Beyond GDP to well-being indicators in Malta

Abstract

Although measures such as GDP are essential indicators to be able to track economic activity, they are also quite limited and do not provide a true representation of all the factors that may have an influence on the economy. These measures were never designed to be a comprehensive measure of prosperity and well-being. The most important driver of an economy is its people. Therefore, it is in every government’s interest that people have a good increasing level of wellbeing, to ensure feasible economic growth. Across recent years, the relevance of well-being has grown across Europe, this can be seen by the various policies that take into consideration wellbeing aspects. Therefore, it is useful for economies around the world to be able to capture wellbeing as a part of their economic activity. To do this policymakers and governments need to consider representative indicators that truly reflect people’s well-being. The main aim of this dissertation was to come up with the most representative well-being indicator for Malta if it were to move beyond GDP and towards a well-being economy. More specifically, this dissertation has considered five of the most well-known and reliable measures of well-being which include the dependent variable and examined the correlation between them. Panel data analysis using Random Effects Model was employed for a sample of 27 European countries over the period of eleven years (2010-2021). Moreover, the study considered 39 independent variables that vary across four well-being measures. Each model represents four different well-being measures. Furthermore, these variables were then tested using pairwise correlations for a period of 16 years (2005-2020) to in order to understand the extent to which each variable correlates with the dependent variable (i.e. the SDG Score) when it comes to Malta. The findings of this study show that six variables were statistically significant and highly correlated with SDG Score. These being; life expectancy, mean years of schooling, employment, education, pollution and internet access. Any variable which is significant and highly correlated to the dependent variable is to be considered by Maltese policymakers and the Maltese government if they were to introduce a wellbeing measure for Malta in the future. The variables outlined in the results are a determining factor for people’s well-being and therefore provide some indication for policymakers on which areas there should be most efforts in when it comes to making people content.