National Accounts of Well-being 23 rd – 24 th July 2009, Florence Measuring subjective well-being: An opportunity for

National Accounts of Well-being 23rd – 24th July 2009, Florence Measuring subjective well-being: An opportunity for National Statistical Offices? Centre for Well-being nef (the new economics foundation)

Outline • Why well-being? • What is well-being? • The perfect indicator – what National Accounts of Well-Being should look like • An imperfect example - what National Accounts of Well-Being look like now • Next steps

A bit about nef • An independent UK think-and-do-tank (founded 1986). • Inspired by 3 principles • Environmental sustainability • Social justice • Well-being and quality of life • Aim of the centre for well-being: “Enhance individual and collective well-being in ways that are environmentally sustainable and socially just”

and a bit more about nef… • Has developed a wide range of indicators • MDP / Regional ISEWs • Social Return on Investment • Happy Planet Index WHY? • What gets measured matters • Indicators create sense of precision and attract interest • Indicators redefine what they purport to measure • Indicators incentivise specific policies

How not to measure progress Gross National Product counts air pollution, and cigarrette advertising and…the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It does not allow for the health of our children, the quality of their education or the joy or their play…the beauty of our poetry or the strength of our marriages. It measures everything, in short, except that which makes life worthwhile. Robert Kennedy, 1968

How should we measure progress? • Criticisms of GDP (as a proxy for welfare) are well-known • Insensitive to distribution • “Defensive” expenditure • Deals poorly with non-market goods and externalities • Fails to account for subjective experience • Can overplay GDP-as-progress argument (govt actually measures all kinds of stuff)… but huge symbolic importance.

How should we measure progress? • “Economic performance is not intrinsically interesting. No-one is concerned in a genuine sense about the level of gross national product last year or about next year’s exchange rate. People have no innate interest in the money supply, inflation, growth, inequality, unemployment… Economic things matter only in so far as they make people happier.” (Oswald, 1980) • “No one wakes up dreaming they lived in the country with the highest economic growth.” (Michaela Moser, European Anti-Poverty Network) Why not measure subjective well-being directly?

Where to measure? Input Process Output Outcome Resources Products Well-being Industry need to measure at all of these points

Life, the universe and everything (a human perspective)

Our approach to well-being • More than just happiness and/or satisfaction • “.. a dynamic state, in which the individual is able to develop their potential, work productively and creatively, build strong and positive relationships with others, and contribute to their community. It is enhanced when an individual is able to fulfil their personal and social goals, and achieve a sense of purpose in society” (Foresight MCWB, 2008) • Personal and social dimensions are both important

A dynamic model Experience of life e.g. happiness, satisfaction, interest, boredom and distress e.g. to be autonomous, competent, and connected to others Functioning well and satisfaction of needs Enabling conditions Psychological resources e.g. opportunities and obstacles, inequalities, social norms, culture e.g. resilience, optimism, self-esteem

The perfect indicator (set) • Offers depth of understanding • Can be related to policy • Is sensitive to policy • Quality – grounded in theory, reliable • Valid - avoids relying on proxies • Comparison – across domains, between countries and population groups, over time • Communicable • Provide overall sense of direction (subset of Hagerty et al.’s (2001) list)

An imperfect example • Launched Jan 2009 • Based on data from 2006 • Covers 22 European nations • Intended as starting point for debate, not final answer • Based on data from over 50 questions

European Social Survey • First social science project to win a Descartes Research Prize • Over 40,000 respondents in 25 countries • Interview methodology • Two rotating modules • Personal and Social Well-being module • Led by Prof Felicia Huppert at Cambridge • Partners included Nic Marks at nef, Andrew Clark, Alois Stutzer, Joar Vittersø and Johannes Siegrist. • Building prototype NAWB was an explicit aim

National Accounts structure

Apples and pears Challenge in these accounts is to combine data of different types. A given response code means different things for different questions: How much of the time spent with your family is enjoyable? 0 – none of the time 6 – all of the time To what extent do you feel that people treat you with respect? 0 – not at all 6 – a great deal

Transforming scores Our approach is a three stage one: 1 – convert values for each question into z-scores 2 – combine scores from different questions / respondents

Transforming scores 3 – convert mean z-scores into transformed scores on 0-10 scale, such that lowest possible value becomes 0, highest possible value becomes 10 and z-score of 0 becomes 5.

Results - Personal WB

Results – Social WB

Trust and belonging - youngest

Trust and belonging - oldest

Finland and France

Next steps • Debate and development of framework • Understand how well-being fits within overall framework of measuring sustainable and just prosperity • Mobilisation of widespread interest and support • Public, policy makers and academics • Encourage statistical offices and networks to engage, help shape, and collect data

Contact details: juliet.michaelson@neweconomics.org 020 7820 6370

National Accounts of Well-being 23 rd – 24 th July 2009, Florence Measuring subjective well-being: An opportunity for