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National Wealth and the Subjective Well-Being of Nations

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Wealth(s) and Subjective Well-Being

Part of the book series: Social Indicators Research Series ((SINS,volume 76))

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Abstract

This chapter explores links between national wealth and subjective well-being (SWB) at the macro-level for a sample of 26 OECD countries in 2005. The national wealth data have been developed in the context of the debate on sustainability. They are from two alternative sources. After discussing major features of the two wealth datasets, it is shown that combining them can overcome previously reported anomalous findings for some OECD countries, but only if a major assumption made in the construction of one of them is rejected. The main part of the empirical analysis focusses on correlations and regressions. Nonlinearities are particularly important in the case of natural capital. Several non-monetary social and institutional context variables, i.e. trust and the perception of freedom, have higher correlations with the two SWB variables used than do most of the wealth variables measured in monetary terms. The multivariate regressions reveal that national wealth and two of its subcategories (i.e. produced capital and human capital) from one of the datasets are strong determinants of SWB. Results for other wealth variables are more mixed. They sometimes depend on which SWB variable is used. Natural capital is not statistically significant in any of the multivariate regressions (although it is in bivariate regressions). The estimates reconfirm the importance of trust and, in particular, of the perception of freedom. These variables explain more of the cross-country variation in mean SWB than do the monetary wealth variables and GDP. Possible extensions of the research reported in this chapter are also discussed.

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Notes

  1. 1.

    All monetary wealth/capital stock variables employed in our analysis are in per capita terms, but this is only stated on first use. SWB and macro-level wealth are also part of the OECD’s approach to measuring well-being, first presented in 2011 (see, e.g., OECD 2017a). In this approach, SWB is one aspect of the quality of life and most macro-level capital stocks are measured in non-monetary terms, in contrast to the data used in this chapter.

  2. 2.

    There seem to be a larger number of micro-level studies reporting evidence of positive links between SWB and the natural environment (see, e.g., Welsch 2007; MacKerron and Mourato 2013), and SWB impacts are used to inform environmental policy (Diener et al. 2009, chapter 9).

  3. 3.

    Differences in publication lags explain the reverse timing of the two publications.

  4. 4.

    For further details, see http://www.teebweb.org/ (accessed 27 February 2018).

  5. 5.

    This partnership brings together a broad coalition of United Nations agencies, governments, international institutes, nongovernmental organisations and academics to develop standardised ‘natural capital accounting’ (NCA) and estimate ecosystem services. See https://www.wavespartnership.org/en (accessed 27 February 2018).

  6. 6.

    Originally founded in 1989, Globe is a non-party political organisation of national parliamentarians from now over 80 countries that aims to develop and oversee the implementation of laws in pursuit of sustainable development. See http://globelegislators.org/ (accessed 27 February 2018).

  7. 7.

    There is also a large, separate, literature on measuring intangible capital at the firm- and economy-wide levels that uses much narrower definitions of intangible capital. It comprises a number of distinct research traditions (see the survey by Ståhle et al. 2015). Engelbrecht (2015) points out that even Ståhle et al.’s (2015) wider definition, although resulting in larger than many other firm-based estimates, only amounts to a fraction of the intangible capital measured in World Bank (2011).

  8. 8.

    The term inclusive wealth is potentially misleading because it does not measure the distribution of wealth in society.

  9. 9.

    This contrasts with Piketty (2014), who rejects the inclusion of human capital and of most other forms of intangible capital. Piketty’s restrictive and incomplete definition of wealth has been criticized by a number of authors (see, e.g., Weil 2015).

  10. 10.

    The potential data complementarity only applies to OECD countries. For non-OECD countries, estimates of inclusive wealth are on average larger than those of comprehensive wealth (see Engelbrecht 2016). This is one of the reasons we only include OECD countries in our sample.

  11. 11.

    The chapter by Liu and Fraumeni (2014) provides a survey of the different approaches to human capital measurement and makes the case for the use of direct monetary measures. The chapter by Fraumeni and Liu (2014) then introduce the human capital methodology used in the Inclusive Wealth Report.

  12. 12.

    They are the following 26 OECD countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States. Hungary and Mexico are classified as upper middle-income countries. All other countries are high-income countries.

  13. 13.

    Using micro-level data, Guriev and Melnikow (2017) provide evidence that for post-communist countries, this no longer applies after 2012–13.

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Authors and Affiliations

  1. Massey University, Palmerston North, New Zealand

    Hans-Jurgen Engelbrecht

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  1. Hans-Jurgen Engelbrecht
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Correspondence to Hans-Jurgen Engelbrecht .

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Editors and Affiliations

  1. University of Neuchâtel, Neuchâtel, Switzerland

    Gaël Brulé

  2. University of Neuchâtel, Neuchâtel, Switzerland

    Christian Suter

Appendix: Additional Tables

Appendix: Additional Tables

Table A1 Minimum and maximum values of variables, 26 OECD countries, 2005
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Table A2 Pearson correlation coefficients and Spearman rank correlation coefficients for comprehensive wealth and its subcategories, 26 OECD countries, 2005
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Table A3 Pearson correlation coefficients and Spearman rank correlation coefficients for inclusive wealth and its subcategories, 26 OECD countries, 2005
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Table A4 Pearson correlation coefficients and Spearman rank correlation coefficients for social and institutional context variables, 26 OECD countries
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Engelbrecht, HJ. (2019). National Wealth and the Subjective Well-Being of Nations. In: Brulé, G., Suter, C. (eds) Wealth(s) and Subjective Well-Being. Social Indicators Research Series, vol 76. Springer, Cham. https://doi.org/10.1007/978-3-030-05535-6_15

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