Wellbeing: A Complete Reference Guide, Volume V, Economics of Wellbeing

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Does Money Buy Me Love?

Testing Alternative Measures of National Wellbeing

Arthur Grimes

Motu Economic and Public Policy Research, New Zealand

Les Oxley

University of Waikato, New Zealand

Nicholas Tarrant

GT Research and Consulting, New Zealand

Introduction

Although material prosperity in most nations, including New Zealand, has increased over the past 50 years, many people suffer from uncertainties and anxieties, social and economic divisions are widening, and concern is growing about environmental degradation. Life satisfaction and happiness have not changed much in many developed countries despite decades of rising gross domestic product (GDP) per capita (Easterlin, 1974; Helliwell, Layard, & Sachs, 2012; Layard, 2011). Nevertheless, policy makers in most countries do aim to improve living standards sustainably into the future. Two questions then arise: Are policy makers' current behaviors sustainably increasing wellbeing?; and How would they know that this is the case? In order to answer these questions, policy makers and researchers typically use one or more aggregate measures of wellbeing and/or sustainability as inputs into their evaluations of whether policies and outcomes are on a desirable track.

Many measures of aggregate wellbeing and sustainability exist. We compile a range of existing aggregate wellbeing measures including: material measures such as GDP per capita (GDP(pc)), surveyed measures such as life satisfaction, and composite measures such as the Human Development ...