The OECD Better Life InitiativeRomina Boarini, Head of Monitoring Well-Being and ProgressOECD Statistics Directorate

London School of Economics20 June 2013

Outline

• Context

• OECD Better Life Initiative

• What’s next

• From a statistical perspective: GDP is a key measure to monitor macro-economic activity but it is not a good metric for people’s well-being

• From a normative perspective: GDP/economic growth is an important means to people’s well-being but it is not the ultimate end

• From a public policy perspective: disconnect between what policy makers may seek and what people want

The demand to go “beyond GDP”

The response to go “beyond GDP”• At the OECD:

– Long-standing tradition of work on social indicators– World Fora on Progress– Global Project – Wikiprogress– OECD Better Life Initiative

• Beyond the OECD:– UNDP Human Development Reports – Stiglitz-Sen-Fitoussi Commission– EU comunication: GDP and Beyond– Eurostat sponsorship– UN Resolution calling for “holistic approach to

development” to promote sustainable happiness and well-being

– Many national initiatives for measuring well-being in all countries of the world

A global agenda

Source: Australian Bureau of Statistics

Inspiration of the Better Life Initiative

• Latest OECD response to the need to go beyond GDP

• Opportunity of OECD 50th Anniversary: Better Policies for Better Lives

• Shift the emphasis from measurement to actionable well-being:– Well-being focus in policy-making

– Connecting people with policies

OECD Better Life Initiative

Your Better Life IndexA tool for learning what matters most to people’s well-being

How’s LifeFirst attempt at an international level to present a comprehensive set of well-being indicators

Defining well-being: theoretical roots

• Well-being is about “end states”, i.e. is your life good? (Welfarism)

• Well-being is about “freedom”, i.e. are you free to choose the life you think is good to live? (Non-welfarist theories, e.g. capabilities)

The Better Life Initiative Framework

• The BLI framework is close to the capabilities approach:– Capabilities (enabling factors) – Functionings (end states)

• It defines well-being in terms of dimensions of life that are both:• Instrumental to choose a better life• Intrinsically important

Which dimensions?

Work-Life Balance

Housing

Income and Wealth

Jobs

Social Connections

Environment

Civic Engagement

Health

Life Satisfaction

Personal Security

Education

• Largely those of the SSF Commission Report

• Review of common practices of NSOs and other Indicators Projects (WIKIPROGRESS)

• Consultation with the OECD Committee on Statistics

Why these dimensions

The OECD well-being framework beyond current well-being

Four key features

The OECD well-being framework focuses on:

People rather than the economic system

Both averages and inequalities

Both objective and subjective aspects

Both today and tomorrow

Measurement approach (1)

CHOOSING INDICATORS:Relevance of indicators

- face-validity: outcome indicators- easily understood, unambiguous interpretation- amenable to policy changes- possibility of disaggregation by population groups

Quality of supporting data - official and well-established sources; non-official data

used as place-holders in a few cases- comparable/standardized definitions- maximum country-coverage- recurrent data collection

Measurement Approach (2)

• Dashboard (and traffic lights)• Not a synthetic index (for now) as:

– There is no individual-level information from the same survey comparable across OECD countries

– There is no consensus on how to set weights:- The OECD should not set weights

normatively- There is no first best method to set

weights based on people’s preferences: ongoing OECD work to test various approaches to elicit people’s preferences

Selected results from How’s Life? 2011

• No country is a champion in well-being but some trends emerge

• Life in 2011 better on average in the OECD than fifteen years ago

• Inequalities in all dimensions of well-being

Traffic lights for OECD countriesH

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2009 2009 2010 2010 2009 2009 2009 2009 2009 2009 2000 2008 2009 2009 2010 2007 2008 2008 2008 2010 2010 2010AustraliaAustriaBelgiumCanadaChileCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIcelandIrelandIsraelItalyJapanKoreaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSloveniaSpainSwedenSwitzerlandTurkeyUnited KingdomUnited States

Australia

Austria Belgium

Brazil

Canada

Chile

Czech Republic

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary

Iceland

Ireland

IsraelItaly

Japan

Korea

Luxembourg

Mexico

Netherlands

New Zealand

Norway

Poland

Portugal

Russian federation

Slovak Republic

Slovenia

Spain

Sweden

Switzerland

Turkey

United Kingdom

United States

0%

10%

20%

30%

40%

50%

60%

0% 10% 20% 30% 40% 50% 60% 70%

20% top performers

60% middle performers

20% bottom performers

No country is the champion of well-being

Good performance, percentage of green lights

Poor performance, percentage of red lights

Source : OECD calculations

How’s life for the average German/British household?

Source : OECD calculations

Socio-economic inequalities in well-being

0.00

2.00

4.00

6.00

8.00

10.00

Income and wealth

Jobs and earnings

Health status

Education and skills

Social connections

Civic engagement

and governance

Environmental quality

Personal security

Subjective well-being

United Kingdom_High Income

United Kingdom_Low Income

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00Income and wealth

Jobs and earnings

Health status

Education and skills

Social connectionsCivic engagement and governance

Environmental quality

Personal security

Subjective well-being

Total 36_High income

Total 36_Low income

Understanding people’s aspirations

Your Better Life Index

Global participation

Top 10United States

France Canada

United KingdomGermanyAustralia

ItalyJapan Spain

Mexico

Nearly two visits from over 180 countries

What matters most to people ?

Source: OECD calculations

Weights given by users (in %)

Civic E

ngag

emen

t

Commun

ity

Incom

eJob

s

Housin

gSa

fety

Envir

onmen

t

Work L

ife B

alanc

e

Educ

ation

Health

Life S

atisfa

ction

0%

2%

4%

6%

8%

10%

12%

6.84%8.17% 8.65% 8.93% 8.93% 9.09% 9.18% 9.41% 9.89% 10.28% 10.32%

143642324

9

womenmen

<15 15-24 25-34 35-44 45-54 55-64 >650

2000400060008000

100001200014000

WHAT’S NEXT

2013-2014 developments of the OECD well-being agenda

• Moving forward the statistical agenda

• Update of How’s Life? (Fall 2013): focus on sustainability, gender and well-being, and jobs quality

• Country Monographs on Well-Being

• Analytical work to understand the determinants of well-being outcomes: towards a theory of change

• Two OECD horizontal projects will make use of these findings for policy:- NAEC- Inclusive Growth

• Well-Being for Development

Measuring the sustainability of well-being • Sustainable development: meeting “the needs of the present without

compromising the ability of future generations to meet their own needs” (Brundtland Report, 1987)

- well-being gives us a way to operationalise “needs” : WHAT do we want to sustain?

• Measurement focus: the potential for well-being in the future- Requires going beyond current outcomes, to look at drivers- Measuring the stock of resources passed on to future

generations (“wealth accounting”/ the “capital approach”)

• This means we need to know:- What are the key resources that matter for well-being?- How can we monitor those resources consistently over time?

Measuring sustainability: proposed How’s Life? approach

• Dashboard of physical and monetary measures of “capital” • Different spatial levels (local, national, regional, global)• Flows and trans-boundary impacts • Distribution of stocks

28

“Our fundamental assumptions about the functioning of economies, our policies and structural reforms, our systems and institutions, need to be re-oriented towards one supreme objective: improving the well-being of people”

OECD Secretary-General, May 2013

From measurement to policy

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How well-being informs the policy agenda: the “WHAT” to do

• A more comprehensive and balanced view of what matters to people

• New relevant and previously overlooked well-being areas that deserve policy attention (e.g. social connections, jobs quality; governance, etc.)

• Identification of policy priorities: Examining differences between groups in the population International Benchmarking: cross-country comparisons on well-

being performance indicates strengths and weaknesses Better evaluating the trade-offs between current and future well-

being

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How well-being informs the policy agenda: the “HOW” to do

• A better understanding of well-being drivers (including people’s behaviour and values), that helps design more effective policies and choose the best policy instruments

• Helps evaluating policy impacts

• Aiming at well-being fosters joined-up, more coherent approach to policy-making

• Increases legitimacy and public acceptance, of policies and ultimately their effectiveness

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Examples of OECD work on policy uses of well-being

• Understanding well-being policy drivers New Approaches to Economic Challenges: policy

interactions, trade-offs and synergies Inclusive Growth: pro-growth and pro-wellbeing policies

with benefits shared across social groups and over time

• Workshops on Policy Use of Subjective Well-Being measures Cost-Benefit Analysis based on SWB

• Going national: Well-Being Country Reviews (Austria, Israel, the

Philippines, Uruguay) • Stocktaking of national initiatives

• A well-being toolkit for policy-making

Continued interaction with research community and civil society

A platform for global discussion on well-being; Research Networks in many regions

5th World Forum in Mexico in 2015

THANK YOU!www.oecd.org/measuringprogress

www.oecdbetterlifeindex.org