Marc Fleurbaey, Michel Fouquin & Guillaume Gaulier
"Going Beyond GDP – But How Far?"
La Lettre du CEPII N°312, June 2011, CEPII.
Although economists have long stressed the limitations of using GDP to evaluate standards of living, the debate was recently reignited by the publication of the Stiglitz report. In 2006, the CEPII proposed an indicator incorporating certain social data items, in terms of equivalent incomes, such as leisure time, poverty associated with unemployment, longevity and size of households; this indicator takes also account of inequalities, exhaustion of natural resources, deterioration of the environment and consumption of fixed capital. In this Letter, we propose to update this indicator and above all to extend it to cover the major emerging countries. Our calculations reveal significant corrections. Generally speaking, however, aside from the fact that the size of families is now taken into account, the various corrections applied make hardly any difference to the country rankings. Overall, the same countries still suffer from low income per inhabitant, serious inequalities, a high death rate and a lack of time devoted to leisure activities.
Welfare economics ; inequality ; equivalent income