In many instances the HDI (Human Development Index) would provide a better measure as it’s a composite of life expectancy, education and per capita GNI or gross national income as a measure of a standard of living.
Another avenue could be to measure data related to government macro-economic objectives. Quantitative measurements of inflation, unemployment, balance of payments and economic growth would provide an excellent assessment of the economic health of a country. These data provide hard evidence of the costs to the citizens the availability of work and the competitiveness of the country with other nations abroad. The advantage of these quantitative data is that it allows comparison with other countries as well as historical comparisons in order to highlight trends and inform policy objectives. For example a country whose balance of payments was permanently in disequilibrium may find it useful to enact expenditure switching policies to re-direct the spending within its economy away from imports towards its home produced goods and services as well as considering devaluation as a tool to enhance the attractiveness of its exports.
There are quantitative and qualitative data that companies could be interested in. This would inform their level of investment and recruitment. For example profits and company growth and market share would show how business was performing. The cash balance sheets and gearing would also show whether businesses had capital to invest which may spur economic growth. Indeed one of the biggest determinants for companies for investment in the quantitative and qualitative measures on consumer confidence.
This is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country by country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends.
In simple terms, increased consumer confidence indicates economic growth in which consumers are spending money, indicating higher consumption as a percentage of GDP. Decreasing consumer confidence implies slowing economic growth, and so consumers are likely to decrease their spending. The idea is that the more confident people feel about the economy and their jobs and incomes, the more likely they are to make purchases. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is headed into trouble.
Finally another type of quantitative and qualitative data which would indicate the economic health of a country would be data that might be of interest to households and consumers. In countries like the US and UK where consumption makes up a large percentage of GDP growth, information on the value of asset prices such as home prices are extremely important. Mortgage equity withdrawal based on increasing property values contributed many years of economic growth in both countries as consumers liquidated large amounts of the increase in property values and spent the money thereby boosting economic growth. Conversely falling property prices and negative equity tend to decrease the consumption levels of property owners and leads to a reluctance or inability to borrow for consumption. When the multiplier effects of both the increase or decrease in consumption as a result of an increase or decrease in property prices are factored in then we can see how useful this data is in explaining the increase or decrease in economic activity. Other asset prices such as share prices would also be included in this category although their effect on consumption may not be as large as the increases or decreases in property prices.
In conclusion I have examined how it is important it is to use a range of qualitative and quantitative data in order to assess the economic health of a nation as there are many aspects of the data which gives a broader picture. Data such as GDP growth and HDI may be useful for measuring standards of living whilst other data such as unemployment and inflation rates may be better for assessing the performance of the government’s macro-economic objectives. However data such as consumer confidence index and asset prices would inform us about the likely direction of consumption in the economy and its impact on economic activity.