Economic wellbeing and income are related. But they do not solely depend on one another. Other economic factors such as output per worker, investment, and consumption must be considered. In addition, other non-economic factors such as democracy and environment must play a role in determining wellbeing. Economic prosperity, the term often used interchangeably with wellbeing, varies from country to country. Researches indicate that while rich countries generally enjoy higher economic wellbeing, countries in developing countries also enjoy higher economic wellbeing. In some cases, developing countries score higher in economic wellbeing than some rich countries. Economic development tends to level off at a certain level. Beyond that level, the economic factors become less important in determining wellbeing. Quality of life style becomes more desirable. Factors such as democracy and values are crucial in extending people’s wellbeing.
To sum up, income enhances wellbeing. But it does not guarantee wellbeing for a longer period of time and income must be accompanied by other economic and non-economic factors. The economic and non-economic factors complement each other to determine economic wellbeing. The institutions of sound economic factors such as production, investment, and government policies must be aligned to enhance wellbeing of individuals.
Click on the link below to read a brilliant article on well-being and GDP which has been recently published in The Economist.
http://www.economist.com/node/17578888?story_id=17578888
Source: The Economist, November 2010
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