Synthetic Indicators of Quality of Life in Europe

Abstract

For more than three decades now, sociologists, politicians and economists have used a wide range of statistical and econometric techniques to analyse and measure the quality of life of individuals with the aim of obtaining useful instruments for social, political and economic decision making. The aim of this paper is to analyse the advantages and disadvantages of three possible methodologies for obtaining synthetic indicators for the area of welfare and quality of life. These methodologies are Principal Components Analysis, Data Envelopment Analysis and Measure of Distance P2. Furthermore this paper analyses quality of life in the European Union (EU), as a methodological exercise to demonstrate the principles of calculation, implications and differences between the three indicator-construction approaches. This analysis is particularly useful in a scene like the EU, immersed in a deep transformation process and with profound cultural, economic and social inequalities. Therefore, an analysis of the quality of life and well-being of its inhabitants can play a major role in ironing out such differences.