Developing a Comprehensive Multidimensional Wellbeing Index Based on What People Value: An Application to a Middle-Income Country

We introduce a comprehensive policy-relevant measure of multidimensional wellbeing conceptually rooted in Amartya Sen’s capability approach and applied to a middle-income country: the Multidimensional Wellbeing Index for Peru (MWI-P). We design and collect a specialized survey in Peru in late 2018, which included data on wellbeing achievements across 12 dimensions, on the value that respondents place upon each of these dimensions, and on self-perceived freedom. Then, we utilize this information to set the weighting structure and select a wellbeing sufficiency threshold for the MWI-P, which we estimate using the capability-inspired Alkire–Foster method. Our results show that only 45.9% of the sample population live above the wellbeing threshold, which involves achieving sufficiency in at least seven out of the 12 weighted dimensions of the MWI-P. Subgroup analyses reveal that rural populations, women, and older adults are at a disadvantage compared with urban populations, men, and younger adults, respectively. These subgroups’ disparities hold valid if we introduce changes in the weighting structure or in the wellbeing sufficiency threshold. We argue that the MWI-P can inspire other low- and middle-income countries to reorient post-pandemic recovery policies from a focus on economic growth to a human flourishing approach based on what people value.