Archive for the ‘ Subjective well-being ’ Category

U.S. “social netting” lacks and inequitably distributes

In the middle of a series of articles titled “The High Cost of Low Taxes” for Moyers and Company, Josh Holland challenges the stigma of higher taxes and exposes the issue in its proper context. Whereas compares the United States to 11 of the top performing Organization for Economic Co-operation and Development (OECD) countries, Holland includes all 37 OECD countries for his series. Simultaneously dispelling myths and reconstructing the argument in the terms we should have been using all along, Holland evaluates whether the U.S.’ tax system is equitable, efficient, effective, or enough.


Holland raises the argument that we should be comparing how much we spend (publicly and privately) on social costs and what kind of “social netting” we get as the product for our expenditures. Noting that since the U.S. public and private sectors combined social spending is comparable to the OECD average (29% to 32%, respectively), U.S. quality of social netting should also be proportionate. However, this is hardly the case. In his second article, he tackles specifically the issue of health care, revealing through a World Health Organization report and a compilation of statistics at Bloomberg just how poorly the U.S. health care system performs (in many cases close to last and others dead last) compared to its most relevant peers. Here, then, is Holland’s reasoning: if we are paying nearly the same social costs, why is there such a discrepancy in the quality of the results?

The discrepancy begins in the imbalance between public and private spending on social costs. According to the statistics, OECD countries that delegate social spending to the public sector provide better social netting for its citizens. Health care, as established above, is one dynamic example of how the U.S. has been short-changed; the U.S. tax systems is yet another.

Americans’ heavy reliance on the private sector to provide social goods and services doesn’t only result in us paying a lot and getting a lot less for it, compared to other wealthy countries. It also makes the financing of our entire social welfare system far less fair. It’s a great deal for the wealthiest, and a huge rip-off for the rest of us.

Holland introduces his third installment with this remark and proceeds to discuss that the tax system is not only unequally weighted, but also that there are hidden implications. For example, federal taxes might seem more progressive, but the distribution of state taxes is the antithesis of progressive. In fact, the weight of taxes is nearly level, but the bottom-most quintile provides for 11.1% of state tax revenue. As the quintile groups ascend by earning, the percentage by which they’re taxed descends with the largest earning quintile being taxed 7.5%.

Taken from: Rip-off: High Out-of-Pocket Social Costs are a Stealth Tax on the Middle Class and the Poor,

Still, even within the federal tax system, examples of regressive taxes thrive. Holland discloses that payroll taxes that provide for social security and Medicare are a flat tax with those making $20,000 a year paying 6.2% just like those who make up to $113,000.

We may deduct from Holland regarding social netting that those who need it and pay for it the most–whether by the unfair tax system or by out-of-pocket costs they can hardly afford–receive the least from it, especially when compared to the social nettings of the best performing OECD countries.

Holland has two more installments yet to come in the series to be published at in the next few weeks.

Measuring development and subjective well-being: Human Development Index vs. World Happiness Report

Can measuring “happiness” be a science? Doesn’t the meaning vary too much from person to person and culture to culture? The squishiness of happiness has not prevented researchers from trying to measure it and make it relevant for public policy.

With studies tracing in the paths of what the Human Development Report started over two decades ago, the OECD’s Better Life Index, the OECD’s Guidelines on Measuring Subjective Well-Being, the Happy Planet Index, and the U.S.-focused Gallup-Healthways Well-Being Index (with an international report from 2010) have aimed to perfect the science of quantifying subjective well-being and demonstrate the relatively fresh attention the subject has elicited. Most recently, the United Nations Sustainable Development Solutions Network has released its first World Happiness Report last year.

Subjective Well-Being Indices Rankings-page-001

According to the above table, rankings for well-being become pretty varied. Different indices use and weigh different indicators in different ways. The most exceptional example in this case is the Happy Planet Index which places an immense amount of weight on its indicator, “Ecological footprint” in order to emphasize the importance of environmental sustainability.

But let’s direct our attention to the first two: the United Nations Development Programme’s Human Development Index (HDI) 2013 and the United Nations Sustainable Development Solutions Network’s World Happiness Report (WHR) 2013. The HDI has been a pioneer, and has long considered the index to be one of if not the authoritative voice on quality of life, achieving results profoundly more telling than the traditional GDP/capita. The WHR has developed under the influence of the HDI, yet it has come up with different results contrasting most significantly as it relates to and the countries studied. Fortunately, the WHR dedicated an entire chapter (Chapter 8) to compare its system to the HDI.

Are more developed countries happier?

Human development, as an approach, is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it.
-Economist Amartya Sen on the capabilities approach and what it means to defining subjective well-being

The objective of Chapter 8 in the WHR is to observe the relationship between human development and life satisfaction, that is to say in certain terms the HDI and the WHR. The chapter discusses at great length the different approaches (human development vs. capabilities) to define and measure development, satisfaction, happiness, and subjective well-being. Chapter 8 asks how positive is the relation between the HDI and life evaluation of well-being? For the intents and purposes of the HDI and WHR reports in the scope of the 150+ countries surveyed, very positive. Chapter 8 dissects individual indicators of the HDI like life expectancy, years of expected education, actual years of schooling, and GNI/capita with positive life satisfaction and concludes with correlative coefficients of 0.70, 0.69, 0.63, 0.73, and 0.78. Finally, HDI (overall score) shares a correlative coefficient of 0.77 with life satisfaction.

While this is good news in determining that the gap between measurements of human development and subjective well-being is closing thanks to an increased focus and research on the subject, our more narrow scope concerning the gap among the 12 countries studied at disappointingly still lacks explanation.There are 33 places between the systems’ rank for Japan, 20 places for Germany and Italy, and 14 places for the U.S. and Denmark (which the WHR has at 1st). The correlative coefficient is either not strong enough at 0.77 or not relevant enough with the 12 countries on which we focus.