Beyond GDP and life expectancy: welfare comparisons across the Atlantic

Shaun Mark Da Costa ()
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Shaun Mark Da Costa: European Commission - JRC, https://joint-research-centre.ec.europa.eu/index_en

No 2025-05-2, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: Prior studies assessing welfare across countries have utilised measures that combine country-level outcomes in income and life expectancy (or average lifespan). However, this perspective remains blind to the fact that two countries may have the same life expectancy and/or average income but very different underlying distributions. In this paper, I introduce a new preference-based measure of social welfare that is sensitive to within-country disparities in lifespan and income. To illustrate the measure, I compare welfare levels and trends for the EU and US using different sets of preference parameters. I also test the effects of correlated outcomes using a copula-based approach. The results reveal that welfare levels and trends are highly sensitive to several normative assumptions, particularly the degree of inequality aversion. Moreover, I find that there is a close connection between the degree of inequality aversion and the assumed level of rank-order correlation between income and lifespan. Overall, the results highlight the need for broader measures of welfare that are explicit about the different value judgements.

Date: 2026-02
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