Economic Dissatisfaction Index

Economic Discontent Index (EDI) is an index that reflects public dissatisfaction with a country’s economic condition. This index is calculated by combining several important economic indicators (unemployment rate, inflation rate, and economic growth rate) and helps to understand the relationships between these indicators. Public economic dissatisfaction is generally associated with economic hardship, high unemployment, high inflation, and low economic growth. The EDI shows whether these factors together lead to widespread discontent within society.

1. Unemployment Rate: The unemployment rate is a key indicator showing the proportion of the labor force that is unable to find employment. As the unemployment rate rises, individuals’ ability to earn income and participate in consumption decreases. Moreover, high unemployment weakens social security perceptions and increases future anxieties, thereby heightening economic discontent. When unemployment rises, both individual quality of life declines and general societal unease emerges. Particularly when youth unemployment is high, this situation can trigger a broader chain of economic and social problems.
2. Inflation Rate: Inflation measures the rate at which prices of goods and services increase. High inflation erodes individuals’ purchasing power. When people cannot afford the same quantity of goods and services with their income, their standard of living is strained and dissatisfaction increases. Inflation especially deepens economic hardship for those with fixed incomes. High inflation reduces purchasing power, leading individuals to spend less and save less. This can cause economic contraction, increased public unhappiness, and social unrest.
3. Economic Growth Rate: Economic growth refers to an increase in a country’s capacity to produce goods and services. High economic growth creates new employment opportunities, raises living standards, and improves public welfare. However, low or negative growth rates can lead to economic difficulties, limited job opportunities, and declining income levels. This situation increases public economic discontent. During periods of low economic growth, countries may become more indebted, generate fewer job opportunities, and experience a decline in the population’s standard of living. This triggers dissatisfaction at both individual and societal levels.

The Economic Discontent Index is typically calculated using the following formula:

EDI = Unemployment Rate + Inflation Rate + (100 – Economic Growth Rate)

• Unemployment Rate and Inflation Rate: These two factors directly reflect public dissatisfaction with the economy.
• Economic Growth Rate: The growth rate indicates the speed and health of economic activity. When economic growth is low, the index value rises, because low growth restricts public economic opportunities and welfare.

High EDI: A high EDI signals serious economic problems and widespread public dissatisfaction with economic conditions. Typically, high unemployment, high inflation, and low economic growth negatively affect public purchasing power and quality of life. Such conditions can lead to social unrest and potentially to broader social problems road.

Low EDI: A low index indicates that the economy is growing healthily, unemployment rates are low, and inflation is under control. In such circumstances, people is generally satisfied with economic conditions and social peace may be higher.

1. Economic Policies and Reforms: When economic discontent is high, governments are compelled to develop policies aimed at improving public economic welfare. These policies typically focus on reducing unemployment, controlling inflation, and stimulating economic growth.
2. Social Unrest and Protests: High economic discontent can trigger social unrest and protest movements. This is especially true during periods of high youth unemployment, which can lead to social tensions.
3. Early Warning System for Crises: The Economic Discontent Index can serve as an early warning signal for economic crises. Sustained high values of the index may provide early indications that an economic crisis is imminent, allowing governments to take preventive measures.