3 - Measuring Wealth and Human Wellbeing NGE

Defining Wellbeing

• Definition of Wellbeing:

  • The ability of human beings to access the necessities for happy and healthy lives, which includes food, water, education, safety, and security.

Indicators of Wellbeing

Quantitative Indicators

• Definition:

  • Measure wellbeing using numerical data, statistics, and objective figures.

• Characteristics:

  • Provide measurable and comparable information.

• Examples of Quantitative Indicators:

  • GDP per capita

  • Life expectancy

  • Literacy rates

  • Unemployment rates

Qualitative Indicators

• Definition:

  • Measure wellbeing using subjective, descriptive, and non-numerical data.

• Characteristics:

  • Focus on people's experiences, opinions, and perceptions.

• Examples of Qualitative Indicators:

  • Happiness and life satisfaction surveys (self-reported happiness)

  • Access to cultural and recreational activities

  • Social cohesion and sense of belonging

Comparison between Quantitative and Qualitative Indicators

Quantitative Indicators

• Advantages:

  • Easy to measure and compare across populations.

  • Provides clear, statistical evidence for trends.

  • Useful for making policy and economic decisions.

• Disadvantages:

  • May not capture people's actual quality of life or happiness.

  • Reductionist—simplifies wellbeing into numbers, missing important human experiences and social contexts.

  • Data can be misinterpreted without proper context.

Qualitative Indicators

• Advantages:

  • Provides an in-depth understanding of people's experiences.

  • Captures emotional aspects of wellbeing.

  • Highlights issues beyond quantitative data.

• Disadvantages:

  • Difficult to measure and compare accurately.

  • Subjective—dependent on personal opinions.

  • Harder to utilize for policy decisions.

Categories of Wellbeing Indicators

1. Social:

   • Measures demographic, social, and health indicators (e.g., population growth, literacy, life expectancy).

2. Technological:

   • Examines the impact of technology on wellbeing (e.g., access to electricity and the internet).

3. Environmental:

   • Assesses natural and man-made factors affecting wellbeing (e.g., CO₂ emissions, access to fresh water).

4. Economic:

   • Quantifies living standards through income and employment indicators (e.g., GDP).

5. Political:

   • Evaluates effective governance and safety in living and working conditions (e.g., defence spending, female political representation).

Traditional Ways of Defining Development

1. Developed or Developing

2. North or South

3. First World or Third World

• Concerns about Labels:

  • What might be problematic about these classifications?

Newly Industrialised Countries (NICs) and Emerging Economies (EEs)

• NICs:

  • Nations such as China, India, and Brazil that are modernizing and experience rapid economic growth.

• EEs:

  • Countries also undergoing economic growth but facing political, monetary, or social challenges (e.g., China, India, Saudi Arabia).

Key Vocabulary

• Gross Domestic Product (GDP):

  • Total monetary value of all goods and services produced in a country over a specific time period.

• Literacy Rates:

  • Statistical measures indicating the percentage of adults who can read and write, generally over the age of 15.

Measuring Wealth: Gross Domestic Product (GDP)

• Definition and Calculation:

  • GDP measures the total value of all goods and services produced in a year, divided by the population to obtain GDP per capita.

  • Example: In 2012, Qatar's GDP per capita was $103,900, while the Democratic Republic of the Congo's was $272; Australia's was $42,000.

Contrasts in Wealth

• Global Wealth Distribution:

  • The richest 1% of the global population holds about the same wealth as the poorest 56%, which equates to approximately 3.5 billion individuals.

  • Notably, all 10 of the world’s poorest countries are located in Africa.

Assessment Questions

1. What does GDP per capita measure, and how is it calculated?

   • GDP per capita measures the average economic output per person. It is calculated by dividing a country’s total GDP by its population.

2. Why might similar GDP per capita between two countries not reflect identical living standards?

   • Factors include income distribution inequalities, differences in the cost of living, and disparity in public services and infrastructure.

3. How can GDP per capita be misleading as an economic well-being indicator?

   • It may overlook income inequality, non-market activities, environmental degradation, and informal economy transactions.