An Evaluation of Effective Prosperity Measure: A Case of Wellbeing Index

Prosperity has been considered the most desirable real outcome of all human efforts however usually measured through gross domestic output of the economy that may not capable to comprehend it effectively. This paper evaluates wellbeing measured through some economic, social and institutional aspects considering the dynamic behavior of variables based on Legatum Prosperity Index (LPI), Maslow’s theory of human needs and Minsky financial instability hypothesis. Considering the data within the context of economic quality, business, education, health, financial security and environment, a comparative analysis has been made to judge the level of prosperity engrossed through LPI. Annual data related to Pakistan from 1960 to 20016 has been examined for about hundred variables after reducing them into 21 exogenous and four endogenous variables through index-transformation. Two Stage Least Squares (TSLS) regression technique to solve the simultaneous equations models prove relevant. The major findings reveal that LPI has successfully measure the wellbeing scenario in case of Pakistan, further it ascertains that social and institutional dimensions are vital complement for wellbeing in addition to economic dimension which cannot uniquely be relied upon for sustainable prosperity.