Measuring Economic Well-Being in Canada and the Provinces

This note, written by Errol Black, shows how Manitoba’s economic well-being has changed over the last 30 years, compared with Canada and the other western provinces.

For many years now, a group of scholars in Canada have been producing estimates based on an Index of Economic Well-being developed in 1998 by the Centre for the Study of Living Standards (CSLS).

The Index is based on four components of economic well-being, namely: effective per capita consumption flows; net social accumulation of stocks of productive assets; income distribution, including the intensity of poverty…and the inequality of income; and economic security from job loss and unemployment, illness, family breakup, and poverty in old age.

In 2010, the CSLS published a Research Report by Lars Osberg and Andrew Sharpe titled New Estimates of the Index of Economic Well-being for Canada and the Provinces 1981-2008.

There is much useful information in this report. Of particular interest are three inter-province comparisons based on different weightings for components of the overall index of well-being. Overall Manitoba has performed well relative to both the country as a whole and other provinces. Under Alternative II which assigns weights of 0.40 to consumption, 0.10 to wealth, 0.25 to equality and 0.25 to security, for example, the record for Manitoba compared to Canada and the other western provinces is as follows:

 

Canada

Manitoba

Saskatchewan

Alberta

British Columbia

Index in 1981

0.435

0.362

0.463

0.570

0.462

Index in 1989

0.510

0.487

0.480

0.515

0.523

Index in 2000

0.522

0.501

0.523

0.600

0.518

Index in 2008

0.646

0.623

0.665

0.776

0.644

 

per cent change:

1981-2008

48.3

72.1

43.7

36.1

39.6

1981-1989

17.0

34.5

3.8

– 9.7

13.4

1989-2000

2.5

3.0

8.9

16.5

– 1.0

2000-2008

23.6

24.2

27.2

29.4

24.4

These data show that Manitoba’s relative performance was especially strong over the entire period 1981-2008 and the period 1981-89, especially weak in the period 1989-2000.

In OECD countries:

The most recent OECD Index of Economic Well-being for selected countries 1980-2007 (Andrew Sharpe, Beyond GDP: Measuring Economic Well-being) yields the following ranking for 2007: Norway, Denmark, Netherlands, Belgium, Sweden, France, Germany, Finland, Canada, UK, Australia, Italy, United States, Spain. The United States is, of course, way at the bottom on the Index of Equality (Canada, Spain, Italy and the UK are also at the lower end of the scale).

The moral of this story would seem to be that we need to start paying more attention to the measurements of economic well-being and less to the sorts of data that governments, business organizations and right-wing think tanks rattle on about in their commentaries on the state of societies and the world.

Errol Black is the chair of the CCPA-MB’s Board.

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