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Measuring Well-Being

The O OECD Better L Life Initiative

Martine Durand, OECD Chief Statistician and Director of Statistics NZ Treasury, Wellington, 1 February 2013

Measuring Well-Being

The O OECD Better L Life Initiative

Martine Durand, OECD Chief Statistician and Director of Statistics NZ Treasury, Wellington, 1 February 2013

Outline

• Context
• OECD Better L

Life Initiative

• The g

global well-being agenda : highlights o

• f the 4

4th

th OECD World F

Forum

• What’s next

Context

• An increasing gap between what official

l statistics say about economic performance, and how people perceive their own li living conditions

• Risk that people may lo

lose faith in governments’ ability to address “what matters to them”

• Potentially dangerous for democracy

The starting point

• GDP is a key measure to monitor macro-

economic activity, productivity, demand for paid-jobs

• GDP is not a metric for people’s well

ll-being and and is often at variance with people’s personal experiences

• Measuring well

ll-being impli lies confronting valu lues: from “treasuring what you measure” to “measuring what you treasure”

A consensus to go “beyond GDP”

Well ll-being: a lo long-standing focus of OECD work

• Work on environmental and social indicators

(1980s-90s)

• Analy

lytic reports on alt lternative measures of well ll- being (The Well ll-being of Nations, 2000; Society at a Gla lance, 2006)

• Several

l OECD World ld Fora (Palermo, Istanbul, Busan and Delhi) and regional conferences (Africa, Asia, Latin America, Europe)

Strong momentu tum a and global resonance

• An increasing number of initiatives to move

‘beyond GDP’:

–UNDP Human Development Reports –Sti tiglitz-Sen-Fitoussi report –EU 2020 and communication –UN Resolution calling for “holistic approach to to development” to promote sustainable happiness and well- being –Rio+20 “The Future We Want” declaration, June 2012 –Many national initi tiatives fo for measuring well-being in all countries of the world….

The g global reach of the w well-being agenda

The O OECD Better L Life Initiative

OECD@50 : : the O OECD Better L Life Initiative:

Your Better Lif ife Index

How’ Life?

Measures, analy

lysis is and fu futu ture sta tati tisti tical agenda on what matt tters most t in in people’s life

OECD@50 : : Better Poli licies fo for Better Liv ives

The O OECD well-being framework

OECD well-bein ing fr framework:

• People rather than

economic system

• Outcomes rather than

inputs and outputs

• Both averages and

in inequalities

• Both objective and

subjective aspects

• Attributes of both

in individuals and communities

• Both ‘here & now’ and

‘elsewhere & later’

Measurement a approach

• Rele

levance of f in indic icators

• face-validity
• easily understood, unambiguous interpretation
• amenable to policy changes
• possibility of disaggregation by population groups
• Quality of

f supportin ing 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
• Sig

ignif ificant documentatio ion and testin ing

Comparin ing the Better Lif ife Init itia iativ ive to NZ Treasury 'L 'Liv iving Standards Framework'

OECD well-bein ing dim imensions NZL Treasury’s Indicators for Measuring Liv iving Sta tandards

14 Susta tain inabil ility ty of f well ll-bein ing over ti time In Indiv ividual w well ll-bein ing

• Income
• Wealth
• Employment
• Leisure
• Education/Skills
• Health
• Trust
• Security
• Environment
• Subjective well-being

Treasury’s Living Standards Framework

Comparing th the Better Lif ife In Init itia iati tive to to Measurin ing NZ Pro rogress to towards Sustainable Development

OECD well ll-being dimensions Measuring New Zealand’s Progress Using a Sustainable Development Approach

Susta tain inabil ility ty of f well ll-bein ing over ti time In Indiv ividual w well ll-bein ing

• Population
• Biodiversity
• Air and atmosphere
• Water
• Land use
• Energy
• Transport
• Waste
• Innovation
• Work, knowledge and skills
• Economic resilience
• Living conditions
• Health
• Social connections
• Governance
• Culture and identity

Selected results f from How’s Life? 2011 2011

• Life in 2011 better on average in the OECD

than fifteen years ago

• Inequalities in all

ll dimensions of well-being

• No country is a champion in well-being but

some trends do emerge

• Men do better in economic dimensions of well-

being while women do better in non-economic

• nes

Inequalities i in e economic w well-being...

0.20 0.25 0.30 0.35 0.40 0.45 0.50

Levels of income inequality (Gini coefficient) in OECD countries, around 2010

Source: OECD Income distribution and poverty database

…and in non-economic aspects of well ll-being, e.g .g. Health ...

% of population reporting good or very good health status

Source:OECD Health Data; European Union Statistics on Income and Living Conditions (EU-SILC)

... Social ties...

% of OECD population being able to rely on friends in case of need

65 70 75 80 85 90 95

Primary Secondary Tertiary 1 2 3 4 5

Axis Title

Education Incomequintile

Source:OECD Society at a Gance; Gallup World Poll

...and Housing

Housing cost overburden rate by in income quin intile, 2009

Source: EU SILC

No country i is the c champion o

• f well-being

Poor performance, percentage of red lights

Source : OECD calculations

Australia Austria Belgium Brazil Canada Chile Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea Luxembourg Netherlands New Zealand Norway Poland Portugal Russian federation Slovak Republic Slovenia Spain Sweden Switzerland United Kingdom United States 0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60%

20% top performers 60% middle performers 20% bottom performers

How’s life for the average NZ household?

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skills Social connections Civic engagement and governance Environmental quality Personal security Subjective well-being Australia OECD New Zealand United Kingdom

Source : OECD calculations

How do women and men compare in NZ?

0.00 2.00 4.00 6.00 8.00 10.00

Jobs and earnings Housing Work and life balance Health status Education and skills Social connections Civic engagement and … Environment al quality Personal security Subjective well-being New Zealand_F New Zealand_M

0.00 2.00 4.00 6.00 8.00 10.00

Jobs and earnings Housing Work and life balance Health status Education and skills Social connections Civic engagement and … Environmental quality Personal security Subjective well-being OECD_F OECD_M

Source : OECD calculations

Socio-economic inequali lities in New Zeala land

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skills Social connections Civic engagement and governance Environmental quality Personal security Subjective well- being New Zealand_High Income New Zealand_Low Income

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skills Social connections Civic engagement and governance Environmental quality Personal security Subjective well-being OECD_High income OECD_Low income

Source : OECD calculations

Understanding people’s aspirations:

Your Better Life Index

Your Better Life Index

39% 61%

Global gender distribution

female male

6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0%

What matters most to to people ?

Source : OECD calculations

Weights given by users (in %)

The g global well-being agenda: key messages f from 4 4th

th OECD World

Forum, N New Delhi, O October 2012

Where do we stand on the glo lobal well ll-being agenda ?

• The 4th

th OECD World Forum, , New Delhi, 16-19 Octo tober

• Theme: Measuring well-being for development

t and polic icymaking

• Gath

thered 1000 participants ts and a wid ide range of sta takeholders

• Brought

t to togeth ther perspectives from developing, emerging and developed countr tries

• Combined expertise from a range of dis

isciplines

Key messages from 4th

th OECD World

ld Forum

• Much convergence in understanding of issues and in measurement

approaches

• Progress in

in measurement t of some areas (e.g. subjective well-being, wealth distribution, time use) but t

• more conceptu

tual work needed in in oth ther domains (e.g. governance, social connections, sustainability)

• challenges in terms of periodicity, timeliness
• More analyti

tical work needed to promote use of new well-being metrics in the policy process

• on the dete

terminants ts of well-being (e.g. across domains, over different phases of people’s life-cycle, over time)

• on the role of public polic

icies (e.g. across population groups, different geographical levels)

From measurement to to policy

“No cottage industry has developed to explain differences in performances in measuring other outcomes [than GDP]”, Joe Stig igli litz “Need to think more deeply about causal mechanisms and develop structural models for linking outcomes with life course events and experiences”, Ric ichard Layard  An international research agenda is crucial to moving from measurement to in info formin ing poli licy and decis isio ion-makin ing, and promotin ing change

A well-being cycle

Consultation Domains that matter Measures Analysis and research BETTER POLICIES (+ more joined up) Stocktaking and sharing experiences Informed citizens New business models

What’s next at the OECD

2013 2013-2014 Work Programme on Measuring Well ll-Being

• Moving forward the statistical agenda:

– Guidelines on Measuring Subje jectiv ive Well ll-Bein ing – Handbook on Measuring Income, Consumptio ion and Wealth; Inequalit ities in in the Natio ional Accounts – Wealth dis istrib ibution dataset – Measures of socia ial capital – Green Growth Indicators

• Update of How’s Life? (Fall 2013) and of the

Better Life Index (May 2013):

• How’s Life? will focus on sustain

inabil ility, gender and well ll-being, and jo jobs qualit ity

From cross-country to country-specific analy lysis

Country Monographs/Chapters in in Economic Surveys to:

• Paint a broad picture of people’s life and well-being in

the country considered and compare the sit ituatio ion over tim ime and wit ith other countrie ies

• Provide the country with a fr

framework for conducting a “well-being diagnosis” and identify well ll-bein ing driv ivers and in interrelationships

• Identif

ify the areas where the country should focus efforts to maximis ise the well ll-bein ing of its citizens

From measurement to to policy

• Analytical work to understand the determin

inants of f well-bein ing outcomes

• Two OECD horizontal projects will make use of

these findings for policy: – NAEC (New Approaches to Economic Challenges): how to manage complex trade-offs (and synergies) in a multidimensional policy decision framework; building on country experiences (e.g. UK, NZ, Bhutan) – Inclu lusive Growth: how to deliver economic and non-economic benefi fits of growth to all ll social groups and over tim ime

Continued in interaction w with r research community a and civil society

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

• 5th W

World F Forum i in Mexico in 2 2015

THANK YOU!

www.oecd.org/measuringprogress www.oecdbetterlifeindex.org