Incorporating Sustainability Concerns in the Better Life Index: Application of Corrected Convex Non-parametric Least Squares Method

Hideyuki Mizobuchi ()
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Hideyuki Mizobuchi: Ryukoku University

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2017, vol. 131, issue 3, No 4, 947-971

Abstract: Abstract The OECD recently released a comprehensive set of 11 well-being indicators, the so-called Better Life Index (BLI), for 36 countries. The BLI covers a wide range of socio-economic aspects of life, which are essential to well-being. This well-being dataset allows us to compare countries’ overall well-being. However, in spite of the BLI’s wider coverage of variables, it fails to consider sustainability concerns. This study provides a practical proposal for comparing overall well-being by incorporating sustainability concerns. Using the World Bank’s adjusted net savings data as a sustainability indicator, we add an extra dimension to the BLI. Then, we apply a composite indicator and aggregate these 12 indicators for each country into a single number. Moreover, we improve the current method for constructing composite indicators by adopting corrected convex non-parametric least squares (C2NLS). It is a typical problem in a non-parametric approach based on linear programming for countries’ scores of composite indicators to become equal and their performance cannot be distinguished. This becomes even more severe if the number of sample countries is small or the number of aggregated indicators is large, which is the case of the present study dealing with 12 indicators for 36 countries. The use of C2NLS, which is based on quadratic programming, overcomes this problem and allows us to order all countries in the sample completely. The empirical results show that the introduction of a sustainability indicator for comparisons does not change countries’ overall rankings significantly. However, it certainly changes the ranking of some countries in both directions.

Keywords: Sustainability; Composite indicators; Better Life Index; Data envelopment analysis; Benefit of the doubt approach (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s11205-016-1282-9

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