The purpose of this paper is to devise a new index of wellbeing that includes social and political in addition to economic factors. The new index seeks to assess a country's underlying “enabling environment” – the extent to which individuals are able to live as each chooses. Country rankings using this new measure (the HENX) are compared with the ranking of countries using the UN's popular indicators of development, the human development index and the HPI‐2.
The paper describes the necessity of a new index, the subcomponents used in its construction, and the method of construction.
Country rankings are sensitive to which measure is used for the ranking. In particular, the USA and UK fare poorly when ranked by the HPI‐2 but their rankings improve dramatically when the HENX is used.
If a measure of the enabling environment of a country is deemed to be important as a measure of the wellbeing of citizens, and if political and social dimensions are deemed to be important to this environment, rankings of the most developed economies by the UN fail to adequately capture the countries' relative positions.
