MANY people complain that conventional measures of GDP fail to capture a country's true standard of living. But their attempts to improve on these conventional metrics are ad hoc. In a new paper* Charles Jones and Peter Klenow of Stanford University propose a new measure of standards of living based on a simple thought experiment: if you were reborn as a random member of another country, how much could you expect to consume, in goods and leisure, over the course of your life? America, for example, has a higher GDP per person than France. But Americans also tend to work longer hours and live shorter lives. They also belong to a less equal society. If you assume that people do not know what position in society they will occupy, and that they dislike being poor more than they like being rich, they should prefer more egalitarian societies, everything else equal. For these reasons, the authors calculate that France and America have about the same standard of living.

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*"Beyond GDP? Welfare across Countries and Time”, by Charles Jones and Peter Klenow, NBER Working Paper No. 16352