The term ‘well-being’ is most commonly used to describe what is ultimately good for a person. The question of what well-being consists of is of great importance for various disciplines, such as economics, philosophy and psychology. Well-being is associated with two core notions – quality of life and happiness. Related are the concepts of freedom, human rights and social progress.
When evaluating the general well-being of individuals and societies, we usually refer to quality of life. It is used in a wide range of contexts. Well-being should not be confused with the concept of standard of living, which usually is based primarily on income (GDP per capita). Instead, quality-of-life indicators include wealth and employment, and others pertaining to the built environment, physical and mental health, education, recreation and leisure time, availability of environmental services and social belonging.
While quality of life has long been an explicit or implicit policy goal, adequate definition and measurement have been elusive. Diverse ‘objective’ and ‘subjective’ indicators across a range of disciplines and scales, and recent work on subjective well-being surveys and the psychology of happiness have spurred renewed interest. Regarding happiness, since it is subjective and hard to measure, other measures are generally given priority. It has also been shown that happiness, as much as it can be measured, does not necessarily increase correspondingly with the comfort that results from increasing income. As a result, standard of living should not be taken to be a measure of happiness.
In the nineteenth century, economists believed that happiness, which they called ‘utility’, could in principle be measured. By the 1950s, this view had been almost abandoned by neoclassical economists. However, in past decades, psychologists and a few economists have been studying peoples’ feelings and investigating what makes them happy. The emerging insights are very important in relation to the study of the satisfaction of human needs and desires. Several countries and international organisations accept the empirical studies showing that income growth above a certain threshold does not imply an increase in the quality of life and well-being. Economies are growing while social and income inequalities keep rising along with new poverties and social exclusions. As a result, social capital and cohesion are weakened with effects on crime, violence and life satisfaction. Natural resources are depleted, biodiversity is lost and human-induced climate change is approaching. These factors are not properly measured in GDP accounting.
Rethinking growth and well-being.
These socio-economic phenomena call for a critical review of the nexus between economic growth and well-being. Does the GDP index tell us something about well-being measures? GDP does not include some positive components of well-being (social capital, social and cultural consumptions, etc.) and it does not account either for components which have negative impacts on well-being (pollution, inequalities, etc.). As a consequence, economic indicators are poor measures of well-being. The need for a better evaluation of individual and collective well-being has shifted attention from GDP measures towards alternative measures both at macro (e.g. Human Development Index, Index of Sustainable Economic Welfare, Genuine Progress Indicator) and micro levels – subjective measures of well-being.
Examples of new indicators of well-being:
• Human Well-being Index (HWI) (Prescott-Allen, IUCN) is an attempt to overcome some of the limitations of GDP and the Human Development Index (HDI) as measures of national well-being. Its main purpose is to form a component in a well-being indicator that addresses issues of sustainability and the ‘well-being’ of the ecosystem. HWI is a composite of five domains: health and population; wealth; knowledge and culture; community; equity.
• The Happy Planet Index (HPI) (new economics foundation) is designed to challenge well-established indices of national development, such as GDP and the HDI, which are seen as not taking sustainability into account. Each country’s HPI value is a function of its average subjective life satisfaction, life expectancy at birth and ecological footprint per capita.
Examples of programmes integrating well-being:
• The Stiglitz-Sen report of 2009, which calls for measure of well-being alongside growth. This report adds to the literature on indicators of economic well-being and social progress and substantiates the voices of early pioneers like Herman Daly. According to Stiglitz, a more recent critical voice, ‘GDP has increasingly become used as a measure of societal well-being and changes in the structure of the economy and our society have made it an increasingly poor one; many things that are important to individuals are not included in GDP’. Stiglitz and Sen recommend including other factors, such as sustainability and education.
• Beyond GDP initiative (European Commission, European Parliament, Club of Rome, OECD and WWF), which work on improving measures of progress, wealth and well-being. In August 2009, the European Commission released its communication, ‘GDP and beyond: Measuring progress in a changing world’. The communication outlines an EU roadmap with five key actions to improve our indicators of progress in ways that meet citizens’ concerns and make the most of new technical and political developments.
References / Useful links
Beyond GDP Initiative [Accessed November 15, 2012, from: http://www.beyond-gdp.eu/]
Commission on the Measurement of Economic Performance and Social Progress, Stiglitz, J. E., Sen, A., & Fitoussi, J. P. (2009). Report by the commission on the measurement of economic performance and social progress. [Accessed November 15, 2012 from: http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf ]
GDP and beyond [Accessed November 15, 2012, from: http://epp.eurostat.ec.europa.eu/portal/page/portal/gdp_and_beyond/introduction]
Genuine Progress Indicator [Accessed November 15, 2012, from: http://rprogress.org/sustainability_indicators/genuine_progress_indicator.htm ]
Happy Planet Index (HPI) (new economics foundation) [Accessed November 15, 2012, from: http://www.neweconomics.org/projects/happy-planet-index]
Human Development Index (HDI) [Accessed November 15, 2012, from: http://hdr.undp.org/en/statistics/hdi/ ]
Human Well-being Index (HWI) [Accessed November 15, 2012, from: http://cmsdata.iucn.org/downloads/wonback.pdf ]
For further reading:
Costanza, R. et. al. (2008) An integrative approach to quality of life measurement, Research and Policy. S.A.P.I.EN.S. 1 (1)
Daly, H., Cobb, J., 1989. For the Common Good. Beacon Press, Boston. (Index of Sustainable Economic Welfare)
Layard R. (2005) Happiness: Lessons from a New Science. London. Penguin.
This glossary entry is based on a contribution by Tom Bauler
EJOLT glossary editors: Hali Healy, Sylvia Lorek and Beatriz Rodríguez-Labajos