How the UK government values well-being

At the highest levels of government, measuring well-being is increasingly seen as serious evidence. We have written before about how the Prime Minister’s wants it to be used to decide how and where money should be spent. But now a report from HM Treasury puts some flesh on this idea.

The report describes how changes in well-being can be valued in monetary terms. It outlines a technique for incorporating measures of well-being in cost-benefit analysis, the standard tool government economists use to analyse policy.

The paper’s Forward begins by stating how ‘the government is committed to improving the way that well-being and social impacts are incorporated into policy decisions.’ It goes on to say how well-being measurement can ‘provide a complement to the more traditional economic approaches’, ‘play an important role in challenging decision makers to think more carefully about the full range of impacts of their proposed policies’ and ‘gives us a better idea of the value of non-market goods’ – all of which will help policy makers ‘better ground their decisions in evidence’.

So how do you value changes in well-being? Consider this example, given in the paper:

If a 20% reduction in local crime rates increases the life satisfaction of an individual by 1 ‘index point’ and an increase in household income of £5,000 p.a. also increases their life satisfaction by 1 index point, then we can conclude that the value of the 20% reduction in crime to them is £5,000 per year. This, therefore, values the 1 index point increase in well-being at £5,000.

It’s good to see the government beginning to explore how measuring well-being can be used more in decision-making. Applying this analysis will help make better decisions and, ultimately, benefit us all.

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About John Copps

John is part of NPC's research and consulting team and is the founder of NPC's Well-being Measure, a social business that provides an online tool to measure young people’s well-being. He has eight years experience of research and consulting, and is passionate about how data can be used to improve the performance of organisations. John is a regular contributor to NPC's blog and has also contributed to pieces for BBC Radio, the Guardian, and the Financial Times. John is a governor of a secondary school.
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2 Responses to How the UK government values well-being

  1. Pingback: How the UK government values well-being | NPC's Well-being Measure … | E-Health Work

  2. Pingback: ‘If you treasure it, measure it’: The UK Civil Service’s response to well-being | NPC's Well-being Measure blog

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