Total factor productivity (TFP) and capital stock per person are key factors in determining the welfare of a country's citizens. These variables can be used to calculate changes in welfare within a country and differences in welfare between countries. The method applies to all types of production technology and market competition levels. When constructing TFP for welfare analysis, prices and quantities as perceived by consumers should be used. Factor shares should be calculated using after-tax wages and rental rates. The study analyzed data from advanced countries to calculate welfare gaps and growth rates, with similar results found in a broader sample including both advanced and developing countries.