Lackluster economic growth is a big concern, and for good reason. GDP per capita is an indicator of material living standards. But it tells little about broader wellbeing. Do we have time to spend with our friends and family? Are we healthy? Rested? Happy?
Charles Jones and Peter Klenow, writing in the American Economic Review, have developed a new metric of living standards that incorporates elements like leisure and inequality that are too often ignored in our traditional economic statistics.
The U.S. is way ahead of countries like France on narrow economic metrics: French GDP per capita is less than two-thirds that of the United States. But when a broader metric is used, the gap is much narrower: Jones and Klenow find that the average person in France was about 92 percent as well-off as the average American.
On at least three fronts, the French can claim to be leading better lives:
1. Americans work an extra hour every day
In 2015, the average employee worked 1,482 hours in France and 1,790 hours in the U.S. Even off the clock, Americans still spend more time working:
2.The gap between rich and poor is much wider in the U.S. than France
Inequality is more severe in America than in France. The share of income taken by the top 1 percent in France increased by 7 percent between 1970 and 2012. In the U.S., richer households saw a dramatic jump in their income share, with the top 1 percent share soaring by 142 percent:
It is important not to paint too gloomy a picture. Even taking into account these other variables, the new metric still puts the U.S. ahead of France. Life in America is still good—just not as good as narrow economic measures suggest.
GDP is a vitally important and necessary measure, not least for helping guide monetary and fiscal policy. But it does not capture all of the things that make life worth living. We should pay more attention to alternative metrics and learn some lessons from the French approach to life. Vive la France!
Global Economy & Development A look back at 2023—and what’s in store for 2024—from the Global Economy and Development program
Brahima Sangafowa Coulibaly, Zia Qureshi, Aloysius Uche Ordu, Arushi Sharma, Jennifer L. O’Donoghue, Rebecca Winthrop, Alexandra Bracken, John W. McArthur
That article touches on economic growth, living standards, and alternative metrics beyond GDP to measure wellbeing. The authors, Eleanor Krause and Isabel V. Sawhill, highlight how traditional economic indicators like GDP per capita don't fully represent overall quality of life. They reference Charles Jones and Peter Klenow's work on a new metric that considers elements like leisure and inequality often overlooked in economic statistics.
Three key points emerge:
Work Hours: Americans work longer hours than the French, impacting leisure and work-life balance.
Inequality: The gap between rich and poor is wider in the U.S. than in France.
Health: Despite higher healthcare spending, the U.S. lags behind France in health outcomes like life expectancy and infant mortality rates.
The article emphasizes the importance of considering alternative metrics for assessing a nation's wellbeing beyond economic growth. Despite the U.S. leading in some aspects, factors like slowing life expectancy improvements and increased inequality restrain overall welfare.
The authors advocate for a more comprehensive approach to assessing societal progress, echoing the sentiment that GDP alone doesn't capture the essence of a fulfilling life. They suggest learning from the French approach to life and paying attention to alternative metrics.
Regarding other concepts used in related articles:
Global Economy & Development: These pieces likely discuss the global economic landscape, potential development strategies, and insights into economic changes worldwide.
Sustainable Development Goals (SDGs): These refer to a set of global objectives set by the United Nations to achieve a more sustainable future by addressing various social, economic, and environmental challenges by 2030.
Development Financing: This field involves strategies and mechanisms to fund and support initiatives aimed at global development, potentially touching upon impact bonds and innovative financing models.
Social Impact Bonds: These financial instruments aim to generate social and financial returns by funding social programs through private investments, focusing on achieving predefined social outcomes.
These topics likely delve into global economic trends, sustainable development initiatives, innovative financial models for societal advancement, and the pursuit of broader social well-being.
Introduction: My name is Greg O'Connell, I am a delightful, colorful, talented, kind, lively, modern, tender person who loves writing and wants to share my knowledge and understanding with you.
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