Leaders around the world increasingly recognize that GDP alone cannot give a full picture of a country’s performance. The well-being of citizens is an even more important measure. The Boston Consulting Group’s Sustainable Economic Development Assessment (SEDA) is a powerful diagnostic designed to provide leaders with a perspective on how effectively countries convert wealth, as measured by income levels, into well-being. SEDA also helps identify specific areas where a country is lagging behind others, even after taking into account its income level and growth rate.
SEDA defines well-being through three fundamental elements that comprise ten dimensions.
- Economics – Income, Economic Stability and Employment
- Investments – Health, Education and Infrastructure
- Sustainability – Income equality, Civil Society, Governance and Environment
The wealth-to-well-being coefficient compares a country’s current-level SEDA score with the score that would be expected given the country’s GDP per capita. The expected cur- rent-level score is based on the relationship between GDP per capita and current-level well-being scores among all countries in our analysis. (See Exhibit 2.) The coefficient thus provides a relative indicator of how well a country has converted its wealth into the well-being of its population. Countries that sit above the solid line in Exhibit 2 —meaning that they have a coefficient greater than 1.0—deliver higher levels of well-being than would be expected given their GDP levels, while those below the line deliver lower levels than expected. New Zealand sits above Japan in the Exhibit 2.
To understand how countries stack up in terms of well-being, and to see whether they are gaining ground or falling behind, it is helpful to examine both current-level and recent-progress SEDA scores. Countries in the upper-left quadrant of Exhibit 5 below have high current-level scores for well-being, but their recent-progress scores are below the median—meaning that they are in good shape but have been losing ground relative to the rest of the world. Those in the upper-right quadrant have scores that are above the median for both current level and recent progress— their well-being levels are relatively high and have been improving. Those in the lower-right quadrant have relatively low current-level scores but recent-progress scores that are above the median—what we describe as weak but improving. Those in the lower left are the most challenged: they have poor current-level and recent-progress scores, meaning that they have relatively low well-being already and have been losing more ground.
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