New Paper: The Case for Economic Growth as the Path to Better Human Wellbeing
We’re pleased to share a research paper by our advisor and leading economist Lant Pritchett, "The Case for Economic Growth as the Path to Human Wellbeing."
This paper, developed for the upcoming Growth Summit that Growth Teams is organizing in collaboration with the Center for Global Development and the Charter Cities Institute, explores how inclusive economic growth can drive poverty reduction and improve living standards globally. Using concrete examples and new analysis, it provides key insights into the power of growth to transform societies.
The Case for Economic Growth as the Path to Better Human Wellbeing
Lant Pritchett
Visiting Professor of Practice, School of Public Policy, London School of Economics
October 1, 2024
Abstract. That higher levels of GDP per capita and consumption expenditures are empirically necessary and empirically sufficient for high levels of human material wellbeing is a fact, but not a theorem. That is, it is possible that economic growth might not deliver on normatively important goals, the strength of the relationship is an empirical question. Using data on three important normative measures: (i) headcount poverty, (ii) basics of material wellbeing and (iii) broad measures of social progress I show that the empirical association is very strong in all three cases. Nearly all cases of growth in a country’s median level of household consumption are “inclusive enough” (which need not be “pro-poor” or “inequality reducing”) that poverty is reduced and growth is empirically sufficient for poverty reduction. And increased levels of median consumption are empirically necessary for large progress in poverty reduction. In reaching basics of material wellbeing (health, education, shelter, living standards): no country reaches high levels of GDP per capita without reaching high levels of basics (with one illustrative exception) and conversely no country reaches high levels of basics without moving beyond low GDP per capita. More broadly, “national development”—the combination of higher productivity, a more responsive polity, a capable state, and more equal treatment of citizens—is empirically necessary and sufficient delivers the same for any measure of wellbeing: high levels of national development deliver on high levels of social progress.