Abstract

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The objective of this paper is to develop an index of economic well-being for Canada for the period 1971 to 1997 using a framework originally laid out by Lars Osberg (1985). Although the economic well-being of a society depends on the level of average consumption flows, aggregate accumulation of productive stocks, inequality in the distribution of individual incomes and insecurity in the anticipation of future incomes, the weights attached to each component will vary, depending on the values of different observers. It is argued that public debate would be improved if there were explicit consideration of the aspects of economic well-being which are obscured by average income trends and if the weights attached to these aspects were explicitly open for discussion.

The four components of economic well-being are: effective per capita consumption flows, which includes consumption of marketed goods and services, and effective per capita flows of household production and other unmarketed goods and services; net societal accumulation of stocks of productive resources, including net accumulation of tangible capital and housing stocks and net accumulation of human capital and R&D investment; net changes in the value of natural resources stocks; environmental costs; and net change in level of foreign indebtedness; poverty and inequality, as indicated by the Gini index of inequality, and depth and incidence of poverty; and indicators of insecurity, particularly economic security from unemployment, ill health, single parent poverty and poverty in old age. Estimates of the overall index and the sub-components are presented for 1971-1997 for Canada. The index is compared with other measures of economic welfare such as GDP per capita.