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How Do Economists Measure the Quality of Life in a Country? Report

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Updated: May 15th, 2020

Introduction

Economists concentrate on measuring the gross domestic product (GDP) of a particular country as a way of evaluating the progress and appropriation of resources. However, to measure quality of life they rely on more than just the GDP indicators (Constanza, 2008).

This essay seeks to explain how economists will measure quality of life and the problems they are likely to encounter. It also highlights the benefits of indicators used by economists. The essay shows that economists use a number of indicators to explain the affordability of essential services, their accessibility in society, and the satisfaction levels of the general population when accessing services and goods.

Measuring quality of life using indicators

As a way of measuring quality of life, economists first measure the size of an economy and then use social indicators to determine the distribution of wealth. Social indicators used by economists include life expectancy, education standards, housing standards, distribution of income in society, air pollution, congestion, and access to clean drinking water. In addition, economists will also look at social investments and present consumptions. They measure consumption by households and incomes earned by households and match them with the GDP indicator.

They can come up with additional observations to influence their verdict on the quality of life. In countries with sufficient social security programs, household incomes reveal resilience against the devastating effects of recession on household incomes. Thus, the presence of social security can act as an indicator of quality of life. In theory, an increase in social security expenditure will lead to improved livelihood.

Based on this understanding, economists lump quality of life indicators together in a survey and then use the descriptive results of the survey to offer an outlook of people’s lives. According to Diener, Inglehart, and Tay (2013), “life satisfaction surveys are thought to complement existing indicators by reflecting the influences of diverse facets of quality of life and allowing respondents to freely weight different aspects” (p. 498).

Benefits of using quality of life indicators

The indicators provide meaningful data for future planning of resource allocation in society. They allow governments to come up with policies that increase citizen engagement in the process of governance for the benefit of everyone. Through policies influenced by quality of life indicators, societies are able to preserve their environments and develop urban areas in sustainable ways that ensure there is no compromise in quality of life. Overall, indicators make wealth distribution efforts equitable because they provide different parameters for determining neediness of a community or household.

As explained by Greenwood and Holt (2010), “indicators of quality of life can better equip local communities to deal with a variety of issues and to develop an economic development strategy that improves the overall standard of living” (p. 39). The use of indicators in popular quality of life surveys allows economists in different countries to have a universal basis for comparing results, even though not all indicators may be identical in different surveys.

Problems with quality of life indicators and why they are still useful

The mostly used standard survey today covers more than 110 countries and provides different scores for indicators measured. The problem facing many economists as they undertake the measurement task is the inability of non-monetary indicators to be objective. Many of them remain subjective and require a combination with monetary indicators to become comprehensive and reliable measurements. As they use life-satisfaction surveys, economists face a challenge of explaining differences in cultures.

They also have to explain the effect of language differences in different countries or psychological factors that can be responsible for the distortion of responses. Another problem with surveys is that they will carry questions that match the dominant view of life. As an example, Teneguzzi (2015) reports that, “affordable housing is one of the many factors that contribute to the overall quality of life of Albertans and the attractiveness of our province to do business in” (par. 4).

Conclusion

Economists rely on quality of life indicators in addition to GDP when they are measuring the quality of life of a particular country. They use indicators such as access to clean drinking water and education standards of a country. The indicators allow economists in their research and practicing capacity to assist governments in making development policies, wealth distribution policies and to compare progress of societies. Unfortunately, indicators can be cumbersome to use, especially for comparison among countries, because they are subject to prejudicial, language and cultural influences. Nevertheless, they remain inexpensive when used in surveys as instruments for measuring quality of life.

References

Constanza, R., Fisher, B., Ali, S., Beer, C… & Bond, L. et al. (2008). An integrative approach to quality of life measurement, research, and policy. Sapiens, 1(1), 16-21.

Diener, E., Inglehart, R., & Tay., L. (2013). Theory and validity of life satisfaction scales. Social Indicators Research, 112(3), 497-527.

Greenwood, D. T., & Holt, R. P. (2010). Local economic development in the 21st century: Quality of life and sustainability. Abingdon, OX: M. E. Sharpe.

Teneguzzi, M. (2015, March 13). .

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