Initiated by French President Nicolas Sarkozy and chaired by Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen and by Jean-Paul Fitoussi, the Commission on the Measurement of Economic Performance and Social Progress delivered its final report in September 2009 (Stiglitz, Sen and Fitoussi, 2009). Its key message was that in an increasingly performance-oriented society, metrics matter. What we measure affects what we do. If we have the wrong metrics, we will strive for the wrong things. In the quest to increase GDP, we may end up with a society in which citizens are worse off.
The principles expressed by the Stiglitz report are remarkably similar to those underlying the Index of Economic Well-being (IEWB), a composite index developed in the late 1990s by Lars Osberg and Andrew Sharpe, published in the Review of Income of Wealth in 2002 and 2005 (Osberg and Sharpe, 2002 and 2005) and recently updated (Osberg and Sharpe, 2009a and 2009b). The salient feature of this index is that it organized the economic well-being domain into four dimensions: consumption flows, stocks of wealth, equality, and economic security.
The objective of this paper is to present new estimates of the Index of Economic Well-being and its components for the 1980-2009 period for 14 OECD countries. The paper discusses the factors behind trends in the Index, with a particular emphasis on the impact of the economic crisis on economic well-being. The paper also highlights the commonality between the recommendations of the Stiglitz report and the IEWB.
Keywords: Economic well-being; Economic security
Biography: Andrew Sharpe is founder and Executive Director of the Ottawa-based Centre for the Study of Living Standards (CSLS). Established in 1995, CSLS is a national, independent, non-profit research organization. Its main objectives are to study trends and determinants of productivity, living standards and economic well-being and to develop policy recommendations to improve the lives of Canadians. He has held a variety of earlier positions, including Head of Research at the Canadian Labour Market and Productivity Centre and Chief of Business Sector Analysis at the Department of Finance. He is also founder and Editor of the International Productivity Monitor and Executive Director of the International Association for Research in Income and Wealth, an international research association dedicated to the advancement of knowledge relating to income and wealth. He holds a M.A. and Ph.D in economics from McGill University and a maitrise in urban geography from the Université de Paris-Sorbonne.