Does a healthy economy equate with a healthy and happy population?

How does one measure how “well” a country’s citizens are doing? Traditionally, GDP per capita has been used as the de facto measure of a country’s success and wellbeing, but it is a measure of production and income, not wellness. Revealingly, even the architects of GDP warned against its use as a measure of a nation’s overall wellbeing.

In recent times, calls for policy makers to move beyond growth and GDP have been getting louder. Furthermore, as Asians’ demand for wellness rises in tandem with their rising income, policy makers have already begun to pay more attention to wellness-related issues such as health, education and the environment. Therefore, it is high time to develop measures of wellness, as exemplified in the UN’s Sustainable Development Goal #3: “To ensure healthy lives and promote well-being for all, at all ages”.

As part of the Asian Development Outlook: Update 2020 theme chapter on “Wellness in Worrying times”, we developed the Wellness Index that allows us to create a ranking of wellness across 153 countries. Our index joins a growing list of indicators of wellbeing such as the Human Development Index. The index takes a bottom-up approach, starting with the Global Wellness Institute’s definition based on four pillars of individual wellness, namely, physical, mental/intellectual, social and environmental wellness, and leverages multiple indicators to create a global ranking of wellness. Compared to the existing indices, the Wellness Index is more comprehensive in both scope and coverage.

Top ranking countries provide their populace with high levels of wellness across all dimensions. We found that nations with strong social welfare programs do well. The top five countries are European, with Finland, Luxembourg and Sweden taking the top 3 spots. New Zealand (7), Australia (13), and Canada (15) are the only non-European nations in the top 20. Top Asia-Pacific performers include Japan (21), Singapore (30), and Republic of Korea (39). The absence of some of the world’s richest economies from the top 20 underscores the difference between purely material well-being and broader overall wellness.

There is clearly a relationship between income and wellness. For instance, the bottom three—Chad, the Central African Republic, and Afghanistan—are among the world’s poorest countries. However, the fact that Nigeria and Pakistan, two middle-income countries, round out the bottom 5 suggests that the correlation between income and wellness is far from perfect.

Does this imply that the wellness index is a better gauge of wellbeing than GDP per capita? The intuitive argument for using GDP is simple. Higher per capita GDP generally translates into more and better food, housing, education, health care, and other key determinants of quality of life. Plotting the wellness against the GDP per capita of economies bears out a positive correlation. However, closer inspection reveals a significant variation in wellness at each GDP per capita level. That is, among equally rich countries, some achieve higher wellbeing than others. This suggests that policymakers would do well to look at wellness, not just GDP per capita. Disaggregating across the four pillars of the index allows policymakers to direct resources to wellness sectors that lag the most.

The wellness index presents policymakers with a new tool for assessing wellness, which provides a more balanced and holistic view of development than per capita GDP. It helps policymakers identify priority areas for policy measures that will improve the wellbeing of their citizens. For instance, in a country which visibly lags comparable countries in the environmental pillar but not in the other pillars, cleaning up the environment will contribute a lot to improving wellness. Finally, more and better data in the future will allow for further refinement and improvement of the index.

The complete wellness index is released as part of the September 2020 Asian Development Outlook Update. The full construction of the methodology and data sources is available in our working paper “Ahmad, H. F., & Qureshi, I. A. (2020): Quantifying and comparing wellness across nations: A cross country empirical analysis.”