Custom essays on Well-Being GDP: Its Historical Background and Its Future

The rapid development of technologies and science stimulated the growing concern of people with their education. In actuality, the education plays an important part in the life of the society. In the late 20th century, the higher education was an essential condition of an effective and successful career development. Therefore, the education has become one of the items affecting the well-being of people. Moreover, the education affected consistently the development of economies at large. What is meant here is the fact that the educational level of countries defines their competitive position in international markets. Today, knowledge and information play the crucial role in the economic development of countries because they can use the intellectual potential of the nation to accelerate their economic development. Knowledge and information stimulate the development and implementation of innovations, which, in their turn, accelerate the economic development of countries. In such a situation, the education becomes one of the essential items of the concept of well-being. No wonder, the concept of the well-being GDP is often closely intertwined with the measurement and evaluation of the educational level of countries and their educational systems.
In actuality, the well-being GDP is one of the most prospective concepts, which combines the elements of the traditional GDP with ideas of the welfare state and progressive ideas of the well-being of people. This concept is extremely popular today and it stands on the ground that people can be happy only if they have not only material values but also non-material ones and the state should assist people to increase their well-being.
Efforts for well-being GDP developments among major nations
The idea of the well-being GDP has become very popular in recent years. At the same time, some states have made efforts to implement the concept of the well-being GDP since the late 20th century but till today there is not a single state that proved to be really successful in this regard. On analyzing efforts of major nations to implement the idea, it is possible to refer to the experience of the US, which introduced the Human Development Index (HDI) to measure the well-being GDP development. In actuality, the US introduced the concept of the HDI independently of the concept of the well-being GDP but basically the idea of HDI met the concept of the well-being GDP because the HDI aimed at the measurement and evaluation of the human development, which included standards of living of the population, their education, public health and other factors which influenced the quality of life and which were not always linked directly to the economy and economic development of countries as well as the level of income of people.
Researchers (Pine and Gilmore, 194) lay emphasis on the fact that the HDI introduced in the US focused on the items which have never been enrolled by the traditional GDP. The HDI focused on the human capital of the US, its measurement and evaluation. The US understood the importance of human capital in the contemporary world and the HDI measurement became an effective way to assess and evaluate the current level of development of the US and compare it to other countries. The HDI allowed the US to assess the quality of life in the US and to evaluate the potential of human capital in the US. However, the HDI alone proved to be insufficient to measure and evaluate the well-being GDP because it failed to measure the happiness of the population as well as some other important items.
Nevertheless, the experience of the US was borrowed by other states, who started to measure their HDI to assess their current position and to assess their competitive prospects in the world market. Remarkably, the HDI proved to be quite efficient to assess and evaluate the human capital and potential of countries but it did not provide sufficient data for the analysis in terms of the well-being GDP. For instance, the HDI failed to take into consideration the children care, or the elderly people care, and others. Therefore, these efforts were useful but not sufficient to implement the concept of the well-being GDP.
Systems of measurement and evaluation of knowledge capital
In actuality, the concept of the well-being GDP is still a subject to heat debates between specialists because there is no unique approach to the measurement and evaluation of the well-being GDP. Nevertheless, specialists keep working on the assessment and evaluation of the well-being GDP. Today, it is possible to single several items which are crucial for the measurement and evaluation of the well-being GDP, such as happiness, the HDI, the Weighted Index of Social Progress, and others. In this respect, it is worth mentioning the fact that the assessment of happiness is often intertwined with the assessment of the welfare of the population. For instance, in the study conducted by Graham “measures are based on the results of large-scale surveys, across countries and over time, of hundreds of thousands of individuals who are asked to assess their own welfare” (Graham, 2).
At the same time, specialists (Heintz and Folbre, 177) point out that the welfare should not be narrowed to the traditional concept of the welfare used in the GDP assessment and evaluation. The concept of the welfare should be expanded to include a broader assessment of the development of the economy and society at large. Researchers insist on the fact that “the welfare effects of inequality, environmental degradation, and macroeconomic policies such as inflation and unemployment” (Graham, 2-3). On the other hand, the welfare is a milestone of the well-being GDP measurement and evaluation but it is not the only item that has to be taken into consideration.
In actuality, specialists recommend to pay a particular attention to happiness as one of the crucial items in the assessment of the well-being GDP. In this regard, it is important to refer to researches which reveal the fact that “happiness surveys are based on questions in which the individual is asked, ‘Generally speaking, how happy are you with your life’ or ‘How satisfied are you with your life’, with possible answers on a four-to-seven point scale” (Graham, 3). Such studies aimed at the assessment of happiness of people. Taking into consideration the essence of the concept of the well-being GDP, the measurement and evaluation of happiness is particularly important because it mirrors the actual position of people and their satisfaction with their standards of living and their life at large.
Remarkably, some researchers have come to formulas with the help of which they attempt to calculate the well-being GDP as well as happiness: “Micro-econometric happiness equations have the standard form: Wit = α + βxit + εit , where W is the reported well-being of individual i at time t, and X is a vector of known variables including socio-demographic and socioeconomic characteristics” (Graham, 3-4). At first glance, such formulas are very helpful but they do not always work properly because happiness is a very complex concept that cannot always be measured. In such a context, specialists stress that “an important criterion for the reliability of output-based measures is that they are based on observations that are detailed enough to avoid mixing up true volume changes with compositional effects” (Stiglitz, et al., 27). In this respect, it is worth mentioning such items as public health, public services, insurance, education, and others. These items affect the life of people and define their standards of living. They influence directly or indirectly their happiness and well-being at large. The measurement of these items can help to measure and evaluate the well-being GDP. However, these measurements are not always reliable and concise.
In this respect, specialists recommend to improve measurements (Stiglitz, et al., 28). In actuality, it is possible to suggest the following improvements to measurements:
First, focus on household consumption rather than total final consumption (Stiglitz, et al., 28). In such a way, the well-being GDP will be measure on the ground of the consumption of households instead of the total consumption by the national economy. Second, widen the asset boundary (Stiglitz, et al., 28). The measurement should expand the traditional GDP boundaries to such items as health care system, education, public health, insurance, and other items affecting the well-being GDP. Third, widen the household production boundary (Stiglitz, et al., 28-29). The measurement should focus on the knowledge capital which is accumulated by households.
In fact, specialists insist that income, wealth and consumption have to be considered together (Stiglitz, et al., 29). In such a way, it will be possible to assess and evaluate the well-being GDP effectively. On the other hand, such an approach to the well-being GDP measurement and evaluation does not take into consideration such items as public health, education, and others.