Although GDP per capita is distinct from this expanded welfare metric, the correlation between GDP per capita and this expanded welfare metric is very strong at 0.96, though there is substantial variation across countries, and welfare is more dispersed (standard deviation of 1.51 in logs) than is income (standard deviation of 1.27 in logs).[9]
I checked the paper and it looks like they’re comparing welfare by “how much more would person X from the US have to consume to move to another country i?” Which results in equations like this:
which says what the factor λsimplei , should be in terms of differences in life expectancy, consumption, lessure and inequality. So I suppose it isn’t suprising that it’s quite correlated with GDP, given the individual correlations at play here, but I am suprised that it is so strongly correlated since I’d expect e.g. life expectancy vs gdp to correlate at maybe 0.8[1]. Which is a fair bit weaker than a 0.96 correlation!
Good point. I grabbed the dataset of gdp per capita vs life expectancy for almost all nations from OurWorldInData, log transformed GDP per capita and got a correlation of 0.85.
I checked the paper and it looks like they’re comparing welfare by “how much more would person X from the US have to consume to move to another country i?” Which results in equations like this:
which says what the factor λsimplei , should be in terms of differences in life expectancy, consumption, lessure and inequality. So I suppose it isn’t suprising that it’s quite correlated with GDP, given the individual correlations at play here, but I am suprised that it is so strongly correlated since I’d expect e.g. life expectancy vs gdp to correlate at maybe 0.8[1]. Which is a fair bit weaker than a 0.96 correlation!
I checked. It’s 0.67.
This seems to come from European countries.
Good point. I grabbed the dataset of gdp per capita vs life expectancy for almost all nations from OurWorldInData, log transformed GDP per capita and got a correlation of 0.85.