What Does Our Well-Being Cost?

Starting with the GDP, we treasure what we measure. As a record of the dollar value of the goods and services produced in the U.S., the GDP is supposed to go up. If not, policy makers respond.

Some say that the GDP’s consumption, gross investment, and government components measure our well-being. Others though suggest alternatives.

Well-Being Metrics

Over at LISEP (the Ludwig Institute for Shared Economic Prosperity), they’ve been keeping an eye on the little things in life that make a big difference. Composed of what we need for physical and mental health, their Minimal Quality of Life Index has seven variables:

• Eating at a full service restaurant every other week.
• Maintaining one TV subscription.
• Owning basic adult sports equipment like running shoes.
• Enabling children’s school sports participation.
• Buying minor league baseball game tickets.
• Going on a 3-day vacation.
• Spending on December holiday gifts, decorations, a family dinner.

A LISEP graphic summarized their well-being metric:

After tracking these “minimal recreation” activities between 2001 and 20021, LISEP found the price increase exceeded the CPI’s 19 percent rise. They did vary, though, ranging from the 82 percent children’s sports increase to a seven percent hike in adult biking and jogging equipment.

Then, taking the next step,  LISEP researchers concluded it was unaffordable. At $70, 784 in 2021, families taking home the median income would not have enough for the seven well-being basics. According to the Aspen Institute, we need $693 for one child to play one sport. Meanwhile, one adult Disney World ticket is at least $109.

Looking at the annual budget of a family with the median household income, we see where we spend the most (and why we don’t have enough):

Below, you can see how much LISEP said the prices in their Index changed during the past 20 years. A seeming anomaly, TV is down because of a cheaper streaming option that became available duroing 2013. (I added the exclamatory note.):

Our Bottom Line: GDP

In 2008, French President Nicholas Sarkozy asked Nobel Prize winning economist Joseph Stiglitz to chair a commission that reconsidered the GDP. The result was a commission report that concluded, “…the time is ripe to shift emphasis from measuring economic production to measuring people’s well-being.” (Italics are from the report.) If leisure, for example, were a positive economic variable, then fewer work days would not be (statistically) punished through less output.

So, if a yardstick from the Stiglitz Commission became the norm, more leisure would be a plus and maybe even a government goal. Seeing we had inadequate leisure, they could respond with extra work holidays.

Returning to where we began, the commission confirmed that, “What we measure affects what we do.”

My sources and more: Thanks to yesterday’s Axios Markets email for inspiring today’s post. From there, I checked the Ludwig Institute for Shared Economic Prosperity and its happiness indices. Finally, you might want to ponder the Stiglitz Commission Report. Please note that I did not confirm the LISEP numbers. Also, I minimally edited today’s post after publication and, in the “Bottom Line,” quoted from a past econlife.