KPC just posted the above picture, taken from research by Justin Wolfers. The picture shows the correlation between the U.N.'s Human Development Index (HDI) and per capita income. The correlation is .95, meaning that the two things are almost perfectly correlated. In the social sciences, relationships this strong are exceedingly rare.
HDI is an attempt to compare development outcomes across countries in a more nuanced way than simply looking at GDP numbers. So it includes things like educational enrollment, life expectancy (at birth), and adult literacy as well as per capita GDP. The thing is, those things are all highly correlated with per capita GDP. So even though the intention is to give a more nuanced view of quality of life than simply comparing income levels across countries, what we end up seeing is that income levels are the primary determinant of quality of life.
This shouldn't be too surprising. After all, if you have more money you can buy better health care (and thus live longer) and afford to send your children to school (thus boosting literacy and educational enrollment). However, simply comparing incomes across countries is often thought of as being a crass way of measuring quality of life. After all, money can't buy love or happiness, right? And if we spend our lives selfishly chasing money than we are surely missing other things.
That may be true, but it doesn't show up in cross-national studies. Wolfers has also done other work on the relationship between income and happiness (discussed here briefly; the actual research is here). This work (with Betsy Stevenson) re-examines the "Easterlin Paradox" that has caused much debate in the social sciences for decades. The Easterlin Paradox states that citizens of countries with more economic growth are not happier than citizens of countries with less economic growth, as was commonly assumed by economists. The inference was often made that there is no relationship between income and happiness. But the Stevenson/Wolfers research indicates that this isn't true, and the Easterlin Paradox doesn't actually hold: higher levels of GDP are strongly related with higher levels of subjective happiness.
This new research all points in the same direction: higher economic development leads to better objective and subjective outcomes. People in richer countries live longer, more enriching, happier, more fulfilled lives. So if we want to improve peoples' quality of life, then we need to improve their economic opportunities. And if we don't do that, we will have a difficult time improving outcomes.
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Monday, May 25, 2009
Posted by Kindred Winecoff at 9:50 PM . Monday, May 25, 2009