The heterogeneous level of life quality across Chilean regions

Abstract

This paper integrates the empirical literature attempting to measure quality of life with different philosophical, economic and psychological approaches that shed some light on the contours of the concept. On this basis, we suggest quality of life is composed of multiple dimensions of value that are not reducible to a single teleological measure as proposed by utilitarianism and modern economics. A quality of life index must integrate subjective and objective indicators, measures of environmental quality and inequality, individual and collective wellbeing and material and non-materials aspects. We applied this framework to the regions of a rapidly growing economy, Chile, and despite the data limitations, the paper adds dimensions that have not been explicitly considered in previous work. Using a large set of indicators based mostly on micro-data, ten factors characterizing different dimensions of life are built from 27 indicators that represent: material and subjective individual wellbeing, collective good and subjective social welfare, environmental quality and resource inequality across the Chilean regions. The behavior of the factors is very heterogeneous across regions and the correlation between factors is positive for the one representing material and subjective individual welfare, but negative with the factors representing collective good and social wellbeing. Given these results, the methods used weighting and aggregation for calculating the index becomes critical in defining the final ranking of regions. For instance, the assumption about substitution between factors is a key issue. Three methods of aggregation are used to calculate the index: the arithmetic and geometric mean that allow perfect and imperfect substitution respectively and the min-function that does not allow substitution. The results show a great deal of variation in the Quality of Life Ranking among Chilean regions, suggesting policy makers that pursuing one or two dimensions is not enough for promoting quality of life due to the multidimensional character of the concept.