MEASURING WELL-

BEINGDENNIS TREWIN, FORMER AUSTRALIAN STATISTICIAN

My Credentials

• Led the development of Measures of Australia’s Progress (MAP), 2002

• Won the Bulletin’s Smart Australian (Society Category) for this work

• Co-author of OECD’s “A Practical Guide to Developing Societal Indicators”

• Senior Advisor of “State of the Tropics” (led by JCU)

• Advisor on the Redesign of the UNDP’s Human Development Index

• Advisor for the Gulf Co-operation Council’s Well-being Indicators Project

• Chair, Advisory Board of Australia’s National Development Index

• Member of the Advisory Committee for the ACT Indicators project

Outline of Talk

• History

• Approaches to measuring progress

• Modalities for developing measures of progress

• Measures of Australia’s Progress

• OECD initiatives

• Australian National Development Index (ANDI) as an example of a composite index

• New Zealand developments

• International developments

• ACT Indicators project

• Role of National Statistical Offices

An excellent overview is provided in Tanton and Schirmer (2019)

A Potted History

• Early 1970s – Start of the Social Indicators movement

• 1970s – Experiments with adjustments to GDP (eg Nordhaus & Tobin)

• 1980s – First Publication of Genuine Progress Indicator (GPI)

• 1990 – UNDP’s Human Development Index (HDI) as a composite index with major revision in 2010; recognises measures of progress should recognise improvements in well-being

• Early 1990s – Start of environmental indicators movement

• 1990s – Composite indicators become more common and getting increasing media attention

• 1990s – Subjective measures of well-being (eg quality of life become more prevalent)

• 2000 – UN’s Millennium Development Goal indicators (followed by SDGs)

• 2003 – MAP (first official national well-being indicators project)

• 2004 – OECD held first World Forum on measuring well-being and fostering the progress of societies

• 2011 – Publication of OECD Better Life Index

Four Broad Approaches to

Measuring Well-being

• Suite of Indicators (eg MAP, MDGs, SDGs, NZ Wellbeing Indicators) using a structured framework

• Composite Indicators (HDI, ANDI, CIW)

• Adjustments to GDP (Nordhaus and Tobin’s ‘net economic welfare’ which attempts to incorporate additional components of well-being into the GDP measure itself, Genuine Progress Indicator)

• Subjective measures of well-being

Note: GDP has never pretended to be a measure of well-being although it has often been used to that effect

Strengths and Weaknesses

compared with ‘Suite of

Indicators’ approach

Composite indicators – Digestible summary which can attract headlines BUT questions about validity, value judgements on weights, over-simplification of a complex and multi-dimensional concept and limited analytical value

Adjusted GDP – A single number and similar weaknesses to composite indicators. Valuation difficulties with adjustments to GDP

Subjective measures – Relatively easy to measure BUT individual’s expectations change over time and space

Suite of Indicators approach also has weaknesses – eg does not cover all dimensions, judgements on what indicators to use. Dashboard can help with interpretation of whether things are getting better or worse.

Broad Approach – Some key questions

• Terminology (Domains Dimensions Indicators Measures)

• Objective? Most common Concepts (Well-being, Quality of Life, Progress, Sustainability)

• What framework?

• Which dimensions (Health, etc)? How are they decided?

• Which indicators for each Dimension? – MAP tried to have one outcome focussed headline indicator for each Dimension .

• What measures for each indicator?

• Length of time series? Data sources.

• Treatment of linkages between Dimensions

• Analysis, Comparisons eg sub-populations

• If composite index, how do you determine weights and standardise indicators

Types of Indicators

(with health as an

example)

• Outcome (health status, life expectancy)

• Risk Factors (smoking, weight)

• Inputs (health finances, health professionals)

• Process or Output Measures (number of people receiving treatments)

• Performance Metrics (productivity measures, waiting lists)

Most indicator projects use a mixture. MAP focussed on outcome indicators.

Measures of Australia’s

Progress

• Uses suite of indicators approach

• Domains – Dimensions – Indicators - Measures

• Four broad domains ( Society, Economy, Environment, Governance)

• For 2004 edition, there were 20 Dimensions (7+4+4+5)

• Supplementary Indicators as well as Headline Indicators

• Criteria for Headline Indicators

- Relevance

- Focus on outcomes

- Movements could be associated with progress by most Australians (divorces are a counter example)

- Availability of measures on an annual basis

Some examples (D-I-M)

• Society (Health – Healthy Life Expectancy – Life expectancy at birth)

• Economy (Financial Hardship – Equivalised Disposable Income – Equivalised Disposable Income of those in the second and third lowest decile)

• Environment (International environmental concerns –Greenhouse gas emissions – Net greenhouse gas emissions)

• Governance (Crime – crime victimisation – victims of personal crimes and victims of household crimes)

Status of MAP

• Released 2002, 2004, 2006, 2010

• Indicators electronically most years from 2006

• Early issues were supported by the Coalition Government of the time

• MAP – Aspirations of a Nation released in 2011

• Currently shelved

• It was the stimulus for OECD’s Measuring Well-being and Beyond GDP initiatives

OECD Initiatives

• The Beyond GDP initiative is about developing indicators that are as clear and appealing as GDP, but more inclusive of environmental and social aspects of progress.

• The Better Life Index is designed to allow readers to visualise and compare some of the key factors – like education, housing, environment, and so on – that contribute to well-being in OECD countries. It’s an interactive tool that allows readers to see how countries perform according to the importance they give to each of 11 topics (according to OECD) that make for a better life.

OECD Better Life Index

Material Living Conditions – Housing, Income, Jobs

Quality of Life – Community, Education, Environment, Governance, Health, Life Satisfaction, Safety, Work-life Balance

1-4 indicators for each dimension

Australia is in top quartile (for OECD countries) for all Dimensions except for jobs, safety and work-life balance

Can compile an index using your own weights based on your self-assessment of the relative importance of the Dimensions

Weights do not make much difference unless there are significantly different movements in indicators

Australian National

Development Index (ANDI)

• Some key features

- Composite Index based on 12 Dimensions (Health, Education, Economic Life, etc), to be published annually

- Essentially a social well-being measure – similar framework to OECD Better Life Index; Environment/Sustainability is the only non-well-being Dimension

- As well as an overall index, a composite index to be developed for each of the 12 Dimensions, with a different Dimension published each month

- 12 Indicators for each Dimensions to be determined by expert panels assisted by democratic surveys and focus groups

- These are a mixture of outcome, output and input indicators

- Weights to be determined democratically

- Project currently on hold because of funding difficulties but significant work has been done on health and education indicators

Another issue with

composite indexes

• How to deal with the fact that the more volatile measures have the most influence on the direction of the index

• Z scores do not work

• Principal component analysis and factor analysis is used to derive weights for standardised variables but weights change over time

Table 1.

Trends in Living Standards Indicators for Canada, 1994 to 2008 Headline Indicators for Living Standards

Year

Headline Indicators for Living Standardsa

1n 2pb 3nc 4p 5n 6p 7p 8n

1994 4.83 51,700 14.0 0.571 17.4 58.4 100.6 41.5

1995 4.92 51,200 14.5 0.576 16.3 58.7 101.6 39.6

1996 5.18 51,100 15.2 0.564 16.3 58.5 100.1 36.7

1997 5.31 51,400 15.0 0.563 15.6 59.0 100.2 35.2

1998 5.52 53,300 13.7 0.566 13.3 59.7 100.4 34.7

1999 5.44 55,100 13.0 0.570 11.3 60.6 104.3 35.5

2000 5.69 56,000 12.5 0.579 10.8 61.3 105.3 36.9

2001 5.56 58,300 11.2 0.551 9.0 61.1 105.6 34.7

2002 5.63 58,200 11.6 0.512 9.2 61.7 102.8 35.2

2003 5.53 58,100 11.6 0.508 9.6 62.4 100.2 35.6

2004 5.72 58,900 11.4 0.516 9.1 62.6 99.0 36.8

2005 5.62 59,900 10.8 0.518 9.2 62.5 99.1 37.4

2006 5.54 61,100 10.5 0.522 8.3 62.8 98.3 41.1

2007 5.50 63,400 9.2 0.530 7.1 63.4 97.6 44.3

2008 5.61 64,100 9.4 0.521 6.7 63.5 99.8 45.0

Note. Taken from Michalos et al. (2011), p. 26, Table 1a, copyright 2011 Canadian Index of Wellbeing;aKey:1n = Ratio of top to bottom quintile of economic families (after tax) 2p = After tax median income of economic families (2009$) 3n = Incidence of persons in low income (%) 4p = Scaled value of CSLS economic security 5n = Incidence of long-term unemployment (%) 6p = Employment rate (%) 7p = CIBC index of employment quality (1994 Q1=100) 8n = RBC housing affordability index bData for after tax median income of economic family is in constant dollars for 2009. cData for incidence of poverty

Table 6.

Comparisons of Indexes

YEAR UNWEIGHTED WEIGHTED WEIGHTED TO ADJUST FOR VOLATILITY

1994 100.0 100.0 100.0

1995 101.0 100.8 100.5

1996 100.3 100.3 100.8

1997 101.6 101.5 100.5

1998 105.6 104.8 102.3

1999 110.3 108.1 104.4

2000 111.4 111.0 105.4

2001 117.9 113.6 106.6

2002 115.5 111.1 105.2

2003 114.4 110.8 105.3

2004 115.3 111.2 105.6

2005 116.2 112.0 106.2

2006 118.5 113.2 106.7

2007 125.2 118.2 108.3

2008 126.4 118.4 109.0

New Zealand Approach

• Want to take a broader approach to well-being, not just economic growth (GDP)

• NZ Treasury have established a Living Standards Framework based on the OECD Better Life framework –used to drive 2019 budget

• Statistics NZ have led the development of a set of indicators of social, economic and environmental indicators. Not driven by data availability – a lot of data gaps. Published on SNZ website.

• Consider both current and future well-being

• A very extensive consultation process

• A lot of indicators (30 Dimensions and 112 Indicators)

• Trying to link with SDGs

Indicators New Zealand (Current well-being)

Culture & Settlement Identity Waste

Climate Knowledge and skills Water & sanitation

Culture Land Work

Economic standard of living Leisure Air quality

Ecosystems Safety Health

Governance Social connections Subjective well-being

Indicators New Zealand (Other)

Future Well-being Impact on Rest of World Contextual

Financial and physical capital Climate Population

Human capital Economic standard of living Production

Natural capital Financial and physical capital

Social capital Human capital

Natural capital

Waste

Some other influential

international developments

• 2007 Bhutan Gross National Happiness Index (includes psychological well-being)

• 2008 Canadian Index of Well-being

• 2009 Stiglitz, Sen & Fitoussi, French Commission on measurement of economic performance and social progress

• 2009 EU, GDP and beyond: Measuring Progress in a Changing World

• 2010-16? The State of USA (System of Indicators initiated by GAO and National Academy of Science and endorsed/funded by Obama) but seems to have been discontinued

• 2011 UK Measuring National Well-being project (initiated at the request of the Cameron Conservative Government)

ACT Well-being

Indicators (ACT

Government sponsored)

Phase 1: July - Inform and listen

Phase 2: August – Review and Report back

Phase 3: August/September – Domain and Indicator design

(Have developed set of potential domains and associated priorities or indicators for each of these domains)

Phase 4: September-November – Community Engagement to test Indicators

Phase 5: October/November – Indicator Development

March 2020: Launch of Well-being Indicators

Some Features of

ACT Indicators

• Go beyond economic goals to help guide investments and priorities

• Strong government support (led by Chief Minister)

• Strong community participation in developing framework. Special effort to engage vulnerable communities

• Most important priorities identified in consultation have been health, good relationships with family and others and work-life balance)

• Starting with suite of indicators but hope to move to index

• Limited annual data for ACT at present but looking at administrative data and survey data

Draft Domain What does good well-being mean?

Draft Domain What does good well-being mean?

Living Standards I am able to meet my basic needs

Time use I have a balanced life with time for what matters

Housing and Home I have a place to call home Governance and Institutions I have a chance to have a say on issues that matter to me

Education and Life-long Learning

I have the skills and education I need and can access opportunities for development

Economy and Region I am able to share in our city’s economy

Physical and Mental Health I am healthy and can find the right care when I need it

Safety I can be and feel safe

Social connection I am connected to my family, friends and community

Mobility and Accessibility I am able to get around and access the services I need

Belonging and Cultural identity

I am free to express my culture, I belong, and I can participate fully in broader society

Environment I can enjoy the natural and built environment now and in the future

Role of National

Statistical Offices

• Active partner in the development of frameworks

• Custodian (and publisher or re-publisher) of the measures associated with the various indicators

• Publisher of reports based on the indicators? Have to be factually based.

• Data sources for international indicators projects (eg SDGs)

• Not a publisher of composite indexes but may be a data supplier

A Message from the

current Australian

Statistician

“I did want to pass on a message of support for continued discussion of this important dimension. While ABS is unable to produce MAP at this stage with our current funding, many of the underlying information sources are still being collected, and the funding we have just received for a time use survey, enhancement of our labour market information, our forthcoming social surveys and the expansion of reporting through the System of Economic Environmental Accounts do help better understand the broader range of dimensions of life in Australia. We are also staying in touch with the OECD and other NSOs who are progressing work in this area, and have someone contributing to the ACT project.”

References

• www.abs.gov.au Measures of Australia’s Progress

• ABS (2011) Measures of Australia’s Progress, Aspirations for our Nation, A Conversation with Australians about Progress

• Paper by Tanton R. and Schirmer J. (2019) Measuring Well-being and Progress: key considerations and review of international experience

• www.oecdbetterlifeindex.org

• www.andi.org.au

• www.stats.govt.nz Wellbeing Indicators

• www.yoursay.act.gov.au