Acronym Definition
NLQI Near Letter Quality Inc
NLQI National Laboratory Quality Initiative
NLQI National land quality index
NLQI National Language Quality Inspection (localization industry; translated
texts)
NLQI National Link Quality Indicator
NLQI Natural Local Quality Instruction
NLQI National Life Quality Index
The National Life Quality Index (NLQI) is a compound social indicator of
human welfare that reflects the expected length of life in good health and
enhancement of the quality of life through access to income. The Life Quality
Index combines two primary social indicators: the expectancy of healthy life at
birth, E, and the real gross domestic product per person, G, corrected for
purchasing power parity as appropriate. Both are widely available and accurate
statistics.
The three components of the Life Quality Index, G, E and K reflect three
important human concerns: the creation of wealth, the duration of life in good
health and the time available to enjoy life. The amount of life available to
enjoy wealth acts as a multiplying factor upon the value of that wealth.
Conversely, the amount of income one has to enjoy that available lifetime acts
as a multiplier on the expected duration of life.
Unlike the United Nation’s Human Development Index (HDI), the NLQI is derived
rigorously from the economics of human welfare. Like the HDI it can be used to
rank nations in order of human welfare (development). However, more important
and unlike the HDI it can also serve as an objective function to be used in
setting national or corporate goals for managing risk and to guide effective
allocation of society’s scarce resources for the mitigation of risks to life or
health. The NLQI is a summary indicator of net benefit to society for improving
the overall public welfare by reducing risks to life in a cost-effective manner.
Formulation
The mathematical expression for the Life-Quality Index L is:
L = EKG, (1)
showing the NLQI, L as a power function of E, the health-adjusted life
expectancy (HALE) at birth and G, the Gross Domestic Product (GDP) per person.
The parameter K is a constant based on time budget studies available for many
countries. K is approximately equal to 5.0 for developed nations (Rackwitz 2005,
Pandey et al. 2006).
Societal Capacity to Commit Resources (SCCR) The NLQI has been used to determine
an acceptable level of expenditure that can be justifiably incurred on behalf of
the public interest in exchange for a small reduction in the risk of death that
results in improved life-quality for all. This value can be considered as the
Societal Capacity to Commit Resources (SCCR) to sustainable risk reduction.
Suppose a portion of GDP, dG, is invested in implementing a program that has an
impact on public risk, thus modifying the life expectancy by a small amount dE.
There is a net benefit if there is a net increase in NLQI, dL. This criterion
can be derived from eq.(1) as
dL/L = K dE/E + dG/G > 0. (2)
from which the Societal Capacity to Commit Resources to sustainable risk
reduction follows as
SCCR = Max dG/dE = KG/E. (3)
Application
The Life Quality Index is a decision tool serving to promote human development
through better allocation of society’s scarce resources by reducing wasteful
efforts on inefficient risk-reduction and identifying efficient alternatives.
Given that the Societal Capacity to Commit Resources (SCCR) is limited, the NLQI
is a powerful indicator of merit amongst competing but desirable goods, such as
for example level of resources to be directed at air pollution vs water
pollution vs low probability, high consequence risks in the distant future.
Using the Life Quality Index or SCCR to Judge Risk -- Risks influence the NLQI
via the age- and sex-specific mortality, calculated by changes in an actuarial
life table. The safety benefit is the gain in health-adjusted life expectancy
HALE, or life extension expected upon implementation of the program. The cost
impacts must also be evaluated, measured as the impact on the real gross
domestic product per person (RGDP) (with refinements that could include
correction for purchasing power parity for international comparisons). The net
benefit of a program is measured, according to the SCCR, by the resultant
increases in real gross domestic product per capita and life expectancy,
weighted by K, eq.(3). The Life Quality Index may be thought of as refinement of
monetary measures commonly used in cost-benefit analysis.
Net Benefit Criterion for Managing Risk- the objective is to maximize life
expectancy subject to society’s capacity to commit resources in light of
existing or future constraints. Reducing risk of death and disease translates
into longer healthful lives. The length of life extension in good health for a
population can be reliably measured as the impact on the gain in life expectancy
(dE). Resources and monies (-dG) are required to achieve the gains, or
increases, in life expectancy. If the resources are wisely spent, then the gains
in life expectancy will be sufficiently large that there is a net increase in
the Life Quality Index (NLQI). In contrast, if inordinate sums are spent on
activities that do not save lives or result in only meagre life extension then
there is a net decrease in the NLQI.
Life Quality Index as a Tool for Managing Risk - Through case studies and worked
examples, it has been shown how the Life Quality Index can be used to assist
decision-makers in evaluating the effectiveness of regulations and activities
aimed at reducing risk to life, health and the environment. The NLQI is a
versatile tool that can be used to assess a wide range of risk management
problems. The examples of application of NLQI include: - the effectiveness of
standards and regulations for health and safety; - harmonization of structural
safety standards and design goals; - assessment of air pollution standards; -
efficiency of life-saving interventions and estimates of the societal
willingness (or capacity) to commit resources for safety.
Summary
In the accounting and assessment of human development, we can view the role of
individuals as the principal means, or contributors, to development as well as
the ends. For example, the productivity of an individual contributes directly to
the aggregate wealth creation in a society. However, the income so generated (to
whomsoever it may accrue) increases the capacity of society to provide the
necessary means such as the required infrastructure (hospitals, schools, clean
water, safe roads and structures). The adequacy of the infrastructure in turn
benefits the individual via access to quality health and environment, education
and means for cultural expression and enrichment. The NLQI enhances our
decision-making capacity and helps brings into sharp focus the choices and
trade-offs we have to make between extension of life and creation of productive
wealth.
Development of the Life Quality Index at University of Waterloo, Waterloo,
Ontario, Canada
The concept of the Life Quality Index was first initiated at the Institute for
Risk Research, University of Waterloo, Waterloo, Ontario, Canada in the early
1990s The two primary publications were:
Lind, N.C., Nathwani, J.S. and Siddal, E. (1992). Managing Risks in the Public
Interest, Institute of Risk Research, University of Waterloo Press, Waterloo,
ON, Canada and [2] Nathwani, J.S., Lind, N.C., and Pandey, M.D. (1997).
Affordable Safety by Choice: The Life Quality Method. Institute for Risk
Research, University of Waterloo Press, Waterloo, ON, Canada, pp 230.
The principal investigators involved in the development of the Life Quality
Index have been Professors Niels Lind, Jatin Nathwani and Mahesh Pandey.
IRR-NERAM University of Waterloo 519.888.4567 x3355 irr-neram@uwaterloo.ca
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