Measuring National Wellbeing

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A. Abstract Governments and other institutions worldwide are increasingly interested in measuring and monitoring wellbeing at the individual, social group and national levels. This POSTnote summarises the latest research on measuring national wellbeing, its components and causes, and examines some policy implications. B. Background Wellbeing is at the core of diverse policy agendas, whether it is for social inclusion or environmental sustainability. National wellbeing measures provide information for policy makers and citizens about social and economic progress, and can inform policy development. The measures reflect not only national accounting but also people’s quality of life. What is Wellbeing? Definition of wellbeing very with several terms used, including national wellbeing, individual wellbeing, subjective wellbeing, happiness, quality of life or life satisfaction (Table 1). Some view wellbeing as wholly psychological; it is subjectively experienced by individuals. It can be an emotional state such as happiness or anxiety. It can also be a judgement about satisfaction with lif overall or with certain domains, or the extent to which life has meaning or purpose. Some however holds a contrasting view, seeing wellbeing as an objective or external assessment of people’s daily living conditions such as their abilities and opportunities to live a good life. Among all, the most prominent view is that wellbeing results from meaningful and sustainable interactions between an individual and their social and physical environment. Consensus and Disagreement Below are four key factors influencing several countries to develop data collection tools called National Wellbeing Measures (NWBMs): • Political interests in developing new indicators that are more informative than personal incomes or GDP in assessing how well or poorly the lives of citizens are going. • Advances in measurement and research on different dimensions of subjective wellbeing and its links to health, mortality, productivity, cost-savings and environmental sustainability. • The potential for research on behavioural economics (the psychology of decision making under uncertainty) to inform public policy aimed at improving wellbeing. • Its potential use in policy design, monitoring and evaluation and as an aid in better targeting of resources. In general, consensus is that the measures should incorporate many dimensions and must include more than one subjective (for example, happiness) or objective aspect (such as income). There is however disagreement on which dimensions to include and particularly if subjective wellbeing should be included. There are different views on whether and how to combine the information about the different dimensions into a single number or index. A single index number simplifies the information and enables progress to be tracked easily over time. Harmonising a core set of common indicators of national wellbeing measures and their indexing, is also needed to make international comparisons. C. Limitations of Economic Indicators Gross domestic product (GDP) measures the monetary value of goods and services produced in a country. The size and growth of GDP reflects economic performance and is often used as the headline indicator of a society’s success and progress. However, GDP is not necessarily a good measure of personal or national wellbeing. GPD focuses on production, hence masking income inequalities and deprivations. Rising GDP doesn’t mean incomes of the worst off or the majority of citizens are increasing. GDP can include economic activity related to undesirable situations. For instance, cleaning up oil spills or rebuilding after a tsunami contributes to GDP growth. In addition, GDP doesn’t include unpaid activities or improvements in quality of life produced from healthcare. Income and Wellbeing GDP is an indicator of national wealth and can be made to estimate GDP per capita, or average real incomes. It is assumed that as GDP and average real incomes grow, more wellbeing is produced from more consumption. However, economic research shows that the link between income and wellbeing is not straightforward. Initial research found that while higher levels of national wealth are associated with greater happiness across countries, within a country, increasing incomes over the life course seems to produce diminishing or no increases in happiness. One explanation is that increasing incomes do not increase happiness if everybody’s incomes are also increasing, since additional income is used to keep up with others. The relationship between GDP, personal incomes, and wellbeing is contested and is being actively researched. Environment and Wellbeing Human wellbeing is dependent on the environment. Scientists argue that if the pursuit of ever-increasing GDP growth is based on unsustainable use of natural resources or is harmful to the environment, it threatens the wellbeing of current and future generations. Some economists recognise that current measures of growth do not take into account environmental costs, and require adjustments. D. National Wellbeing Measures The Stiglitz Commission In 2008 President Sarkozy created the Commission on the Measurement of Economic Performance and Social Progress (the “Stiglitz Commission”), which recommended that NWBMs should include eight core components: material living standards (income, consumption and wealth); health; education; personal activities (including work); political voice and governance; social connections and relationships; environment (present and future conditions) and insecurity (economic and physical). Many countries have followed the suit and are developing set of key indicators of national wellbeing. Developing national wellbeing index measure is not an easy task. A key challenge is in reconciling public and expert opinions on what wellbeing or a good life is, what its components are and weighting the relative importance of each. Some countries task experts to identify the key indicators, while in others politicians and the public are more involved. Wellbeing Indexes National wellbeing measures and indexes vary from organisation to organisation. For example, the UN’s Human Development Index contains only three components: life expectancy, education and income per capita. Many more components are included in the OECD’s Your Better Life Index, the European’s Statistical System Indicators, the Dutch Life Situation Index and the Canadian Wellbeing Index. Wellbeing Research Researchers from different disciplines including economics, psychology, public health, neurobiology and sociology are examining the components, consequences and distribution of both subjective and objective wellbeing. For example, some psychiatrists argue that living a life with self-direction, meaningful relationships and engagement and skill development leads to greater wellbeing. A novel aspect of recent wellbeing research is that it focuses on the components and causes of positive aspects of human lives as well as the negatives. The premise is that the absence of mental and physical impairments does not necessarily lead to positive wellbeing. E. Measuring National Wellbeing in the UK In November 2010, in response to a request by the government, the UK’s Office for National Statistics (ONS) began developing indicators of national wellbeing. These were based on advice from expert and public consultation. It identified the following domains that influence subjective wellbeing: • Domains directly affecting individual subjective wellbeing: relationships, health, what we do, where we live, personal finance, education and skills; • Other wider influences: governance, the economy and the natural environment. The ONS also states that issues of equality, fairness and sustainability apply to each domain and further work is needed to ensure that future surveys can capture meaningful information about their impact on wellbeing. Subjective wellbeing questions in UK Household Survey The ONS’s annual Integrated Household Survey of a large population sample (165,000 adults, aged 16 and over) includes the four questions below on subjective wellbeing. Respondents rate their response on a scale from 0 to 10, where 0 is not at all and 10 is completely. • Overall, how satisfied are you with your life nowadays? • Overall, to what extent do you feel the things you do in your life are worthwhile? • Overall, how happy did you feel yesterday? • Overall, how anxious did you feel yesterday? Measuring Subjective Wellbeing Although media attention often focuses on happiness research and its relevance to policy development, it is only one component of subjective wellbeing research which has many dimensions. The ONS questions capture information on some commonly recognised dimensions, all in one place. • Daily experience of positive and negative emotions • Satisfaction with life overall or with certain domains of life • The extent to which life has meaning or purpose The main method of collecting data on subjective wellbeing is to ask individuals to self-report responses to questions. Such surveys must be carefully designed as research shows that answers can be affected by the types of questions asked immediately before. Experts comment that conclusions should be drawn cautiously, since subjective wellbeing research is based largely on self-reports. Subjective Wellbeing and National Wellbeing The reason subjective wellbeing at the national level is not being measured by more governments is that here is disagreement as to whether it should be included in broader wellbeing initiatives. One prevalent criticism is that governments should not try to intervene into people’s psychological states Another is that subjective wellbeing is not necessarily an adequate indicator of a good quality of life. A person can be happy despite being in poor health or having a low level of educational achievement; People’s subjective wellbeing can be high if they lower their expectations and aspirations. F. Wellbeing Data and Public Policy The process of developing NWBMs by involving citizens is seen by prominent wellbeing researchers as an important feature of democratic governance. On the other hand, wellbeing researchers recognise that after the systems of NWBMs are in place, it will be necessary to identify the priorities among various social and economic policies, what the policy goals should be and to ensure that the policy being considered will have the intended effect on wellbeing. Subjective Wellbeing and Public Policy Wellbeing and an Ageing Population The US authorities believe that subjective wellbeing research to have a potentially significant role in making policy related to the growing proportion of the population who are elderly and/or living with chronic diseases. Longer life expectancies mean that more people will experience age-related degenerative disease, while chronic diseases require long-term medical treatment. It is anticipated that research on the determinants of subjective wellbeing could inform policies to improve individuals’ quality of life. Influencing Personal Decision Making UK policy makers are considering how large national data sets on subjective wellbeing could be used to help people make decisions that may influence their future wellbeing. For example, data on life satisfaction could be analysed according to various demographic characteristics such as profession or geographical location. This could then give people useful information about which profession to pursue or where to live. Research in behavioural psychology shows that human decision-making is influenced by cognitive biases (subconscious mistakes in processing information), particularly where uncertainty exists. It is hoped that policies could be designed to take into account the way choices are made, so that people are more likely to make decisions that improve their own personal wellbeing as well as that of others. Such policies could relate to organ donation, pension savings and health behaviours. G. Overview • There is growing international consensus about the need for additional national indicators of economic performance and social progress to supplement established measures such as GDP; • Many countries are developing methods to collect and present data on wellbeing. The UK has developed a national wellbeing framework; • Happiness research has received much attention, but it is only one aspect of individual and national wellbeing; • National wellbeing measures reflect many dimensions of people’s lives and goals, and their link to sustainability and the economy; • Wellbeing data and analysis could be used to inform central and local policy-making.
Last Modified: 2015/06/24