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Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much

Consumption is the income and wealth that you end up using. Measuring wellbeing by consumption is the standard economic perspective, since it describes how much of society's goods and services one ends up using. More simply, if you save then spend, wealth-based measures will rate you as better off than a person with higher income who just spends. That doesn't make sense.

mdoms 6y ago
A wealth measure will give a higher rating to someone who spends on assets than someone who spends on Fortnite skins. What it doesn't do is arbitrarily favor someone who lives in a HCOL area or in a country (sorry, the country) that forces individuals to spend their own money on things like health care.
- HPsquared 6y ago
  Someone living in a HCOL area who happens to have bought their house before the price inflation era, would have a high wealth figure but unable to do anything with said wealth. Australia has high house prices.
kennywinker 6y ago
This is confusing. If you save, you have more wealth. If you have more wealth, you are more resilient to hardships (economic, health, etc.) - a population of people with large savings accounts and low debt seems obviously better than a population that makes a ton of money but lives close to the wire or carries large debts
- jldugger 6y ago
  The problem though is that personal savings grows over time -- a nation full of young people with high incomes will eventually become a nation full of weathly old people, but if you were to compare the two nations, the yard stick matters. edit: if you want to cook up some evidence, look at a scatter plot of some indicator of age (national average age?) vs national average wealth. I suspect, given the countries at the top of the list, you'll end up with a pretty good r.
- scatters 6y ago
  Resilience is unnecessary in countries with a safety net. Are individuals in those countries who make the rational decision to save less somehow worse off than those who have to carry a large savings buffer to guard against misfortune?
  - Polylactic_acid 6y ago
    >Resilience is unnecessary in countries with a safety net Not entirely. Having a safety net might be the difference between having a home/food and being on the street but having savings and a safety net allows you to live your previous comfortable life while not working. If you have a healthy savings then you can afford to willingly leave your current job and have some time to yourself while you look for a better job.
  - im3w1l 6y ago
    Safety net usually come with caveats. Foodstamps are as their name suggests not general purpose dollars. Sometimes you have to perform tasks you don't want to do to benefit from the safety net. Your own money can be used for whatever you want and no need to beg and justify before a government employee.
- nearbuy 6y ago
  I think you're double counting the advantage for wealth if you consider resilience an advantage, but don't consider not spending money to be a disadvantage. Keeping money reserved for hardships is a lot like having spent the money, since you can no longer use that money to increase your standard of living. If you put away $50,000 in case of job loss or health problems, you've bought resilience at the opportunity cost of $50,000 worth of something else. If you change your mind later and spend it, you just traded in your resilience for other goods and services. You have the benefit of resilience or the benefit of whatever else you might buy with that money, but not both at the same time. When you look at consumption numbers for a country, they already include what people have spent to deal with hardships. Wealth, however, doesn't tell you how much in poverty someone had to live in order to save that wealth. Insurance is a formal way of spending money on resilience. Insurance, though, has the advantage of pooling risk among a large number of people. You don't actually have to save up millions to be insured for millions in healthcare bills. Someone with excellent insurance but little savings can have both more resilience and a higher standard of living than someone who lives in poverty to save every penny, but doesn't spend on insurance.
fulafel 6y ago
> Measuring wellbeing by consumption is the standard economic perspective Behavioural economics has long focused on more sensible sets of metrics.

mdoms 6y ago

A wealth measure will give a higher rating to someone who spends on assets than someone who spends on Fortnite skins. What it doesn't do is arbitrarily favor someone who lives in a HCOL area or in a country (sorry, the country) that forces individuals to spend their own money on things like health care.

HPsquared 6y ago
Someone living in a HCOL area who happens to have bought their house before the price inflation era, would have a high wealth figure but unable to do anything with said wealth. Australia has high house prices.

kennywinker 6y ago

This is confusing. If you save, you have more wealth. If you have more wealth, you are more resilient to hardships (economic, health, etc.) - a population of people with large savings accounts and low debt seems obviously better than a population that makes a ton of money but lives close to the wire or carries large debts

jldugger 6y ago
The problem though is that personal savings grows over time -- a nation full of young people with high incomes will eventually become a nation full of weathly old people, but if you were to compare the two nations, the yard stick matters. edit: if you want to cook up some evidence, look at a scatter plot of some indicator of age (national average age?) vs national average wealth. I suspect, given the countries at the top of the list, you'll end up with a pretty good r.
scatters 6y ago
Resilience is unnecessary in countries with a safety net. Are individuals in those countries who make the rational decision to save less somehow worse off than those who have to carry a large savings buffer to guard against misfortune?
- Polylactic_acid 6y ago
  >Resilience is unnecessary in countries with a safety net Not entirely. Having a safety net might be the difference between having a home/food and being on the street but having savings and a safety net allows you to live your previous comfortable life while not working. If you have a healthy savings then you can afford to willingly leave your current job and have some time to yourself while you look for a better job.
- im3w1l 6y ago
  Safety net usually come with caveats. Foodstamps are as their name suggests not general purpose dollars. Sometimes you have to perform tasks you don't want to do to benefit from the safety net. Your own money can be used for whatever you want and no need to beg and justify before a government employee.
nearbuy 6y ago
I think you're double counting the advantage for wealth if you consider resilience an advantage, but don't consider not spending money to be a disadvantage. Keeping money reserved for hardships is a lot like having spent the money, since you can no longer use that money to increase your standard of living. If you put away $50,000 in case of job loss or health problems, you've bought resilience at the opportunity cost of $50,000 worth of something else. If you change your mind later and spend it, you just traded in your resilience for other goods and services. You have the benefit of resilience or the benefit of whatever else you might buy with that money, but not both at the same time. When you look at consumption numbers for a country, they already include what people have spent to deal with hardships. Wealth, however, doesn't tell you how much in poverty someone had to live in order to save that wealth. Insurance is a formal way of spending money on resilience. Insurance, though, has the advantage of pooling risk among a large number of people. You don't actually have to save up millions to be insured for millions in healthcare bills. Someone with excellent insurance but little savings can have both more resilience and a higher standard of living than someone who lives in poverty to save every penny, but doesn't spend on insurance.

fulafel 6y ago

> Measuring wellbeing by consumption is the standard economic perspective Behavioural economics has long focused on more sensible sets of metrics.