Going beyond GDP with a parsimonious indicator: Inequality-adjusted healthy lifetime income

ABSTRACT

Per capita GDP has limited use as a well-being indicator because it does not capture many dimensions that imply a “good life”, such as health and equality of opportunity. However, per capita GDP has the virtues of being easy to interpret and to calculate with manageable data requirements. Against this backdrop, there is a need for a measure of well-being that preserves the advantages of per capita GDP, but also includes health and equality. We propose a new parsimonious indicator to fill this gap, and calculate it for 149 countries. This new indicator could be particularly useful in complementing standard well-being indicators during the COVID-19 pandemic. This is because (i) COVID-19 predominantly affects older adults beyond their prime working ages whose mortality and morbidity do not strongly affect GDP, and (ii) COVID-19 is known to have large effects on inequality in many countries. © 2021