Compare and Contrast-(Well-being)

Consider GDP and the OECD Better Life Index, as well as the core value of responsible stewardship. What is the link between wealth and well-being, and do governments have a responsibility to address well-being?

The economists assert that there is a positive correlation between economic growth and well-being (of an individual or household). For instance, when an economy grows, it generates employment. As the demand for labor increases, so does the real wage (in the short run). The increase in wage implies that an individual or household has more money to spend now. Generally, an increase in a real wage not only increases the size of consumption and savings for a household/individual but also it improves quality of life. For instance, with the increase in real income, a household/individual can now consume high-quality products that were not accessible before. Therefore, most economists claim that as the size of the economy swells, the quality of life improves.

GDP

Recent studies have shown that an increase in GDP growth rate does not necessarily reduce income inequality between different classes. Sometimes, economic growth benefits only a small segment of society, which has access to most of the resources. The claim that GDP is a misleading economic indicator (as it does not present a detailed picture of an economy and only focuses on certain aspects of an economy) is backed by evidence (The Economist, 2016). For instance, many studies have inferred that the impact of GDP growth on the quality of life is marginal, especially when there is a lack of institutions that are essential to disperse the benefits of economic growth to all segments of society in a systematic manner.

OECD Better Life Index

As GDP provides a distorted image of the economy, different economic indicators have been devised to collect authentic information about the quality of life. For instance, the OECD Better Life Index provides not only authentic information regarding prevailing socioeconomic conditions, but also identifies those factors that improve lives. It allows policymakers to devise such strategies and policies that may improve the lives of individuals by emphasizing relevant socioeconomic factors. It is imperative to understand that GDP generally focuses on classical economic factors, which play a part in economic growth, whereas indicators like OECD Better Life Index emphasize socioeconomic indicators that may improve quality of life of individuals, households or families (OECD.Org, 2018).

Government and Overall Well-being

States came into existence to protect and nourish life. One of its prime obligations is to produce such socioeconomic opportunities that enhance the well-being of the population. Governments, which express the will of the state’s population, are formed to 1) ensure political/economic stability and to 2) improve economic and social prospects. The primary concern of a government is such economic growth that addresses the challenge of unemployment and Scio-economic inequality. Governments around the world acknowledge that when social and income inequality increases, the political, social and economic systems become vulnerable. The consequences of instability are enormous and usually to address these consequences a lot of time and resources are required. Therefore, governments take measures to address the socioeconomic challenges, such as income inequality or overall well-being, when these challenges have not gained strength (Hadden, 2017).

It is also imperative to acknowledge that governments, around the world, now recognize that when the quality of life of individuals, households or families improves, the economy swells at a faster pace. Also, governments can realize socioeconomic objectives by employing fewer resources. Therefore, it has become essential for the government to devise such strategies and policies that address the well-being of the general public. In developed countries, governments are emphasizing well-being to realize macroeconomic objectives. However, it is also a fact that the instruments that are devised to address the well-being of a population are maturing or improving, which is why they are slightly failing to address the challenge/concern effectively.

References

Hadden, D. (2017, February 20). Why Should Government Policy Include Happiness? Retrieved from https://freebalance.com/national-well-being-sustainability/why-should-government-policy-include-happiness/

OECD.Org. (2018, June 1). Better Life Index – Edition 2017. Retrieved from https://stats.oecd.org/Index.aspx?DataSetCode=BLI

The Economist. (2016, April 30). The trouble with GDP. Retrieved from https://www.economist.com/briefing/2016/04/30/the-trouble-with-gdp.