Developing an Aggregate Well-being Index: Some First Trials

T. Muccigrosso, Guido Pellegrini and M.T. Salvemini

Rivista economica del Mezzogiorno, 2013, issue 3, 407-424

Abstract: The growing need to put alongside established development measures, asthe gross domestic product, measures oriented to evaluate the general well-being of a Country, has led to the setting up of systems of indicators useful to assess economic, social and environmental issues that affect the lives and on the happiness of the citizens. The major difficulty encountered in this case is not only to identify such indicators, but also to define, as less arbitrarily as possible, an aggregate index that measures the level of collective well-being. This study fits into this context, using the results produced by a statistical project on progress and well-being indicators, carried out by the Steering Committee CNEL-ISTAT, which led to the construction of 134 indicators, grouped into 12 domains. In this project, because of the methodological difficulties related to the arbitrariness in the choice of the system of weights and synthesis procedures, we have chosen not to create an aggregate index. In our paper, we suggest a methodological approach for the aggregation of different indicators. The synthesis of information occurs at two levels: at the level of domain we create a marker using the method of factor analysis; such indicators are then aggregated into a composite index, with weights based on the regional distribution of well-being perceived by citizens. Using the indicators obtained, we compare the levels of well-being for each domain and in total between the Southern Italy and the whole of the country. The results highlight the presence of a gap in well-being lower than that in terms of GDP per capita. Even the ranking of regions is different.

Keywords: Well-being Index; Regional Gap; Factor Analysis. JEL Classification: I31; O18; P17. (search for similar items in EconPapers)
Date: 2013
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