Introduction

The development of industrialization and bacteriology in the 19th century led to modern public health concerns such as global epidemics, poverty and inequity, climate change, health in all policies, and social factors in health and illness (McQueen, 2017). As this list illustrates, economic conditions have profound impacts on a nation’s health levels that go beyond a simple correlation with per capita gross domestic product (GDP). This has implications for public policy, including economic policy. The Strategic Review of Health Inequalities in England has documented some of these implications. After demonstrating a strong social gradient in health, meaning that a person’s health tends to reflect social position, the review urged action across all social determinants of health such as economic inequality (Marmot, 2010).

That recommendation is consistent with a wider conceptual framework known as Health in All Policies (HiAP). The Helsinki Statement defines HiAP as “an approach to public policies across sectors that systematically takes into account the health implications of decisions, seeks synergies, and avoids harmful health impacts in order to improve population health and health equity” (World Health Organization [WHO], 2013). Applying this approach to economics, governments should pay attention to the public health implications of its economic policies. This requires more than simple analyses of how policy might or might not support growth in GDP, especially given that greater economic inequality in a nation is associated with significantly worse health outcomes (Wilkinson & Pickett, 2009).

A strong global movement advocates adoption of measures beyond GDP to evaluate national economic performance. The momentum of this movement increased sharply after the Commission on the Measurement of Economic Performance and Social Progress recommended a shift in emphasis from measuring economic production to measuring people’s well-being (Stiglitz, Sen, & Fitoussi, 2009). Since then, many countries have developed dashboards of statistical indicators to monitor national well-being across multiple dimensions (Exton & Shinwell, 2018). Some countries are also moving to embed well-being into core economic policy, including delivery of the world’s first well-being budget by the New Zealand government in 2019 (Robertson, 2019). This policy approach aims to foster what is being called a well-being economy (Hough-Stewart, Trebeck, Sommer, & Wallis, 2019).

This article provides an overview of well-being economics, with particular attention to public health. The first section (“Well-Being Economics”) explains what is distinctive to well-being economics and focuses on three key elements: human capabilities, planetary boundaries, and future generations. The section finishes with a discussion of recommendations to move beyond GDP as a measure of economic performance. The remainder of the article addresses each of the three key elements in turn. The section on “The Capabilities Approach to Well-Being” focuses on the framework introduced by Amartya Sen, whose work has been influential in designing national well-being frameworks to monitor economic performance using a broad dashboard of statistical indicators across diverse domains of well-being. This is illustrated with examples from Scotland and the Federal Republic of Germany. The discussion on “Planetary Boundaries” presents attempts being made to respond to the impact that economic growth is having on the planet, including the global climate emergency. The discussion on “Future Generations” concentrates on the capital approach to development, and describes seven types of capital stocks with examples drawn from public health. This is important for well-being economics because governments make distinctive contributions to investment in each type of capital. The section “Well-Being Economics and Economic Policy” describes attempts to implement well-being economics into core economic policy and discusses important areas for further research.

Well-Being Economics

The Capabilities Approach to Well-Being

National Frameworks for Measuring Well-Being

Many countries have responded to the call to shift emphasis away from measuring production to create a national framework for measuring well-being (Exton & Shinwell, 2018). Drawing on the capabilities approach, standard practice is to ask citizens and organizations to identify elements considered important for leading a valued kind of life in the particular country. This section discusses two examples—Scotland and the Federal Republic of Germany.

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Figure 1. Scotland’s National Performance Framework.

Scotland was an early mover in adopting a dashboard of statistical indicators for monitoring national performance. Reestablished in 1999, the Scottish Parliament had prepared the first version of its National Performance Framework by 2007 (Wallace, 2019). It set out the government’s purpose: To focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth (Scottish Government, 2016). This was supported by high-level targets and strategic objectives, monitored by a series of 45 statistical indicators.

The National Performance Framework passed into law through the Community Empowerment (Scotland) Act 2015. Public consultation on the national outcomes involved more than 16,000 participants in public events and more than 40,000 people through social media and other platforms (Wallace, 2019). The framework was refreshed in 2018, with a tighter focus on well-being (Scottish Government, 2019). Figure 1 presents the purpose statement, the values statement, and the 11 national outcomes (supported by 81 statistical indicators, not shown here) in the 2019 version.

In December 2010, the German Parliament (Bundestag) set up an Enquete Commission, which is a body composed of an equal number of parliamentarians and external experts to advise on complex, long-term, special issues (Strunk, 2015). This commission was asked to report on growth, prosperity, and quality of life, which it did in 2013 with a recommendation to implement a system for measuring and monitoring social wealth and welfare. This was forwarded to the federal government, which launched a national dialogue on well-being in Germany between April and October 2015, involving some 15,750 people (Federal Government of Germany, 2017). After analysis of the results by an independent academic team, and with the assistance of a six-member scientific advisory board, the government developed a national well-being framework with 12 well-being dimensions supported by 46 statistical indicators (see the Well-being in Germany interactive report).

The first dimension, Healthy Throughout Life, has five statistical indicators:

1.

Life expectancy at birth

2.

Prevalence of obesity

3.

Number of residents covered by a general practitioner or general specialist

4.

Quality of care (a placeholder, since the statistical data are not yet available)

5.

Ratio of self-reported health and income

These examples illustrate how national well-being frameworks are created, with room for differences in domains and statistical indicators. It can then be difficult, however, to embed well-being considerations into a country’s core economic policy. In 2010, for example, the United Kingdom launched its Measuring National Wellbeing program, but also introduced austerity measures with severe impacts on children and their households (Lambie-Mumford & Green, 2017). The remainder of this article discusses how well-being economics can be incorporated into policy, especially through investment in different types of capital stocks.

Planetary Boundaries

The scientific evidence is compelling that human activities are driving the global climate emergency (IPCC, 2015). The Paris Agreement that came into force on December 4, 2016, included a commitment by participating countries to undertake ambitious efforts to limit the global average temperature increase to 1.5˚ Celsius above preindustrial levels. Within the well-being economics framework, this commitment is an example of a key concern that the global economic system must operate within planetary boundaries (Rockström et al., 2009).

This is a challenge for economics. For most goods and services, a binding constraint is reflected in the item’s market price. Climate change, however, is an example of market failure, meaning that enterprises responsible for greenhouse gas emissions face little private incentive to reduce their emissions or to invest in creating new technologies that would address the problem (Newell, 2010). This means that public policy is required, with all of the difficulties this implies, to achieve a coordinated and effective global response.

The global climate emergency is only one example of human activity exceeding planetary boundaries. In a framework termed “doughnut economics,” Kate Raworth has integrated this concern with the issue of human capabilities (Raworth, 2017). The outer circle of the doughnut model is defined by the nine planetary boundaries analyzed by Rockström et al. (2009). The inner circle is defined by 12 dimensions of minimum social standards (which are akin to the idea of fundamental capability entitlements, using the language of Nussbaum, 2003) drawn from the Sustainable Development Goals. Raworth offers the doughnut model as a monitoring framework for defining an environmentally safe and socially just space where humanity can thrive between social and planetary boundaries.

Future Generations: Sustainable Well-Being and Capital Stocks

A Capitals-Based Framework for Well-Being Economics and Public Policy

Some frameworks for well-being economics and public policy have incorporated a capitals-based approach. The most influential is the well-being framework created by the OECD for its Better Life Initiative launched in 2011 (OECD, 2020). The initiative identifies 11 key dimensions of current well-being, supported by the standard four capitals (natural, human, economic, and social) as key resources for future well-being. The New Zealand Living Standards Framework incorporates the same four capitals, but includes an additional dimension of current well-being, labeled as cultural identity (New Zealand Treasury, 2018).

Figure 2 presents a capitals-based framework for well-being economics and public policy (Dalziel, 2019). It incorporates the features of the OECD framework, but expands on that framework in two ways. First, the figure highlights human agency, which is an essential element in the capabilities approach. Thus, the ovals at the heart of the figure represent different ways in which people take individual and collaborative action to create well-being. Second, the figure expands the number of capital types from four to seven, including cultural, knowledge, and diplomatic capitals.

The framework observes that a country’s total wealth, made up of the different capital stocks, provides services that are used by people to create well-being, monitored by statistical indicators organized into domains. Figure 2 presents the 12 domains in New Zealand’s Living Standards Framework, but the domains from any national well-being framework could be used. The figure also shows that the level of well-being feeds back into people’s capabilities for action. In order to sustain well-being into the future, some part of human actions must include reinvestment in the capital stocks that make up total wealth.

The framework in Figure 2 highlights that public policy implemented by the nation-state is just one way in which people collaborate to create well-being. Nevertheless, public policy makes distinctive contributions to well-being that individuals, households, communities, and the market economy cannot achieve on their own. The next section presents examples of governments that have begun to pursue well-being economics in their core economic policies.

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Figure 2. A capitals-based framework for well-being economics and public policy.

Source: Dalziel (2019).

Well-Being Economics and Economic Policy

Well before the formation of the Commission on the Measurement of Economic Performance and Social Progress (Stiglitz et al., 2009), the Royal Kingdom of Bhutan had rejected GDP as a suitable measure of development, adopting a strategy based on promoting gross national happiness (GNH; Verma, 2019). Emerging from Bhutan’s unique history and culture, an explicit vision of happiness-oriented development began to be articulated within the country in the early 1970s. This led to a unifying conceptual framework built on four pillars: sustainable and equitable socioeconomic development, good governance, environmental conservation, and the preservation and promotion of culture. The framework continues to guide policy design, including Bhutan’s national five-year plans, monitored by a GNH Index comprising 33 indicators clustered into nine domains: health, education, living standards, time use, good governance, ecological diversity and resilience, psychological well-being, community vitality, and cultural diversity and resilience (Ura, Alkire, Zangmo, & Wangdi, 2012).

Governments seeking to embed well-being economics into public policy have pursued three major mechanisms: (a) passing legislation requiring particular policy areas to consider the well-being of current and future generations; (b) creating new public institutions that focus on well-being; and (c) reforming the annual budget process to ensure core economic policy supports the well-being economy.

Wales has been described as being at the global forefront of passing legislation on sustainable development (Wallace, 2019). The Welsh Assembly passed the Well-being of Future Generations (Wales) Act 2015, which made it the first national legislature to impose a legal duty on public bodies to safeguard the well-being of future generations (Davies, 2016). The act requires all public bodies to carry out sustainable development, including by setting and publishing specific objectives for itself that are designed to maximize the body’s contribution to achieving seven national well-being goals listed in the legislation:

These goals were determined after a year-long National Conversation on “The Wales We Want” (Commissioner for Sustainable Futures, 2015). The legislation describes five ways of working in accordance with the sustainable development principle, such as balancing short-term needs with the need to safeguard the ability to meet long-term needs, including taking action to prevent problems from getting worse, while pursuing integrated, participatory, and collaborative approaches. It also established 21 public services boards, one for each local authority area, with a statutory requirement to improve the economic, social, environmental, and cultural well-being of its area. A key element of the act was the creation of new position, a future generations commissioner, to hold public bodies to account and to make recommendations that carry weight (Davies, 2017). The commissioner is required to publish a major assessment every five years the first of which was published in May 2020 (Commissioner for Sustainable Futures, 2020).

A major difficulty for countries wanting to move beyond measuring well-being is the absence of a clear consensus on what role central government should play in promoting well-being, and on what policies demonstrably improve well-being. In this sense, well-being is a “wicked problem” (Bache, Reardon, & Anand, 2016). In October 2014, the U.K. government announced it was contributing funding, alongside the Economic and Social Research Council and other partners, for a new institution addressing that issue: the What Works Centre for Wellbeing (Bache, 2019). It belongs to a larger What Works Network created in 2013 with the aim of ensuring that spending and practice in public services is informed by the best available evidence (What Works Network, 2018).

The mission of the What Works Centre for Wellbeing is to identify and communicate evidence on what works to improve well-being, in order to support decision-makers seeking to inform policy and practice in the United Kingdom (Hardoon, Hey, & Brunetti, 2020). As part of work to collect evidence on well-being in the workplace, for example, the it supported research on the benefits of good people management for performance and well-being in England’s National Health Service Trusts. This found that trusts making the most extensive use of good people management practices, compared to those that made the least use, were more than twice as likely to have staff with the highest levels of job satisfaction and more than three times more likely to have staff with the highest levels of engagement (Ogbonnaya & Daniels, 2017).

In 2015 and 2016 respectively, legislation was passed in France and in Italy requiring annual reports to Parliament that track trends in a small set of statistical indicators reflecting economic, social, and environmental progress (Stiglitz, Fitoussi, & Durand, 2018). These reports are part of the budget process. In May 2019, the New Zealand government attracted international attention for delivering the world’s first well-being budget (Anderson & Mossialos, 2019). Echoing the language of the capabilities approach, the budget defined well-being as when people are able to lead fulfilling lives with purpose, balance, and meaning to them (Robertson, 2019). The well-being budget described three ways in which it departed from traditional ways of work in the public sector:

The budget data on well-being measures to identify five priority areas with the greatest opportunities to improve the lives of New Zealanders: taking mental health seriously, improving child well-being, supporting Māori and Pasifika aspirations, building a productive nation, and transforming the economy. Ministers had to demonstrate how budget proposals would contribute to these five priorities to create a collaborative whole-of-government package. For child well-being, the government passed legislation requiring it to publish measures of child poverty with targets for improving them. An amendment in 2020 to the Public Finance Act 1989 imposes requirements on the government to report annually on its well-being objectives, and to table a report on well-being prepared by the Treasury every four years.

Further Progress

The examples given in this article illustrate that progress has been made in advancing a well-being economics agenda, but more research and policy experimentation are required. Five years after the Commission on the Measurement of Economic Performance and Social Progress published its influential report (Stiglitz et al., 2009), for example, the OECD agreed to host a High Level Expert Group to continue its work. The group recognizes the substantial changes that have taken place since 2009, but also points out the significant challenges in sustaining the movement toward well-being in economic policy (Stiglitz et al., 2018). Policies that better support sustainable and inclusive growth are likely to negatively impact some production sectors that can be expected to resist. One example given in the report is the U.S. coal industry lobbying Congress during the Clinton administration. The report also notes the criticism that a focus on well-being may divert attention away from what is commonly viewed as the fundamental contribution of economic growth. This can be particularly influential after an economic crisis, when governments tend to embrace traditional instruments to restore economic growth and job creation (Bleys & Whitby, 2015).

Researchers have identified ideological resistance to the concept of well-being, including complaints that the pursuit of happiness is futile and childish (Frijters, Clark, Krekel, & Layard, 2020). There are doubts in the literature about the ability of people to predict their subjective future well-being, even following major life events such as widowhood, unemployment, disability, marriage, separation, or divorce (Odermatt & Stutzer, 2019). The use of multidimensional, objective indicators of well-being involves the issue of how to weight different domains for policy purposes (Weijers & Morrison, 2018), although public decision-makers may welcome a more comprehensive, multidimensional, accurate portrayal of social progress (Adler & Seligman, 2016). Designing public policy to address multiple well-being dimensions is not easy. It requires integrated collaboration across government agencies and avoids progress in one domain achieved at the expense of other domains (McCartney, Fenton, Morris, & Mackie, 2020).

A further issue is identifying the distinctive role that public policy plays in supporting sustainable well-being, alongside the agency of individuals, families, households, civil society, and the market economy (as represented in Figure 2). Scott (2014), for example, has argued that the well-being discourses of central government in the United Kingdom after 2010 did not include proper reference to structural inequalities and were in danger of supporting neoliberal narratives of individual or local aspiration and enterprise as solutions to social problems. The contribution of market firms is important because of the strong evidence that unemployment is damaging to people’s well-being and the promising evidence that the increase in well-being after re-employment depends on job quality (What Works Wellbeing, 2017a, 2017b). Market firms also bring together resources to provide goods and services that expand the capabilities of their customers to create well-being for themselves and others (Dalziel et al., 2018).

There are unresolved tensions about how a national well-being approach works in multicultural environments where different communities might express very diverse values in creating lives they value and have reason to value. In New Zealand, for example, there is general recognition that indigenous approaches to well-being within a Māori worldview can be quite different in some aspects from the approach taken in the government’s living standards framework (New Zealand Treasury, 2018). This is reflected in examples such as the Te Whare Tapa Whā model of well-being created by Durie (1998).

Strong political leadership can be beneficial in promoting well-being in public policy, although this can be a double-edged sword following a change in leadership (Exton & Shinwell, 2018). This can be addressed by creating institutions for sharing knowledge about effective policies to promote well-being. In November 2018, for example, the governments of Scotland, New Zealand, and Iceland (which adopted its well-being framework of 39 statistical indicators in April 2020) launched the Wellbeing Economy Governments partnership. Wales joined the partnership in May 2020. These four members are collaborating to bring well-being into the heart of policy making with a focus on advancing three key principles: living within planetary boundaries; ensuring equitable distribution of wealth and opportunity; and efficiently allocating resources, including environmental and social public goods (Coscieme et al., 2019).

Conclusion

Global crises, such as the Covid-19 outbreak of 2020, highlight the strong connection between well-being economics and public health. This connection is demonstrated in the tensions between public health policies needed to control the spread of infections and economic policies needed to maintain livelihoods and access to essential goods and services. Some advocates argue that such crises also offer opportunities to “build back better” in ways that prioritize human well-being, reduce inequality, and respond to the climate emergency (Büchs et al., 2020).