The Levy Institute Measure of Economic Well-Being

Our measure of economic well-being is motivated by the conviction that there is substantial room for improving existing official measures of the level and distribution of household economic well-being. The definition of the scope of our measure is guided by an extended concept of income that fundamentally reflects the resources that a household can command for facilitating current consumption or acquiring financial and physical assets. In the contemporary United States, three main institutions–markets, the government, and the household–mediate such command. The measure therefore attempts to integrate the following components: money income, wealth, noncash transfers from the business and government sectors, some forms of public consumption, and household production. We discuss conceptual issues relevant to each of the components and outline an approach for combining them.