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We should follow New Zealand’s lead and make wellbeing central to policy making

4 min read

Now is the time for government to measure success in ways other than economic performance

On 12 March, I will be leading a debate in the Lords examining the case for the Government to use wellbeing as a key indicator of national performance when setting budgets, deciding policy priorities and reviewing the effectiveness of policy goals. This debate is a timely one. A growing number of economists and academics have been arguing that there is something fundamentally wrong with the way that we measure economic and social progress. Indeed, leading academics, such as Nobel Laureate Joseph E. Stiglitz, suggest that measuring people’s wellbeing is important for determining priorities in public policy rather than focusing solely on GDP. To put it bluntly, measurements affect decisions. Failure to measure the right metrics can lead policymakers astray in our communal effort to improve the quality of lives of our fellow citizens.

A nation’s economic success is typically measured by GDP. But this measure says nothing about the distribution of income between the rich and the poor and little about whether things are good or bad for our long-term wellbeing.  In my book, the case for wellbeing is both an economic and an efficiency argument – in short, it’s about spelling out the central purpose of any government’s economy policy. 

Indeed, wellbeing analysis can help to make public spending more effective at improving people’s lives, as the APPG on Wellbeing Economics pointed out in their report ‘Wellbeing in Four Policy Areas’ back in 2014. Furthermore, it seems obvious that an economy cannot work without the active participation of all its citizens. Where there is inequality – between social groups, industries, regions and generations – and ill health, there is also exclusion that prevents fair and equitable participation in society and distribution of the benefits. And yet currently we do not account for measurements crucial to understanding who gets to participate and who doesn’t.

For decades government policy has remained firmly focused on GDP growth as its primary indicator of national performance, often to the detriment of other environmental and social priorities. Various attempts have been made to overcome this by developing alternative measures and proposing different models of economic development such as sustainable growth. A greater focus on wellbeing – and measuring what really matters to people – can help ensure that we make these transitions in a fairer way.

“Where there is inequality and ill health, there is also exclusion that prevents fair and equitable participation in society”

It also accounts for a broad array of issues, including: physical and mental health; high quality education and training for all; accessible leisure and cultural facilities; housing design; and social connections and relationships. These components of a successful, productive and happy society are all missed by conventional measures of income.

It’s always instructive to look at what is happening in other countries. In New Zealand, prime minister Jacinda Ardern tabled a Well-Being Budget in 2019; a year prior, Ardern’s government formed the Wellbeing Governments (WEGo) initiative with Iceland and Scotland, providing a forum for the exchange of ideas on improving the lives of citizens and the success of their countries. In Canada, prime minister Trudeau charged one of his ministers with leading work within the Department of Finance to better incorporate quality of life measurements into government decision-making and budgeting. Closer to home, Wales is a leading example with its Well-being of Future Generations Act in 2015. The measurement of wellbeing is no longer an isolated phenomenon being pursued by a few eccentric enthusiasts – it is becoming a reality in some countries

This debate could not come at a more opportune time. A government that saw its central purpose as improving the wellbeing of the population would have that ambition as a central thrust of any Budget. On 12 March we will be able to see whether that formed any part of the thinking behind the previous day’s Budget.

Baroness Tyler of Enfield is a Liberal Democrat peer. Her debate is scheduled to take place on Thursday 12 March.

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