Measuring well-being by a multidimensional spatial model in OECD Better Life Index framework

Greco, Salvatore and Ishizaka, Alessio and Resce, Giuliano and Torrisi, Gianpiero (2017): Measuring well-being by a multidimensional spatial model in OECD Better Life Index framework.

Abstract

We propose a multidimensional spatial model to evaluate the well-being using the Better Life Index (BLI) in 36 countries according to a two-steps procedure. First, we position the countries as points in the Euclidean K-dimensional space in which each dimension is a specific aspect of well-being as measured in the BLI. Second, we consider each individual/voter’s opinions on the same dimensions to calculate the personal optimal point in that same K-dimensional space. Hence, we measure the distance between optimal point of well-being and the actual observed point at individual level. This distance is interpreted as the individuals’ loss in well-being. We show that this loss is negatively related (i) to the overall well-being in terms of BLI and (ii) the main indices of quality of democracy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Better life Index, OECD, Well-being, Loss function
• Subjects: H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs

References

Bentham, J. (1789). An Introduction to the Principles of Morals and Legislation (Payne, London). Reprinted in 1970 in: J.M. Burns and H.L.A. Hart, eds. (Athlone Press, London).

Bleys, B. (2012). Beyond GDP: Classifying Alternative Measures for Progress, Social Indicators Research, 109, 355–376.

Bogomolnaia, A., & Laslier, J. F. (2007). Euclidean preferences. Journal of Mathematical Economics, 43(2), 87-98.

Costanza, R., Daly, L., Fioramonti, L., Giovannini, E., Kubiszewski, I., Mortensen, L. F., ... & Wilkinson, R. (2016). Modelling and measuring sustainable wellbeing in connection with the UN Sustainable Development Goals. Ecological Economics, 130, 350-355.

Costanza, R., Kubiszewski, I., Giovannini, E., Lovins, H., McGlade, J., Pickett, K. E., ... & Wilkinson, R. (2014). Development. Nature, 505(7483), 283-285.

Coyle D. (2014) GDP: A brief but affectionate history, Princeton University Press, Princeton.

Davis, O. A., DeGroot, M. H., & Hinich, M. J. (1972). Social preference orderings and majority rule. Econometrica: Journal of the Econometric Society, 147-157.

De Beukelaer C. (2014) Gross Domestic Problem: The Politics Behind the World's Most Powerful Number, Journal of Human Development and Capabilities 15.2-3, 290-291.

Downs, A. (1957). An economic theory of political action in a democracy. Journal of Political Economy, 65(2), 135-150.

Eguia, J. X. (2011). Foundations of spatial preferences. Journal of Mathematical Economics, 47(2), 200-205.

Enelow, J., & Hinich, M. J. (1981). A new approach to voter uncertainty in the Downsian spatial model. American journal of political science, 483-493.

Feddersen, T. J. (1992). A voting model implying Duverger's law and positive turnout. American journal of political science, 938-962.

Fioramonti L. (2013) Gross domestic problem: The politics behind the world's most powerful number, Zed Books.

Fleurbaey M. (2009) Beyond GDP: The quest for a measure of social welfare, Journal of Economic Literature, 1029-1075

Frey, B. S., & Stutzer, A. (2010). Happiness and public choice. Public Choice, 144(3-4), 557-573.

Helliwell, J. F., Huang, H., & Wang, S. (2016). The distribution of world happiness. WORLD HAPPINESS, 8.

Herve´, M. (2015). RVAideMemoire: Diverse basic statistical and graphical functions, R package version 0.9-52. http://CRAN.R-project.org/package=RVAideMemoire.

Hirschman A.O. (1970) Exit, voice, and loyalty: Responses to decline in firms, organizations, and states (Vol. 25). Harvard university press.

Hortala-Vallve, R., & Esteve-Volart, B. (2011). Voter turnout and electoral competition in a multidimensional policy space. European journal of political economy, 27(2), 376-384.

Hotelling, H. (1929). Stability in competition. Economic Journal, 39 (153), 41-57.

Karabell Z. (2014) The leading indicators: a short history of the numbers that rule our world, Simon and Schuster.

Kaufmann, D., Kraay, A., & Mastruzzi, M. (2011). The worldwide governance indicators: methodology and analytical issues. Hague Journal on the Rule of Law, 3(2), 220-246.

Kramer, G. H. (1977). A dynamical model of political equilibrium. Journal of Economic Theory, 16(2), 310-334.

Minkowski, H. (1886). Geometrie der Zahlen. Teubner Verlag, Leipzig.

Mizobuchi, H. (2014). Measuring world better life frontier: a composite indicator for OECD better life index. Social Indicators Research, 118(3), 987-1007.

OECD. (2011). Compendium of Oecd well-being indicators. Paris: OECD Publishing.

Patrizii, V., Pettini, A., & Resce, G. (2017). The Cost of Well-Being. Social Indicators Research, 133(3), 985-1010.

Rawls, J. (1971). A Theory of Justice, Harvard University Press, Cambridge, Mass.

Schofield, N. (2007). The mean voter theorem: necessary and sufficient conditions for convergent equilibrium. The Review of Economic Studies, 74(3), 965-980.

Schofield, N., & Sened, I. (2006). Multiparty democracy: elections and legislative politics. Cambridge University Press.

Smith, W. D. (2000). Range voting. The paper can be downloaded from the author’s homepage at http://www. math. temple. edu/~ wds/homepage/works. html.

Stiglitz, J. E., Sen, A., & Fitoussi, J. P. (2010). Report by the commission on the measurement of economic performance and social progress. Paris: Commission on the Measurement of Economic Performance and Social Progress.

Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of political economy, 64(5), 416-424.

UNDP (1996) Human Development Report. United Nation Development Programme, Nairobi, Kenia.

UNDP. (1990). UNDP Human Development Report 1990 Oxford University Press, New York