Pakistan Institute of Development Economics



Dimensions of Well-being and the Millennium Development Goals

The concept of well-being has deep roots in philosophy [Cantril (1965)]. Much later in the 19th century modern definitions of well-being emerged. The utilitarian movement defined well-being subjectively and proclaimed individuals’ well-being as an important goal of individuals’ behaviour and public policy. During the 20th century social scientists started to examine well-being empirically, but a unified concept of wellbeing was lacking. At the beginning of the 20th century, economists developed elaborate quantitative theories of well-being, but rejected the possibility that individuals’ could provide valid reports of their own well-being. In the second half of the 20th century social scientists started to develop subjective measures of well-being, and started to examine how these measures relate to demographic variables or other characteristics of individuals [Andrews and Withey (1976)]. The relationship between GDP and well-being likely depends on how rich a country is. As income increases it contributes little to overall well-being at low levels of GDP in poor country, since only a narrow segment of the population is benefiting directly. Moreover, as noted by Sen (2001) non-monetary benefits such as health and education that improve individual capabilities are often more important than income in poor countries. As the benefits of continued growth trickle down to a burgeoning middle class, social well-being rises dramatically [Torras (2008)]. It is in this context that a number of alternatives to GDP have been introduced. For example, the United Nations Development Programme’s (UNDP) human development index (HDI) uses GDP per capita to measure “access to economic resources” in well-being assessments but accords it only one-third weight in determination of the level of human development. Although national income accounting measures may sometimes not agree with popular perceptions of trends in economic well-being, GDP per capita is one of the three main components of the HDI, whose objective is to indicate the capability of people “to lead a long and healthy life, to acquire knowledge and to have access to resources needed for a decent standard of living” [Osberg and Andrew (2005)].

Rashida Haq, Uzma Zia