Beyond Gdp: An Overview of Measurement Issues in Redefining ‘Wealth’

In the last decades, a growing quantity of literature has been written about concepts such as quality of life and well‐being as a proxy for evaluating societal prosperity and progress. This paper analyses the theoretical foundations and the empirical validity of multi‐dimensional technical tools that can be used for well‐being measurement. There is no doubt that there is a lot of complexity and fuzziness inherent in multi‐dimensional concepts such as well‐being. A possible reduction of this complexity, a pre‐condition for policy‐making, introduces the problem of the descriptors used: indicators and indexes. In a multi‐dimensional framework, multi‐criteria evaluation is a consistent approach for the construction of so‐called composite indicators. Often, some individual indicators improve while others deteriorate. This is the classical conflictual situation dealt with in multi‐criteria evaluation; in particular non‐compensatory methods are quite relevant, since compensability implies complete substitutability between different types of capital. Uncertainty and sensitivity analysis can estimate the robustness of the results obtained and help the framing of the debate around the conceptual framework used, that is, which representation of reality (and thus which societal values and interests) has been considered.