The Wellbeing of Nations

Meaning, Motive and Measurement

Paul Allin, David J. Hand

• Publisher: Wiley
• Year: 2014
• Print ISBN: 9781118489574
• eBook ISBN: 9781118916209
• Edition: 1
• Topic: Economics
• Subtopic: Econometrics
• Index: Economics

THE WELLBEING OF NATIONS
MEANING, MOTIVE AND MEASUREMENT

'A great book that adds much needed well-reasoned argument and weight to the global debate on how we better measure what is getting better and what is not. Hand and Allin chart a series of paths away from the beguiling simplicity of GDP, show where those routes began and to where they might lead. Slowly we are learning to better count what really matters in our lives. This book explains the international collaboration behind this new learning and moves it far forward.'
Daniel Dorling, School of Geography and the Environment, University of Oxford

How and why to use new measures of national wellbeing

We have known for many years that standard measures of a country's economic performance, like GDP and GNP, fail to tell the whole story about progress and wellbeing.

The Wellbeing of Nations explores national and cross-national initiatives to build wider measures. It covers economic performance, quality of life, the state of the environment, progress, development and sustainability. The authors take the view that national wellbeing — how a country is doing — embraces all these aspects and so measures of real progress need these dimensions.

This book:

• Presents insights drawn from a wide range of national and international developments and provides an extensive appendix of resource materials.
• Provides an in-depth study of the UK measuring national wellbeing programme, with which both authors continue to be involved.
• Explores all the main approaches to wellbeing, such as developments to the national economic accounts, Sen's capabilities approach and the concept and measurement of sustainable development.
• Offers a historical perspective on progress and examines current developments in this field.

The authors note that it is still early days in the practical application of these wider measures by government and business, but that use should be the main factor driving their development and production. Aspirations are high and there is much to be gained by the use of such wider measures of national wellbeing, progress and development around the world.

The Wellbeing of Nations is aimed at statisticians, economists, social researchers and policy makers in government, including national and international statistics offices. Academics in development studies, economics, environmental studies, positive psychology, health research, anthropology, political studies and sociology will also benefit from this book.

1
What is national wellbeing and why measure it?

not all the calculators of the National Debt can tell me the capacity for good or evil, for love or hatred, for patriotism or discontent … at any single moment in the soul of one of these its quiet servants.

Charles Dickens, Hard Times

This book is about social progress: its definition and its measurement. In particular, it is concerned with the overall wellbeing or quality of life of the people in a nation at a point in time, how this has changed (i.e. ‘progress’) and whether it is sustainable. In exploring this topic, the book seeks to address three primary questions:

• What is national wellbeing?
• Why should national wellbeing be measured?
• How should national wellbeing be measured?

Underlying those three primary questions lie others, including:

• What is individual wellbeing?
• What is wrong or inadequate with existing measures of progress?
• How do we measure national wellbeing, rather than just describe the state of the nation when we measure specific aspects of wellbeing?
• How do the current and future states of the environment, including stocks of natural resources, fit into our understanding of wellbeing?

All of these questions are interwoven. For example, the definition of wellbeing and its method of measurement are two sides of the same coin, and the meaning of national wellbeing depends both on what is meant by individual wellbeing and on how one aggregates individual values to produce a national value, as well as whether there are aspects of national wellbeing which are distinct from individual wellbeing, which should somehow be included as part of the definition.

Formally, perhaps we should take the opening three questions in the order given above: start by defining the concept, then give the motivation for measuring it and then describe how to measure it. That, however, would make for rather dry reading. It would rely on the forbearance of the reader, who would have to plough through the definition before getting to the reason for reading the book and then to how it was to be done. Better, we think, to begin with the motivation, so that the pressing need for the ideas and tools described in the book serve to drive the reader on. Once the motivation has been established – once we can see the need for such an exercise – then we can dig down into precisely what it means and how we might go about it.

For this reason, we begin in the next section with the motivation: what is wrong with current approaches, current tools and current strategies for gauging the state of society and whether it is advancing or regressing. We then move on to discuss the nature and aspects of individual wellbeing and how to measure the wellbeing of individuals, before embedding this in the larger context of national wellbeing. The measurement of national wellbeing certainly involves aggregating the wellbeing of the individuals in the nation, but it also involves other aspects, such as higher level societal properties which are not evident at the level of individuals as well as other factors which may influence wellbeing and permit improved measures. As the UK Office for National Statistics report Measuring National Well-being: Life in the UK, 2012 put it (Self et al., 2012, p. 3 and see Chapter 7 below): ‘The well-being of the nation is influenced by a broad range of factors including economic performance, quality of life, the state of the environment, sustainability, equality as well as individual well-being.’

It may be that the individuals within a population appear to be fine, while the larger picture shows something rather different (we are reminded of the parable of the turkeys, congratulating themselves on how wonderful life is, as Christmas approaches). Conversely, and as does appear to be reflected in some of the measures, aspects of individual wellbeing may not show things in so positive a light as do some aspects of national wellbeing. For example, individual anxiety about crime may increase even while measures of actual crime rates are decreasing; likewise, increased longevity might be taken as a sign of national wellbeing, even while the ailments associated with advancing age may lead to lower individual wellbeing scores. Such discrepancies, when they occur, need to be explored and explained. (And, for the last particular example, this is one reason why Self et al., 2012, look at ‘healthy life expectancy’ rather than simply ‘life expectancy’.)

Before delving into the details, however, some introductory comments are appropriate.

First, the measurement of wellbeing is a big subject. This book is very much our perspective on it: other authors will doubtlessly have different views of what is important, and will place their emphasis on different topics.

Second, and related to the first point, the book will not seek to provide an exhaustive list of relevant measures. Apart from the sheer size of such a task, it is probably impossible, simply because the area is a dynamic one, experiencing growth and change. Any list we produced would be outdated by the time this book was published. We limit ourselves to taking stock of current developments and drawing in depth on some of them.

This dynamic growth is a consequence of a third characteristic of the area: it is currently the focus of a huge amount of research attention. On the one hand, this means that governments and other actors are exploring how best to apply such ideas in policy formulation, while on the other hand it also means that the very concepts themselves, along with how to measure them, are mutable and are still being refined and polished. Some people suspect that this refinement will take a long time, pointing out that the system of national economic accounts has been refined over decades. Waiting for the refinement to be completed (if it ever is) would appear to be out of the question.

Fourth, this book is primarily about measuring wellbeing. It is not about the policy implications of the results, although we do recognise that policy uses of any new measure need to be taken into account in designing and delivering it. Likewise, it is only in part about what influences wellbeing – the fact that, for example, marital status can have an effect – though inevitably there is some discussion of such matters: causes and effects may be indicators of the extent of wellbeing and thus might be used to improve measures of wellbeing, via regression or calibration models.

The history of measurement in general is one of gradual encroachment, as concept after concept succumbed to the advance of quantification. But it has been a slow and painful advance. Almost every step forward in measurement technology has faced opposition from those who thought attempts to measure or quantify some attribute were impossible or meaningless:

Such pretensions to nicety in experiments of this nature are truly laughable! They will be telling us some day of the WEIGHT of the MOON, even to drams, scruples, and grains - nay, to the very fraction of a grain! - I wish there were infallible experiments to ascertain the quantum of brains each man possesses, and every man's integrity and candour: - This is a desideratum of science which is most of all wanted. (Harrington, 1804, p. 217)

The history of attempts to measure wellbeing can be traced back as far as one likes. Writing 130 years ago Edgeworth remarked ‘hedonism may still be in the state of heat or electricity before they became exact sciences’ (Edgeworth, 1881, p. 98). It is perhaps an indication of the difficulty of ‘hedonimetry’, as Edgeworth calls it, that it is only relatively recently that sound underpinning models and theories for measuring wellbeing have been developed.

Measuring wellbeing is also characterised by its multidisciplinary nature. Psychologists, sociologists, economists, statisticians, medical researchers, ecologists and others all have something to say about how it should be done. In part this is because they have different potential uses for such a measurement in mind, but in large part it is because the issue is fundamentally multidisciplinary. Wellbeing may be a characteristic of an individual, but it is at least partly a reflection of social interactions and is influenced by external forces.

1.1 Motivation: Why measure wellbeing?

United Nations Resolution 65/309 says:

‘The General Assembly …

1. Invites Member States to pursue the elaboration of additional measures that better capture the importance of the pursuit of happiness and well-being in development with a view to guiding their public policies;
2. Invites those Member States that have taken initiatives to develop new indicators, and other initiatives, to share information thereon with the Secretary-General as a contribution to the United Nations development agenda, including the Millennium Development Goals;
3. Welcomes the offer of Bhutan to convene, during the sixty-sixth session of the General Assembly, a panel discussion on the theme of happiness and well-being;
4. Invites the Secretary-General to seek the views of Member States and relevant regional and international organizations on the pursuit of happiness and well-being and to communicate such views to the General Assembly at its sixty-seventh session for further consideration'.

The UK Office for National Statistics report Measuring National Well-being: Life in the UK, 2012 (Self et al., 2012, p. 3) said:

‘In particular, having a more complete picture of national well-being will lead to:

• better understanding of policy impacts on well-being;
• better allocation of scarce resources via more informed policy evaluation and development;
• comparisons between how different sub-groups of the population are doing, across a range of topics;
• more informed decisions on where to live, which career to choose, based on well-being information for that area/organisation;
• assessments of the performance of government;
• comparisons between the UK with other countries’.

Implicit in these two extracts is the fact that a (perhaps the) key role of a government is to ensure the wellbeing of those it governs. That in itself probably provides sufficient answer to the question posed in this section's heading.

Only if one can measure wellbeing can one tell if the government is succeeding and, even more, if progress is being made. Furthermore, government policies ought, above all, to be evidence based, and usually that evidence will be quantitative, so that measures of wellbeing are critical. Such measures, when developed for groups, at more than the individual level, will allow one to monitor change (are things getting better or worse?), to compare groups (do the sexes have different degrees of wellbeing? Do different ethnic or social groups progress differentially?) and generally to investigate the impact of policies (have changes to education systems enhanced overall quality of life?). There are then other general questions which require answers. For example, what explains the frequently observed U-shaped distribution of wellbeing (with greater wellbeing being observed in younger and older age groups)? What explains the weakness of the correlation between income and wellbeing over time? Why in many countries are aggregate levels of happiness much the same as they were at the end of the Second World War, despite the dramatic growth in income per capita since then? And so on.

From the time of the Second World War to the present, economic measures, typically in the form of national economic accounts, have taken the primary place in monitoring progress. Measures such as gross domestic product (GDP) and gross national product (GNP) are headline indicators. But economic indicators focus on just one aspect of life. They do not touch on health, for example (other than through the cost of health service provision). There is concern in some quarters that standard measures of economic performance and progress are not really suited to the policy decisions which they are being used to inform. In 2009, the economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi, wrote in the preface of t...

Table of contents

• Cover
• Titlepage
• Copyright
• Preface
• 1 What is national wellbeing and why measure it?
• 2 A short history of national wellbeing and its measurement
• 3 Recent developments: Towards economic, social and environmental accounts
• 4 Measuring individual wellbeing
• 5 Preparing to measure national wellbeing
• 6 How to measure national wellbeing?
• 7 Wellbeing policy and measurement in the UK
• 8 Conclusions
• Appendix: Sources of methods and measures of wellbeing and progress
• Further reading
• Index
• End User License Agreement