CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Quality of life is tied to the extent with which the welfare of the people is promoted across space

and time. This can be achieved either through market mechanism as a first-best option, or by way

of government interference as a second-best alternative. From whichever perspective, the role of

government is typically the provision and equitable allocation of public goods (Barr, 1987).

Therefore people’s access to, and effective distribution of goods and services can be an important

yardstick for evaluating quality of life and the effectiveness of governance.

Determination of economic criteria for welfare evaluation has been a subject of debate among

economists. The source of this debate is the inability to decide on purely economic grounds how

the goods and services produced in an economy should be distributed among individuals, arising

from the political, economic, and moral considerations surrounding issues of distribution and

equity (Just, Hueth and Schmitz, 2004). Welfare economics provides an economist with tools of

analysis for making normative statements about the ideal policy choice in any given situation, and

the basis for evaluating the achievements of markets and governments in resource allocation.

The approaches for the assessment of human welfare have evolved from the utility-based to

resource-based approach, and more recently to the capability approach. According to Walle

(1996), the evolution of these approaches can be attributed to three important revolutions in

economics. First is the marginalist revolution associated with the independent works of Calrl

Menger, Leon Walras, and Alfred Marshal. Their most notable contribution is the idea of

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diminishing marginal utilitywhich has been the basis for consumption theory and the backbone of

welfare measurement up to early twentieth century. The second is the ordinalist revolution which,

starting with the work of Lionel Robbins in 1932, synthesized the contributions of the marginalists

into a coherent school of neoclassical economics. The ordinalists maintained that utility is a

subjective concept that can be measured only through revealed preference. The third revolution is

attributed to the work of John Rawls in a 1971 publication A Theory of Justice. Drawing on the

philosophy of Rawls, Amartya Sen developed the capability approach with focuses on human

potentials rather than merely on resources. This is known as the humanist revolution which has

been influential particularly in development policy circles (Cooter and Rappoport, 1984; Stanton,

2007).

Most recently, the evolution is towards an integrated approach that combines all approaches to

welfare with emphasis on sustainable development (see Costanza et al. 2008; Stiglitz, Sen and

Fitoussi, 2009). However, the empirical application of this heterodox approach is limited by a lack

of workable framework for welfare evaluation. In addition, the Millennium Development Goals

(MDGs) have been used as a framework for public policy and evaluation especially in the

developing world. But as at 2015, many countries in Sub-Saharan Africa including Nigeria have

not achieved the targets for MDGs despite sustained periods of growth, calling for a shift of focus

to a post-MDGs world. The prospects of most of these countries even in a post-MDG era are

unclear especially when growth forecasts are being adjusted downwards. As such, it is important

to have a clear and measurable framework for quality of life evaluation as a basis for government

action in less developed countries.

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Empirically, studies on qualityof life use diverse indicators as healthcare, education, housing, and

earnings as components of welfare. However, studies on developed countries focus on happiness

and satisfaction with the components since public goods are available and readily accessible in

those countries. On the other hand, studies on developing countries emphasize on access to such

welfare components due to the prevalence of resource poverty and other forms of deprivations in

less developed countries. For example, observations from reports on a global scale show a wide

disparity in quality of life between the