Determinants of social welfare in Brazil after the 2000s

The debate on economic development and welfare highlights that, in the traditional economy, quality of life is linked to the space of utilities and the increase in the monetary wealth of nations. However, from a broader perspective, development should be assessed based on its contributions to individual freedoms and the expansion of capabilities, promoting the improvement of quality of life. In this sense, the income inequality present globally aggravates social challenges. Thus, the problem of the work focuses on analyzing the impacts on the welfare of the Brazilian population between the years 2000 and 2020, in the face of economic shocks and government policies. The research uses statistical data, descriptive and econometric analyses to construct a Welfare Index, created through the Principal Components method. This index indicated 2000 as the worst year in terms of quality of life and 2014 as the best. Subsequently, the relationship of the index with the money supply (M1) and the Selic rate was evaluated through a Vector Autoregressive (VAR) model. The analyses of Impulse-Response Functions and variance decomposition indicated that the welfare index itself is the main determinant of quality of life in the period studied, that is, the better the quality of life, the better the quality of life will be in the following period. The results highlight the relevance of policies that expand individual freedoms and capabilities to promote social welfare.