In pursuit of well-being It has been said that the mark of success of a government is raising the quality of life or the
Posted: Sun Jul 03, 2022 1:00 pm
In pursuit of well-being
It has been said that the mark of success of a government israising the quality of life or the well-being of the people in thecountry. This is sometimes measured by the Human Development Index(HDI). Table 1.1 shows the rank order of selected countries by theHDI and compares it with the rank by Gross Domestic Product (GDP)of that country.
In order to understand how people make decisions, governments inthe United States (US), the United Kingdom (UK) and Australiaestablished Behavioural Insights Teams. They came to be known asthe Nudge Units as they used nudge theories from behaviouraleconomics.
It was hoped that this approach would help to achieve anincrease in well-being as well as in economic growth and GDP. Nudgepolicies were used, with some success, to get people back to work,encourage them to pay their taxes on time and give them goodreasons to save for future pensions or to study for improvedqualifications.
They were not, however, sufficient to eliminate governmentbudget deficits which remained at a high level. There was anever-rising demand for public services but this was not matched byan equal rise in tax revenues so the deficit increased.
Eliminating the government budget deficit continued to be aproblem. One method of dealing with the problem was to increasetaxation. However, tax rates were already high and even higher taxrates would not result in the increase in revenue that was needed.An alternative option was to increase government borrowing. Theremight be a strong case to support economic growth, but increasingthe deficit in order to achieve this could risk causing anotherfinancial crisis.
A third option was to reduce government expenditure on publicservices. This could be achieved without causing a reduction in thequality of the service and a reduction in well-being if increasesin productivity took place. Without continued increases inproductivity, however, further cuts in spending could have seriouslong-term detrimental effects, especially in health provision andeducation.
Requirement:
The information is entitled ‘In pursuit of well-being’. Discusswhether the information supports the idea that GDP is a goodmeasure of well-being.
Table 1.1 Rank of selected countries by HDI and GDP in 2017 Rank GDP (millions US$) 391 959 1359723 3423287 2496757 432 898 15564 251487 3938 Rank Norway Australia HDI 1 0.89 3 0.86 Germany 5 0.85 UK 13 0.83 Thailand 70 0.58 Botswana 103 0.43 Pakistan 117 0.38 Eswatini 121 0.36 29 13 4 5 26 115 43 157 Sources: RSA Issue 1, 2017
It has been said that the mark of success of a government israising the quality of life or the well-being of the people in thecountry. This is sometimes measured by the Human Development Index(HDI). Table 1.1 shows the rank order of selected countries by theHDI and compares it with the rank by Gross Domestic Product (GDP)of that country.
In order to understand how people make decisions, governments inthe United States (US), the United Kingdom (UK) and Australiaestablished Behavioural Insights Teams. They came to be known asthe Nudge Units as they used nudge theories from behaviouraleconomics.
It was hoped that this approach would help to achieve anincrease in well-being as well as in economic growth and GDP. Nudgepolicies were used, with some success, to get people back to work,encourage them to pay their taxes on time and give them goodreasons to save for future pensions or to study for improvedqualifications.
They were not, however, sufficient to eliminate governmentbudget deficits which remained at a high level. There was anever-rising demand for public services but this was not matched byan equal rise in tax revenues so the deficit increased.
Eliminating the government budget deficit continued to be aproblem. One method of dealing with the problem was to increasetaxation. However, tax rates were already high and even higher taxrates would not result in the increase in revenue that was needed.An alternative option was to increase government borrowing. Theremight be a strong case to support economic growth, but increasingthe deficit in order to achieve this could risk causing anotherfinancial crisis.
A third option was to reduce government expenditure on publicservices. This could be achieved without causing a reduction in thequality of the service and a reduction in well-being if increasesin productivity took place. Without continued increases inproductivity, however, further cuts in spending could have seriouslong-term detrimental effects, especially in health provision andeducation.
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The information is entitled ‘In pursuit of well-being’. Discusswhether the information supports the idea that GDP is a goodmeasure of well-being.
Table 1.1 Rank of selected countries by HDI and GDP in 2017 Rank GDP (millions US$) 391 959 1359723 3423287 2496757 432 898 15564 251487 3938 Rank Norway Australia HDI 1 0.89 3 0.86 Germany 5 0.85 UK 13 0.83 Thailand 70 0.58 Botswana 103 0.43 Pakistan 117 0.38 Eswatini 121 0.36 29 13 4 5 26 115 43 157 Sources: RSA Issue 1, 2017