Multidimensional Well-Being and Inequality Across the European Regions with Alternative Interactions Between the Well-Being Dimensions

Abstract

This paper uses recent multidimensional well-being measurements to examine multidimensional well-being and inequality across the European regions in 2000 and 2014 with the use of eleven well-being indicators from the OECD Better Life Index. We use generalized mean aggregation method with alternative parameters to allow different substitutability and complementarity levels between well-being dimensions, which range between perfect substitutability and some degree of complementarity between the dimensions, to examine well-being and inequality across the European regions. Accounting for the interactions between the well-being dimensions matters for the multidimensional well-being and inequality across the European regions. The results show that the multidimensional well-being across the European regions are relatively lower when the dimensions are more seen as complements compared to the case when they are considered to be perfect substitutes. Furthermore, there is also a higher degree of multidimensional inequality across the European regions when the dimensions are considered to have some complementarity. Changes in well-being dimensions between 2000 and 2014 indicates that multidimensional well-being improved and inequality decreased in the personal and community well-being categories, but remained unchanged in material well-being category across the European regions irrespective of interaction levels between well-being dimensions. Policy implications of these multidimensional well-being indices are also evaluated by using these indices to determine the eligible regions for the European Union structural funds where the number eligible regions shows some variation depending on whether the dimensions are perfect substitutes or more of complements.