas y Desarrollo ● Diciembre de 2021**", "**Quantifier l’essence du bonheur**", "**Measuring the Essence of the Good Life**", "**ЧЕМ ИЗМЕРИТЬ хорошую жизнь**", "**美好生活的衡量指标 ● 《金融与发展》● 2021年12月号**" ], "related": [ { "title": "قياس جوهر الحياة الكريمة", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/ar/kimball.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/ar/kimball.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/ar/kimball.pdf", "mime": "application/pdf" } }, { "title": "Medir la esencia de una buena vida ● Finanzas y Desarrollo ● Diciembre de 2021", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/es/kimball.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/es/kimball.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/es/kimball.pdf", "mime": "application/pdf" } }, { "title": "Quantifier l’essence du bonheur", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/fr/kimball.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/fr/kimball.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/fr/kimball.pdf", "mime": "application/pdf" } }, { "title": "Measuring the Essence of the Good Life", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/kimball.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/kimball.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/kimball.pdf", "mime": "application/pdf" } }, { "title": "ЧЕМ ИЗМЕРИТЬ хорошую жизнь", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/ru/benjamin.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/ru/benjamin.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/ru/benjamin.pdf", "mime": "application/pdf" } }, { "title": "美好生活的衡量指标 ● 《金融与发展》● 2021年12月号", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2021/december/zh/kimball.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2021/december/zh/kimball.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2021/december/zh/kimball.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/index.md", "json": "/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/index.json", "bundleManifest": "/en/publications/fandd/issues/2021/12/measuring-essence-good-life-benjamin-cooper-heffetz-kimball/bundle-manifest.json" }, "generatedAtUtc": "2026-09-15T17:20:23.773Z" }