Abstract
This paper looks at the concept of well-being from the perspective that a way of producing well-being is sustainable if it is also efficient, such being able to last over time. The paper gets its value from considering how well-being is produced and from assessing whether OECD countries are making the most of their resources or should revise their production processes. The data envelopment analysis is performed on all 37 OECD countries using the OECD Better Life Index variables with the aim of evaluating both technical and social efficiency in producing well-being. This allows both to assess how many countries are efficient in exploiting their resources and to consider social and environmental externalities as inputs and not only as an unavoidable consequence of the production process. High well-being countries are not always efficient at producing those levels of well-being. The poorest countries show the worst social efficiency scores: in the early stages of development, countries are focused on improving technical efficiency and, only later, on issues that are not merely economic, such as environmental and social costs.
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Notes
The distance between the DMU under evaluation and the optimal frontier is measured radially.
The output data are available on the website OECD.STAT and refer to the last reported year (mostly referring to 2018). The input data always refer to 2018 (last reported year) and are provided by the World Bank.
In line with the OECD guidelines (2008), the 11 dimensions of the BLI were obtained by aggregating two or more elementary indicators, once normalisation (using the min-max method to have values between 0 and 1), translation (for negative indicators) and arithmetic mean (between the values that refer to the same dimension) have been made.
The PCA has been implemented using the varimax rotation and retaining the eigenvalues greater than 1.
Among Eastern European countries, the ones with the highest levels of GDP are those with the highest levels of well-being (Fig. 3). That is: they are all countries with low levels of GDP and none of them reaches the threshold beyond which the relationship between GDP and well-being becomes non-linear. For this reason, observing this group of countries, well-being grows as GDP increases.
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Castellano, R., De Bernardo, G. & Punzo, G. Well-being in OECD countries: an assessment of technical and social efficiency using data envelopment analysis. Int Rev Econ 70, 141–176 (2023). https://doi.org/10.1007/s12232-023-00413-y
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DOI: https://doi.org/10.1007/s12232-023-00413-y