Targeting well-being, not incomes
13 March 2018
The UK economy has been growing at a steady pace since the vote to leave the European Union, albeit more modestly than most of its rich country counterparts. Policymakers traditionally focus on the strength of the economy - as measured by metrics such as per capita GDP - in their assessments of macro policy effectiveness, but in recent times there has been a growing emphasis on the use of broader measures which encompass the life satisfaction, or happiness, of citizens, as well as the factors that contribute to this.
In late 2010, David Cameron tasked the Office for National Statistics (ONS) with producing a series of new statistics designed to measure the well-being of the UK’s citizens covering 4 key areas: overall life satisfaction; how worthwhile life is; how happy people are; and how anxious people are. Since its first publication the personal well-being dataset from the ONS has shown that on average, levels of overall well-being levels are sitting around 7 (on a scale of 1 to 10, with 10 being the highest level of well-being) with anxiety levels at around 2, with 10 being very anxious. Interestingly, well-being improvements in the UK have not been equally shared across its regions with Northern Ireland having the biggest increases in life satisfaction, worthwhile and happiness in combination with the largest declines in levels of anxiety (see chart 4). As of 2011, these statistics have aided the assessment of UK policy making with the inclusion of a clause in the Green Book advocating the consideration of subjective well-being when evaluating policy proposals. These statistics provide us with an idea of the level of happiness but they do not provide any insight into what contributes to UK happiness.
Other metrics of life satisfaction show similar results to that of the ONS research with the OECD Better Life Index finding that UK levels of life satisfaction are above the OECD average (see Chart 5). The OECD not only considers levels of life satisfaction but also a broader array of factors that contribute to life satisfaction. On this basis the UK ranks above average in 9 out of the 11 factors but below average in work-life balance and housing. Alongside this analysis, the OECD identifies policies that can address countries’ shortcomings; in the UK’s case it has advocated grater provision of affordable childcare to address the country’s low levels of work-life balance. Similarly, the UN World Happiness Report considers the contributory factors to quality of life or ‘happiness’ by decomposing happiness as measured by Gallup into 6 explanatory variables. On the basis of data collected from 2014 to 2016, the UK’s happiness score of 6.71 ranked 19th out of 155 countries – only a middling score among the world’s richest economies. Although the UK performed relatively well in most component indicators, including the extent of social support, healthy life expectancy and the generosity of the population, average happiness levels were lower than otherwise implied by these sub-indicators. Moreover, the UK was one of the countries that have seen its average level of happiness decline over the past decade. Post-referendum data from this source is still not available but it is clear that for a government targeting broader measures of well-being there is still much to be done.