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Can national GDP growth maintain personal GDP growth in times of
population growth? An empirical investigation of the UK – Leo Neuerberg 2014
Summary
This report was written for the charity “Population Matters”, which seeks to shed
light on the socioeconomic and environmental consequences of population growth
and promote policies to stabilise population numbers at sustainable levels.
The report focused on investigating the historic and future development of the UK’s
GDP per capita in relation to changes in the national GDP from 1991 to 2030. The
GDP per capita development was investigated for the UK in comparison to Germany
as examples of rich European economies, and Kenya as an example of a rapidly
growing third world economy. Additionally, it identified the most important factors
that influence the life satisfaction of a UK citizen. The report used the OECD Better
Life Index (BLI) to measure the UK’s well being. This particular method was chosen
because it aims to overcome the limitations of GDP when measuring a nation’s
welfare. The BLI considers 11 factors on a factor analysis to calculate the well being
of society. These factors are clustered into two groups: material living conditions and
quality of life. The sub-factors in the material living conditions group are: housing,
income and wealth, and job and earnings. The sub-factors in the quality of life group
are: health status, work - life balance, education and skills, social connections and
community, civic engagement and governance, environmental quality, personal
security and safety, and life satisfaction.
The research suggests that population growth in the UK has had a negative effect on
GDP per capita growth. Forecast data suggest that the situation will get worse in the
near future. It can therefore be concluded that national GDP increase can only
maintain personal GDP increase in times of growing population if the national GDP
growth exceeds the inflation and population growth.
While life satisfaction increases with job satisfaction, community, environment,
quality of health system and work - life balance, the effect is adverse for age and
civic engagement. Research found that the variables of education, gender, housing,
safety and income were not significant in the model used to influence a UK citizen’s
life satisfaction. This reveals that statistically, life satisfaction does not differ
between genders and is not influenced by factors such as income satisfaction.
The results from comparing the GDP per capita analysis with the model used to
determine life satisfaction indicate that higher or lower levels of income do not
affect the level of life satisfaction. As a result, it can be concluded that the
development of GDP per capita will be independent from the development of life
satisfaction for UK citizens. However, this finding should not be generalized to other
countries, but needs to be seen in the UK specific context. The UK is a rich economy
with above average income. In economies with lower average income, the
correlation of income on life satisfaction may be significant.
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