Can an individual’s well-being within a community influence the economic growth of the community?
This is a question that has been debated by economists, policymakers, and researchers for a long time. The conventional wisdom is that economic growth leads to well-being, as it provides more income, consumption, and opportunities for people. However, some studies have challenged this view and suggested that well-being can also be a driver of economic growth, as it enhances human capital, productivity, and social cohesion.
Well-being is a multidimensional concept that encompasses not only material aspects, but also health, education, governance, environment, and social relations. According to the OECD, an economy of well-being has four main pillars: education and skills, health, social protection, and governance. These pillars can affect and be affected by economic growth in various ways.
For example, education and skills are the most important determinants of long-term economic growth, as they increase the employability, innovation, and adaptability of workers. Conversely, economic growth can provide more resources and incentives for investing in education and skills development.
Similarly, health can influence economic growth by reducing absenteeism, increasing productivity, and extending working lives. Economic growth can also improve health outcomes by expanding access to health care, sanitation, and nutrition.
Social protection can reduce poverty and inequality, which can hamper economic growth by creating social unrest, undermining trust, and limiting human potential. Economic growth can also enable more generous and effective social protection systems by increasing fiscal revenues and reducing dependency ratios.
Governance can affect economic growth by providing public goods and services, ensuring the rule of law and property rights, and fostering a conducive business environment. Economic growth can also strengthen governance by enhancing accountability, transparency, and participation.
Therefore, well-being and economic growth can be seen as mutually reinforcing goals that require a balanced and holistic approach. As BCG’s SEDA analysis shows , countries that are better at converting wealth into well-being tend to have faster economic growth and more resilience in times of crisis. Moreover, countries that already enjoy a high level of well-being can further improve both well-being and economic growth by investing in education and employment.
In conclusion, an individual’s well-being within a community can influence the economic growth of the community by contributing to human capital, productivity, and social cohesion. However, this relationship is not one-way or linear; it depends on the policies and institutions that shape the distribution and use of resources across different dimensions of well-being.
