Can technical and social efficiency support sustainability? A study on OECD countries’ well-being

In few decades, several efforts have been made to go beyond the economic criteria of well-being by broadening its traditional measurement based on a large set of indicators. Starting from the idea that a way of generating well-being is sustainable only if it is efficient, this work evaluates the technical and social efficiency of all 37 OECD countries in producing their own well-being. A Data Envelopment Analysis (DEA) is performed to determine whether each OECD country is doing its best with available resources or may revise its production process. The first step is an assessment of technical efficiency, where the inputs are the traditional ones (labour and capital) and well-being (output) is measured by the variables of the OECD Better Life Index (BLI), neglecting those related to social and environmental costs. The second step, instead, is an assessment of social efficiency, whose inputs are the so-called bad variables of the BLI, retaining the same outputs as the previous step. Carrying out both DEAs, it is possible to understand if countries are efficient in exploiting their own resources by also considering the social and environmental costs, instead of treating them as an unavoidable consequence of the production process. The results show that high well-being countries are not always efficient at producing their own levels of well-being. However, the poorest countries achieve the worst social efficiency scores: in the early stages of development, countries focus on improving technical efficiency and, only later, on issues that are not purely economic, such as environmental and social costs.