Beyond GDP: the Index of Economic Well-Being for Lombardy

The definition and measurement of economic well-being is receiving growing attention, both in academic research and on the policy agenda, as a key factor in decision-making at all levels, both national and local. There is general agreement among economists and policy-makers that it is necessary to go beyond gross domestic product (GDP), but a new and wider definition and measurement is far from being achieved. It is for this reason that research and experiments which seek to test different definitions and indicators can contribute to the ongoing debate by furnishing empirical results. This paper attempts to measure the multidimensional well-being of the Italian region of Lombardy, for the years 1995-2005, on the basis of the Index of Economic Well-Being (IEWB) proposed by the Centre for the Study of Living Standards (Osberg, 1985; Osberg and Sharpe, 2002b, 2005). The evolution of the Index is aligned with that of per capita GDP from 1995 to 2001, but diverges in the following period. Well-being exhibits a strong decline in 2002, mainly due to a consumption crisis and a decline in voluntary work, and a slight increase in 2004-05 (owing to a positive trend in per capita consumption, voluntary work, public expenses and capital stock). Per capita GDP showed a negative trend between 2003 and 2005.