Going beyond GDP with a parsimonious indicator: inequality-adjusted healthy lifetime income

Abstract

Per capita GDP has limited use as a well-being indicator because it does notcapture many dimensions that imply a “good life”, such as health and equality ofopportunity. However, per capita GDP has the virtues of being easy to interpret andto calculate with manageable data requirements. Against this backdrop, there is aneed for a measure of well-being that preserves the advantages of per capita GDP,but also includes health and equality. We propose a new parsimonious indicatorto fill this gap, and calculate it for 149 countries. This new indicator could beparticularly useful in complementing standard well-being indicators during theCOVID-19 pandemic. This is because (i) COVID-19 predominantly affects olderadults beyond their prime working ages whose mortality and morbidity do notstrongly affect GDP, and (ii) COVID-19 is known to have large effects on inequalityin many countries.

Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

“…Narrow economic considerations take inadequate account of the ethical, normative, and political dimensions of decisions that relate to saving lives, particularly the lives of vulnerable members of the population who depend on the actions of others and who might not contribute economically by participating in the labor market (e.g., because of age or illness). While welfare economics has long gone beyond a focus on gross domestic product (GDP) and while practical well-being indicators have recently been developed that emphasize life expectancy and health (e.g., Jones, 2016;Jones and Klenow, 2016;Kuhn and Prettner, 2016;Fan et al, 2018;Frankovic and Kuhn, 2018;Bloom et al, 2020a), they might still not fully capture all aspects of living a healthy life without pain and suffering.…”