New insights into the measurement of household well-being for vulnerable economies: Evidence from Pakistan's labor and diet data

Abstract

Well-being is a multidimensional concept. Global measures of well-being like the Human Development Index (HDI) and the Multidimensional Poverty Index (MPI) use indicators such as education, health, and living standards. Nevertheless, both HDI and MPI do not include essential factors of human well-being, especially in lower- and middle-income economies, i.e., decent work and food insecurity. Lack of decent work and food insecurity are two key factors that majorly contribute to the deprivation of household well-being. The lack of decent work conditions substantially contributes to various issues, including low wages, long working hours, and unsafe work environments. These factors can have a detrimental impact on the physical and mental health of workers. Similarly, food insecurity correlates with malnutrition, leading to poor health outcomes and a diminished quality of life. Addressing decent work and food security is essential for improving community well-being and health. In this paper, we construct a novel index that is decomposable to incorporate these dimensions of well-being, i.e., labor and diet. Employing Alkire and Foster (2008) methodology, we develop a multi-dimensional well-being index (MWBI) using PSLM/HIES (2018–19) data for different occupational groups in Pakistan. Our findings indicate that 26 % of households experience poor well-being in Pakistan, with rural areas facing double the deprivation relative to urban areas. KPK province ranks the most deprived, while Punjab is the least deprived. Female-headed households are more deprived (34 %) than male-headed households (26 %). Those in low-skill, agricultural, or entertainment sectors perform the worst. In contrast, those in high-skill, non-agriculture, real estate, and clerical support roles show the least deprivation. Our policy recommendations are improving skills through technical and vocational training programs, supporting legislation to enforce the minimum wage for informal workers, and enhancing labor protections and job opportunities for women. Focusing on the interplay of labor and diet is pivotal for promoting well-being in vulnerable economies.