Rich Countries Often Fail to Bolster Well-Being, Boston Consulting Says

There's a fundamental issue with this report. It doesn't provide insight into why these indicators for well-being are important.

For example, Exhibit 2 in the linked report [1] shows 44 indicators that make up well-being. These range from inflation volatility to carbon dioxide intensity.

Now I have no doubt that those indicators may tell you something about society, but how do we know these indicators tell you about well-being?

Put in another way, how can I tell that these indicators should be included at the level importance this report gives them?

Kudos to the report authors for number crunching and making nice charts though.

[1] (Warning: pdf) https://www.bcgperspectives.com/Images/BCG-The-Private-Secto...

Here's something interesting: The US has the second highest corporate tax rates of all OECD countries, whereas most EU countries have much higher personal income taxes.

Now this might be misleading. My roommate is a corporate/tax law student and he was dumbfounded by this. He pointed out that the effective tax rate might be quite different.

In any case it's not what you expect.

>https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

For me, the red flags that this is a BS study are:

1) They're comparing countries like India and, say, Denmark (Source: Indian here). In India, about 60% of the population shits on the streets, and injured (lame) cows and dogs hobble around in middle of the roads in cities (where they get food and water from is a mystery). In India there are hundreds of cities with over a million people in them, and with not a single public toilet maintained by the city government. I have a cousin who is a lawyer in a big, supposedly "modern" city (Gurgaon). I once went to the courthouse with him. There was 2 inches of standing water every where in the building. You simply cannot compare India and, say, Denmark.

2) The reference point effect. Kahneman talks about this extensively. If the local police are constantly harassing me so that they can be bribed (India), and one less policeman harasses me to be bribed, my well-being is considerably more "bolstered" than if I'm living in, say, Denmark, and instead of 0% sustainable electricity being fed into my home, I now have 10% sustainable electricity being fed into my home.

3) Boston Consulting is going to fund studies (and shape outcomes) that make bureaucrats in rich countries go, "hmmm... maybe we should hire them to 'bolster' our well-being".

Sorry for being so cynical. But consultants are not exactly neutral parties in my opinion.

Interesting to read the actual report (edit: actually BCG's summary of the report) and compare it with the Bloomberg article. BCG's using this report to make the case that private sector involvement, especially from financial services, leads to high social benefit. But this must not be a linear relationship, or it can be strongly offset by other factors. Otherwise the U.S. -- with all its private enterprise and as home to some of the world's biggest/most influential banks -- should be top of the list. But per the article:

>The United States' ability to convert both wealth and growth into well-being is below par globally, while Germany manages to perform above par on both fronts.

https://www.bcgperspectives.com/content/articles/growth-glob...

At a certain point, in order to increase well-being, you will have to do things that could limit growth in a country. For instance, I believe that the Nordic countries are at a point, where the best way to improve well-being (in terms of health and quality of life) would be to reduce the work week to 30 hours.

Sadly that not really consistent with a desire for increase customer spending and financial growth.

After a certain level of "well-being" the cost of reaching the next level becomes prohibited and the measure of success hard to judge.

"The greater the diversity in a community, the fewer people vote and the less they volunteer, the less they give to charity and work on community projects; In the most diverse communities, neighbors trust one another about half as much as they do in the most homogenous settings." http://www.boston.com/news/globe/ideas/articles/2007/08/05/t...

"The SEDA, or Sustainable Economic Development Assessment ranks more than 160 countries across 10 areas including economic stability, health, governance and environment."

A country's SEDA score could easily go up or down drastically based on the weighting of those 10 different areas.

The purpose of GDP is to give a precise measure of our intuitive notion of "prosperity". This is an inherently flawed goal. GDP roughly corresponds with what we want to measure -- countries with higher GDP usually match those we intuitively regard as more prosperous. But, having citizens buy foreign holidays and plasma screen TVs with credit card debt boosts GDP. New technology which cuts the cost of some good can lower GDP. It's a flawed measure.

As with "Gross National Happiness", SEDA strikes me as an attempt to find an alternative to GDP which measures "what we really want to get at". The thing is, "happiness" is both personal and complicated.

I'm sure the society depicted in Brave New World would have both a high GDP and high SEDA score but it's not what I'd regard as bolstering "well-being". Conversely, I'd be pretty happy living in an Anathem-type society (monasteries filled with scientists and philosophers), even though they lived in material poverty.

Internet has played an important role in developing countries. The western/rich countries may have already reached a kind of plateau of streamlining of services facilitated by Internet, but for the large part of developing world, Internet has started to emerge as a major force only in the last decade or so.

E-commerce, easy/free availability to information/knowledge etc .. are all changing the social and economic landscape in developing countries rapidly and this change is going to continue where there is even a partial political will for it do so.

When GPD growth slows, the only way to net personal gain is through another's loss. If you assume well being does have some sort of financial price tag tied to it, then this makes sense that someone's well being would go down as another's goes up, as the net for the whole economy doesn't change.

It's easier to catch up, than to rise ahead, so this is hardly surprising.

The reason seems obvious: diminishing marginal returns.