The Role of Assets and their Distribution in the Estimation of Economic Well-Being Presentation at the 4 th OECD World Forum on Measuring Well-being for Development and Policy Making October 16-19, 2012, Delhi, India Session 1B: The Role of Assets and their Distribution, Dr. Andrew Sharpe (Center for the Study of Living Standards, Canada)

Outline of Presentation I. A Review of Assets Types II. The Role of Assets in the Index of Economic Well-Being (IEWB) III. The Role of Assets in the Levy Institute Measure of Well- Being (LIMEW) IV. Recommendations for Data on Assets 2

I. Review of Asset Types by sector (household, business, government) by individual (personal) or collective ownership by financial (e.g. bank deposits, stocks, bonds) or non- financial (e.g. residential and non-residential capital stock, natural resources, human capital, ecosystems, and intangible capital) assets Micro versus macro approaches 3

II. The Role of Assets in the Index of Economic Well- being (IEWB) The IEWB has developed by Lars Osberg from Dalhousie University and Andrew Sharpe from the Centre for the Study of Living Standards It was first published in 2002 in the Review of Income and Wealth It is a composite index that includes variables expressed in monetary unites and in index form 4

5 Exhibit: The CSLS Index of Economic Well- being: Weighting Tree for Canada and the Provinces

Chart 1: Trends in the Overall Index of Economic Well-Being and GDP per Capita, Canada, , Indexed, 1981=100 6

Chart 2 Components of the Wealth Domain, Canada, 2002 Dollars, 1981 and

Chart 3: Trends in Per-Capita Wealth and its Components, Canada, , Indexed, 1981=100 8

Chart 4: Per-Capita Net Capital Stock, Canada and the Provinces, 2002 Dollars, 1981 and

Chart 5: Per-Capita Stock of Natural Resources, Canada and the Provinces, 2002 Dollars, 1981 and

Chart 6: Total Per-Capita Wealth in Canada and the Provinces, 1981 and

Chart 7: Index of the Wealth Domain in Canada and the Provinces, 1981 and

III. The Role of Assets in the Levy Institute Measure of Well-being (LIMEW) The Levy Institute Index of Economic Well-being (LIMEW) was developed by economists at the Levy Institute at Bard College in New York state in the early 2000s. the LIMEW is calculated at the household level and is expressed in monetary terms. estimates of the LIMEW for Canada were developed by the Centre for the Study of Living Standards in partnership with the Levy Institute 13

Table 1: Components of LIMEW 14

Table 2: Compositions of LIMEW by Quintiles, US and Canada 15

Chart 8 Composition of LIMEW 16

Table 3: Factors Affecting Income From Wealth (Mean Values, 2000 PPP$) 17

Table 4: Contribution of Major Components to the Change in LIMEW of the Middle Quintile (per cent) 18

Chart 9: Composition of LIMEW by Major Component (per cent) 19

Chart 10: Contribution to the Change in Average LIMEW for Each Component (percentage point) 20

Chart 11: Composition of LIMEW of the Middle Quintile by Major Component (per cent) 21

Chart 12: Gaps Between Canada and the US in the Disparities Between Elderly and Non-Elderly Households by Component 22

IV. Recommendations for Data on Assets I. Non-Financial or Real Assets i. develop an internationally comparable time series for physical capital asset ii. develop internationally comparable time series of human capital iii. develop internationally comparable time series of natural resources iv. continue conceptual work on intangible capital and develop internationally comparable time series v. explore methodologies of the valuation of ecosystems II. Financial Assets i. encourage more countries to conduct wealth survey and to increase their frequency ii. work toward the standardization of definitions of different asset types across countries 23