Basic Concept
The three components of the Life Quality Index, G, E and K reflect three important human concerns: the creation of wealth, the duration of life in good health and the time available to enjoy life. The amount of life available to enjoy wealth acts as a multiplying factor upon the value of that wealth. Conversely, the amount of income one has to enjoy that available lifetime acts as a multiplier on the expected duration of life.
Unlike the United Nation’s Human Development Index (HDI), the LQI is derived rigorously from the economics of human welfare. Like the HDI it can be used to rank nations in order of human welfare (development). However, more important and unlike the HDI it can also serve as an objective function to be used in setting national or corporate goals for managing risk and to guide effective allocation of society’s scarce resources for the mitigation of risks to life or health. The LQI is a summary indicator of net benefit to society for improving the overall public welfare by reducing risks to life in a cost-effective manner.
In the accounting and assessment of human development, we can view the role of individuals as the principal means, or contributors, to development as well as the ends. For example, the productivity of an individual contributes directly to the aggregate wealth creation in a society. However, the income so generated (to whomsoever it may accrue) increases the capacity of society to provide the necessary means such as the required infrastructure (hospitals, schools, clean water, safe roads and structures). The adequacy of the infrastructure in turn benefits the individual via access to quality health and environment, education and means for cultural expression and enrichment. The LQI enhances our decision-making capacity and helps brings into sharp focus the choices and trade-offs we have to make between extension of life and creation of productive wealth.
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