Are governments matching citizensídemand for better lives?

Abstract

We propose a new approach which helps to shed light on the importance of the relationshipbetween a government's welfare outcome and its citizens' desired well-being, defining a conceptof welfare gap. To determine this gap, we build two composite indices of well-being measuredat the individual and aggregate level - i.e. subjective and objective welfare measures - assessingoverall well-being and its progress over time. To this end, we apply idiosyncratic settingsof Structural Equation Models to examine the interrelations and causal relationships acrosswelfare determinants and among the underlying drivers of well-being. By comparing thedimensions' weights and rankings of the objective and subjective welfare measures, we obtainlargely opposite results in both analyses, except for the relevance of the health status. Materialliving conditions are the most important dimensions in the objective ranking, whilst the qualityof life indicators lie at the top of the subjective ladder.