The exercise in the paper seems like a nice way to bound the welfare differences between countries with similar production possibility frontiers which make slightly different leisure/consumption/inequality/life expectancy choices.
That said, how seriously do you take the magnitudes on the consumption equivalent welfare comparisons of the US with Malawi/India/Brazil, etc (99%!!!!)? If a solid chunk of the welfare from consumption is eroded by social comparison, I'd expect the difference in CEW to overstate the kind of utility we care about. In plainer language, having Brazil level consumption in the US would feel a lot worse than having Brazil level of consumption in Brazil (even after PPP adjustments). I don't think this is just survey preferences/hedons vs revealed preferences point: I suspect the median American would take the Brazilian bundle in Brazil over the 90% consumption cut at home, if offered the choice.
This is not to say that growth isn't ~everything that matters. I happen to think the Lucas quip is right, especially since growth is also going to give you more years, better health and better insurance (and maybe what we should care about is Sen-style capabilities rather than hedons or life satisfaction). Nevertheless, some of those numbers seemed a little wild.
Thanks, this is a very thoughtful comment. I would need to think more about the social comparability point, which I'm sympathetic to. It does seem to me relatively more important once basic needs are fulfilled (i.e., more Brazil and Mexico levels of income, less India or Malawi).
As for magnitudes, I'm not sure—but maybe 99% is actually in the ballpark? (Hopefully it comes through in the piece that I take this all modeling with a rather large grain of salt.) For Malawi I would start to worry more about the 35% of my lifespan lost than quibble over whether I get to keep 10% or 5% or 1% of my income. It's also really difficult to have intuitions about the thought experiment of losing 99% of your consumption in the US ceteris paribus, since in actuality the social safety net would pick you up.
The exercise in the paper seems like a nice way to bound the welfare differences between countries with similar production possibility frontiers which make slightly different leisure/consumption/inequality/life expectancy choices.
That said, how seriously do you take the magnitudes on the consumption equivalent welfare comparisons of the US with Malawi/India/Brazil, etc (99%!!!!)? If a solid chunk of the welfare from consumption is eroded by social comparison, I'd expect the difference in CEW to overstate the kind of utility we care about. In plainer language, having Brazil level consumption in the US would feel a lot worse than having Brazil level of consumption in Brazil (even after PPP adjustments). I don't think this is just survey preferences/hedons vs revealed preferences point: I suspect the median American would take the Brazilian bundle in Brazil over the 90% consumption cut at home, if offered the choice.
This is not to say that growth isn't ~everything that matters. I happen to think the Lucas quip is right, especially since growth is also going to give you more years, better health and better insurance (and maybe what we should care about is Sen-style capabilities rather than hedons or life satisfaction). Nevertheless, some of those numbers seemed a little wild.
Thanks, this is a very thoughtful comment. I would need to think more about the social comparability point, which I'm sympathetic to. It does seem to me relatively more important once basic needs are fulfilled (i.e., more Brazil and Mexico levels of income, less India or Malawi).
As for magnitudes, I'm not sure—but maybe 99% is actually in the ballpark? (Hopefully it comes through in the piece that I take this all modeling with a rather large grain of salt.) For Malawi I would start to worry more about the 35% of my lifespan lost than quibble over whether I get to keep 10% or 5% or 1% of my income. It's also really difficult to have intuitions about the thought experiment of losing 99% of your consumption in the US ceteris paribus, since in actuality the social safety net would pick you up.
The figures for China are 8 years out of date.
Today, Chinese families' net worth is several time more than US families, their Gini is lower, life expectancy higher and streets much, much safe.