Material Well-Being

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Material Well-being Definition

Material well-being is one dimension of human well-being. Material well-being is measured through income, consumption patterns or assets/wealth.

In developing countries, assets of poor people often include land or livestock. No unique definition exists but the concept is most often thought as representing the stock of wealth used to generate well-being. Asset owners usually do not know the values of their assets because of no information of consumer price indexes or they are unable to report land ownership in acreage, asset measurement remains challenging.[1]

Income

Income is a flow indicator and can defined as the amount of money or its equivalent received during a period of time in exchange for labour or services, from the sale of goods or property, or as profit from financial investments.[2]

Asset

Asset is a stock indicator and is also called wealth. One can think of assets as the accumulated resources or incomes that are productive tangible resources that can be exchanged for some value or can be passed on to the next generation.[3]

 

Measurement of material well-being

Measuring assets

In developing countries, measuring assets is still a challenge because of limited knowledge of assets owners about the values of their assets when they asked about in household surveys.

The World Bank's Living Standard Measurement Survey lists durable household goods, livestock, land, and home ownership. The household questionnaire collects information on these assets and calculates an annual use value. To account for the differences in the value of houses, the type of material used to build portions of the house is listed and the data is weighted according the value assigned to the building material.

Another measure of household assets in developing country is the asset index introduced by Filmer and Pritchett (1999). The index uses household data on durable and semi-durable goods and is not prone to measurement error because it requires less data than other measurement tools.[4]

Studies

Edward Wolff, Ajit Zacharias, and Thomas Masterson, "Postwar Trends in Economic Well-Being in the United States,1959–2004", February 2009. The Levy Institute Measure of Economic Well-Being (LIMEW) is a more comprehensive measure than either gross money income or extended income because it includes estimates of public consumption and household production, as well as the long-run benefits from the ownership of wealth. As a result, it provides a picture of economic well-being in the United States that is very different from the official measures. The authors find that median household well-being grew rather sluggishly over the 1959–2004 period compared to the annual growth rate of per capita GDP. They note the crucial role of net government expenditures, and therefore call for the Obama administration’s fiscal stimulus package to improve the broader economic well-being of the poor and the middle class, while also creating jobs.www.levyinstitute.org/publications/

Andrea Brandolini, "Working paper - On applying synthetic indices of multidimensional well-being: Health and income inequalities in selected EU countries", April 2008. The multidimensional view of well-being is receiving growing attention, both in academic research and policy-oriented analysis. This paper examines empirical strategies to measure poverty and inequality in multiple domains, concentrating on two problems in the use of synthetic multidimensional indices: the weighting structure of different functionings and the functional form of the index. These problems are illustrated by comparing inequality and deprivation in income and health in the four largest countries of the EU: France, Germany, Italy and the United Kingdom.[1]

Johannes Schwarze, "Subjective Measures of Economic Well-Being and the Influence of Income Uncertainty", September 2008. This paper provides evidence that subjective measures of individual well being can be used to study the impact of income uncertainty from an ex ante point of view. Two different measures of subjective well being are under study: Satisfaction with household income and the income evaluation question as developed by Van Praag. It can be shown that satisfaction with income is more affected by ex ante than by ex post volatility of income. The ordinal version of the Van Praag approach might be biased if income uncertainty is essential. The paper was written in 1994.[2]

Bert Van Landeghem, Johan Swinnen, and Liesbert Vranken, “Land and Happiness: Land Distribution and Subjective Well-Being in Moldova”, 2008. The distribution of land rights is a very important economic and political issue, and it played a central role in the transition processes in Europe and Asia. This paper analyzes the impact of the distribution of land on household welfare by using subjective well-being (SWB) data from a rural household survey in Moldova, the poorest country in Europe. The recent land reform in Moldova provides a natural experiment on the impact of land ownership distribution on SWB. We find that household land holdings have a positive effect on SWB but neighbours’ average land holdings have a negative effect on SWB. People, regardless of the land distribution and even given the relatively low living standards of these households, rate their welfare by looking at how much other people possess. The findings of the paper have more general implications as it is one of the first attempts to measure the impact of wealth, rather than income, on SWB.[3]

Daniel Kahneman and Alan B. Krueger, "Developments in the Measurement of Subjective Well-Being", Journal of Economic Perspectives—Volume 20, Number 1—Winter 2006—Pages 3–24. In this paper, we discuss research on how individuals’ responses to subjective well-being questions vary with their circumstances and other factors. We will argue that it is fruitful to distinguish among different conceptions of utility rather than presume to measure a single, unifying concept that motivates all human choices and registers all relevant feelings and experiences. While various measures of well-being are useful for some purposes, it is important to recognize that subjective well-being measures features of individuals’ perceptions of their experiences, not their utility as economists typically conceive of it. Those perceptions are a more accurate gauge of actual feelings if they are reported closer to the time of, and in direct reference to, the actual experience. We conclude by proposing the U-index, a misery index of sorts, which measures the proportion of time that people spend in an unpleasant state, and has the virtue of not requiring a cardinal conception of individuals’ feelings.[4]

Ming-Chang Tsai, "Does globalization affect human well-being?", 14 March 2006. The prevailing theorizing of globalization’s influence of human well-being suggests to assess both the favorable and unfavorable outcomes. This study formulates a dialectical model, adopts a comprehensive globalization measure and uses a three-wave panel data during 1980–2000 to empirically test direct and indirect effects of global flows’ human consequences. The outcomes from random effect modeling reveal significant positive impacts of political globalization, whereas economic and social globalization do not generate favorable influences when development level and regional differences are operated as controls. The overall globalization index is found to generate expected favorable influence on an overall human development index. Within developing countries, globalization’s human influence was not as significant as in industrial countries, however. Several hypotheses about globalization’s potential negative effects through increasing societal instabilities and reducing state power and social spending are not supported in analysis. It is concluded that globalization identified by increased global flows and exchanges contributes rather than hampers progress in human welfare.[5]

John F. Helliwell, “Well-being, social capital and public policy: what’s new?”, December 2005. This paper summarizes recent empirical research on the determinants of subjective well-being. Results from national and international samples suggest that measures of social capital, including especially the corollary measures of specific and general trust, have substantial effects on well-being beyond those flowing through economic channels. Cross-national samples (supported by parallel analysis of suicide data) show large well-being effects from social capital and from the quality of government. Finally, Canadian life-satisfaction data show that several non-financial job characteristics, and especially the climate of workplace trust, have very large income-equivalent effects.[6]

Laura Camfield, “Using subjective measures of wellbeing in developing countries”, September 2003. The paper explores the conceptual and methodological issues entailed in using subjective measures of wellbeing, especially outside the Euro-American context in which they were developed. In the first part I define, situate and contrast subjective quality of life (QoL), subjective wellbeing (SWB), and wellbeing. I also look at the conceptual and methodological shortcomings of subjective measures of wellbeing and suggest ways of overcoming these by combining different approaches. I then explore how an expanded concept of subjective quality of life fits into the theoretical framework of the UK-based Wellbeing in Developing Countries study (or WeD) , specifically how it will adapt the methodology of the WHOQOL group [1995; 1998] to produce a new measure of ‘development-related’ QoL.[7]

Sergiu Bălţătescu, “Trust in institutions and well-being: a state of art”, Analele Universitatii din Oradea, Fascicula Sociologie-Filosofie-Asistenta Sociala, 1, pages 95-99, 2002. This essay explores the aspects and implications of the relationship between trust in institution and well-being. The issue concerns the researchers engaged in the study of social transformations. Especially the American, but also European and Australian political scientists signaled a decline of trust in institutions. Some consider this as being totally benign, framing it in the whole “secular trend” in attitudes towards authority. Others are concerned by the social implications, mainly because of the potential decreasing of the authorities efficiency due to the lack of mass support. In this paper we adopt the neo-utilitarian point of view, assessing the reciprocal effects of trust on the overall appreciation of well-being, i.e. life satisfaction and happiness. Some theoretical models for the relationship were presented, together with several findings from the literature and the estimated social policy implications.[8]

Peter van de Ven, Brugt Kazemier and Steven Keuning, “Measuring well-being with an integrated system of economic and social accounts”, 17 May 1999. The national accounts provide a systematic overview of the performance of a nation’s economy. An important indicator which can derived from this system is Gross Domestic Product (GDP). Often, (volume growth of) GDP is put on a par with (the increase of) welfare or well-being of the society concerned. The latter, however, contains many other aspects; it is a multidimensional phenomenon. In this paper, (economic) well-being is defined, and different methods to take into account the various aspects of well-being are discussed. Subsequently, the System of Economic and Social Accounting Matrices including Extensions (SESAME), the Dutch alternative to measuring well-being, is introduced.[9]

Initiatives

Levy Institute Measure of Economic Well-Being (LIMEW) -
Levy Economics Institute of Bard College

ESRC (Research Group on Well-being in Developing Countries) - University of Bath [ http://www.welldev.org.uk/]

NEF (New Economics Foundation) [ http://www.neweconomics.org/gen/well-being_current.aspx]

The Well-being Institute - University of Cambridge [ http://www.cambridgewellbeing.org/]

The Foresight Project on Mental Capital and Well-being - UK Government Office for Science [ http://www.foresight.gov.uk/index.asp]

References

  1. Chowa, Gina & Ansong, David & Masa, Rainier, (2010).
    "Assets and child well-being in developing countries: A research review," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1508-1519, November.Available at: http://csd.wustl.edu/Publications/Documents/WP09-66.pdf
  2. http://www.thefreedictionary.com/income
  3. Chowa, Gina & Ansong, David & Masa, Rainier, (2010).
    "Assets and child well-being in developing countries: A research review," Children and Youth Services Review, Elsevier, vol. 32(11), pages 1508-1519, November.Available at: http://csd.wustl.edu/Publications/Documents/WP09-66.pdf
  4. http://go.worldbank.org/IPLXWMCNJ0