New Economics Papers
on Economics of Happiness
Issue of 2012‒06‒13
four papers chosen by

  1. Living Standards Domain of the Canadian Index of Wellbeing By Andrew Sharpe; Christopher Ross
  2. A Comparison of Inequality and Living Standards in Canada and the United States Using an Expanded Measure of Economic Well-Being By Edward N. Wolff; Ajit Zacharias; Thomas Masterson; Selçuk Eren; Andrew Sharpe; Elspeth Hazell
  3. The Human Development Index in Canada: Estimates for the Canadian Provincesand Territories, 2000-2011 By Elspeth Hazell; Kar-Fai Gee; Andrew Sharpe
  4. A Reversal in the Relationship of Human Development with Fertility? By Kenneth Harttgen; Sebastian Vollmer

  1. By: Andrew Sharpe; Christopher Ross
    Abstract: This paper, which represents the living standards domain of the new Canadian Index of Wellbeing (CIW), provides a comprehensive overview of trends, in a number of indicators of living standards, over the 1981-2010 period in Canada. Part one examines trends in average and median income and wealth indicators in Canada. Part two looks at the distribution of the income and wealth of Canadians over time, including trends in poverty. Part three discusses trends in income fluctuations or volatility. Part four analyzes trends in the economic security of Canadians, including labour market security, food security, housing security, and the security provided by the social safety net. The report also presents a synthesis of overall trends in living standards, discusses living standard measurement issues, and puts forward a set of headline indicators to capture the essentials of what has been happening to the living standards of Canadians. Finally, the report comments on the sustainability of current levels of living standards. The report provides a comprehensive examination of a large number of indicators of living standards in Canada over the last quarter century and has identified a number of these indicators as headline indicators for the new Canadian Index of Wellbeing. The bottom line is that Canada has become a much richer country, but the top quintile has received the lion’s share of rising income and wealth. Looking at the nine headline indicators for which time series are available, one can immediately see that living standards of Canadians have not unambiguously improved between 1981 and 2010. Indeed, Canadians experienced a widening of income and wealth inequalities. There have been poverty reductions, but the reductions were not nearly as large as the increase in wealth inequality. The recent recession pushed both the unemployment rate and the incidence of long-term unemployment above the 1981 level, though the 2008 levels were below the 1981 levels. Economic security measured by the CSLS index has also fallen dramatically, spurred by a significant decrease in economic security caused by the financial risk associated with illness. Since 1981, many dimensions of living standards in Canada have not improved, and that in spite of a 49.0 per cent surge in gross domestic product per capita. Benefits of growth have been shared very unevenly, and the recent recession has eroded many of the gains that had been made in the last 30 years. Looking forward, the challenges for Canada’s policymakers are significant, but need to be tackled if Canada is to become a fairer, healthier and richer country.
    Date: 2011–11
  2. By: Edward N. Wolff; Ajit Zacharias; Thomas Masterson; Selçuk Eren; Andrew Sharpe; Elspeth Hazell
    Abstract: We use the Levy Institute Measure of Economic Well-being (LIMEW), the most comprehensive income measure available to date, to compare economic well-being in Canada and the United States in the first decade of the 21st century. This study represents the first international comparison based on LIMEW, which differs from the standard measure of gross money income (MI) in that it includes noncash government transfers, public consumption, income from wealth, and household production, and nets out all personal taxes. We find that, relative to the United States, median equivalent LIMEW was 11 percent lower in Canada in 2000. By 2005, this gap had narrowed to 7 percent, while the difference in median equivalent MI was only 3 percent. Inequality was notably lower in Canada, with a Gini coefficient of 0.285 for equivalent LIMEW in 2005, compared to a US coefficient of 0.376—a gap that primarily reflects the greater importance of income from wealth in the States. However, the difference in Gini coefficients declined between 2000 and 2005. We also find that the elderly were better off relative to the nonelderly in the United States, but that high school graduates did better relative to college graduates in Canada.
    Keywords: Well-Being; Living Standards; Inequality; Income; International Comparisons
    JEL: D31 D63 P17
    Date: 2012
  3. By: Elspeth Hazell; Kar-Fai Gee; Andrew Sharpe
    Abstract: This report develops internationally comparable estimates of the Human Development Index (HDI) for the Canadian provinces and territories over the 2000-2011 period. The HDI is a composite index composed of three dimensions (life expectancy, education and income) measured by four indicators (life expectancy at birth, average years of education, expected years of schooling and GNI per capita). This report first tries to replicate the Canadian data found in the 2011 Human Development Report (HDR). Then, estimates for the provinces and territories are developed by following the same methodology and using the same Canadian data sources. These estimates are made internationally comparable by taking the proportion that each province or territory’s estimate represents of the comparable estimate for Canada and applying this ratio to the official estimate given for Canada in the 2011 HDR. This allows the provinces and territories to be ranked in the 2011 HDR international rankings for all four component variables as well as the overall HDI. The highest HDI score in 2011 among the provinces and territories belongs to Alberta, which would be third in the international rankings, while the lowest ranking region is Nunavut, which would be in 38th place. Thus, this report highlights the diverse human development experiences that are concealed by Canada’s overall HDI.
    Date: 2012–05
  4. By: Kenneth Harttgen (ETH Zürich); Sebastian Vollmer (Georg-August-University Göttingen)
    Abstract: For more than a hundred years, advances in development were associated with decreasing fertility rates. This led to total fertility rates far below replacement level in most developed countries. However, during the last decade fertility rates started to increase again in various developed countries. Myrskylä et al (2009) argue that the relationship of the human development index (HDI) with the total fertility rate (TFR) reverses from negative (increases in HDI are associated with decreases in TFR) to positive (increases in HDI are associated with increases in TFR) at a HDI level of 0.85. We revisit this topic and find that the reversal in the HDI-TFR relationship is neither robust to UNDP’s recent revision in the HDI calculation method nor the decomposition of the HDI into its education, standard of living and health sub-indices.
    Keywords: Human development; education; health; standard of living; fertility
    Date: 2012–06–01

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