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A Companion to Urban Economics - Arnott and McMillen - Chapter 28

C H A P T E R T W E N T Y - E I G H T Measuring Quality of Life Life is good when quality of life is high. To many of us, an ideal quality of life index would measure a person’s overall well-being; that is, an individual’s total utility. An ideal index would depend upon things that money can buy. | A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd CHAPTER TWENTY-EIGHT Measuring Quality of Life Glenn C. Blomquist 28.1 Money Quality of Life and Urban Amenities Life is good when quality of life is high. To many of us an ideal quality of life index would measure a person s overall well-being that is an individual s total utility. An ideal index would depend upon things that money can buy. Traditional economic goods such as food and drink shelter clothing transportation and entertainment would be included among these things. An ideal index would depend also upon social environmental and perceptual dimensions of wellbeing. Moderate climate fresh air clean water safe neighborhoods good schools and good government would be included among these things. Furthermore an ideal holistic index would depend on the way in which individuals and households combine marketed goods and services and environmental and community factors with their own time and energy to produce the things such as happy homes that give them utility directly and determine overall well-being. Money income can be used as a metric to measure well-being. The logic is straightforward. More money relaxes the budget constraint and allows a person to purchase more things and achieve a higher level of utility. Not surprisingly great attention is given to average incomes in different areas with the underlying notion that households are better off where incomes are higher because they can buy more. For example in Berger and Blomquist 1988 we used US Census data to compare household incomes poverty rates and unemployment rates across urban areas. We made these comparisons for households of different ages and races and with and without children. Chambers of Commerce elected officials and others talk about the importance of jobs and the accompanying income to the well-being of individuals who live in the area. Money income matters for sure but it