Economics: Measuring Well-being and Development

Wellbeing

• Wellbeing refers to the state of being comfortable, happy, or healthy, having what one needs to live a good and dignified life.

Measures of Wellbeing

• GPD (Gross Domestic Product) per capita is the main global method to measure development, which is the total value of all goods and services produced in a country over one year.

Measuring Indicators

• Indicators are measures used to measure people's living conditions and wellbeing, which can be qualitative (soft) or quantitative (hard).
• Qualitative indicators are measured through written or spoken narratives, which are subjective, process-oriented, and non-standardized.
• Quantitative indicators are measured through numbers and mathematical calculations, which are focused, objective, outcome-oriented, standardized, and numeral.

Types of Indicators

• Indicators can be categorized, and examples include HDI (Human Development Index) and HPI (Happy Planet Index).
• HDI combines life expectancy index (health), education index (knowledge), and income index (standard of living).
• HPI combines ecological footprint – environmental efficiency, experienced wellbeing, life expectancy, and inequality.

Developed and Developing Countries

• MEDC (More Economically Developed Country) has a higher standard of living, advanced industrial infrastructure, and a higher GDP.
• LEDC (Less Economically Developed Country) has a lower standard of living, less advanced economy, and a lower GDP.
• NIC (Newly Industrialised Country) is a country undergoing rapid modernization and economic growth.
• EE (Emerging Economy) is a country undergoing rapid economic growth but still faces political, social, and monetary challenges.

Poverty

• Poverty is an economic state where an individual lacks the money or material possessions to sustain their basic needs.
• Absolute poverty is the scarcity of material possessions or money to meet basic personal needs.
• Extreme poverty is living on less than $1.90 USD a day (or $2.50 AUD).
• Relative poverty is the number of people who earn less than the median income of the local population.
• Poverty can be caused by historical issues like slavery, and casual factors like poor health, lack of education, social and income inequality, underdevelopment, conflict, corruption, conquest, natural disasters, and inherited poverty (poverty cycle).

Poverty Cycle

• The poverty cycle is a set of factors that allow poverty to continue unless there is an outside intervention.
• Situational poverty and generational poverty are how people enter the cycle.
• Generational poverty is passed on from generation to generation through the cycle.
• Situational poverty is traced to a single incident within the lifetime (e.g., losing a job, natural disaster, or illness).

Correlation and Causation

• Comparing sets of data helps to see what relationship exists between them (similar and different).
• If a relationship exists, it's correlation (positive, negative, or no correlation).
• Correlation does not mean causation.