Using subjective well-being data to inform policy trade-offs

A key part of governing involves making decisions not only between different policy options but also between different policy objectives. When confronting policy trade-offs, one of the perennial challenges lies in comparing the relative value of different economic, social or environmental policy outcomes. This is like comparing apples with oranges: is an increase in educational attainment any “better” or “more necessary” than an increase in health outcomes? Governments may use various methods to assist in making these decisions, such as international benchmarking and national targets, but policy trade-offs, and particularly those involving different departments with different objectives, remain thorny issues to resolve.

Although it is difficult to imagine ever solving this problem through evidence alone, subjective well-being data offer one way of looking at the societal preferences (Loewenstein and Ubel, 2008) for different trade-offs. In the terms of Bjprnskov (2012), governments face a massive information problem - i.e. in a large society it becomes impossible to know enough about the detailed preferences and needs of the population to direct policies according to those preferences and needs. By providing information about what is likely to increase the subjective well-being of the population at large, subjective well-being data offers an alternative to listening to the arguments of relatively narrow interest and lobby groups. Subjective well-being can also offer a standard unit of comparison, thereby facilitating more “joined-up government” where departments are better able to consider the spill-overs from their interventions onto a wider range of domains (Dolan and White, 2007).

Practical examples of trade-offs that have been examined in the literature include the trade-off between inflation and unemployment (Di Tella, MacCulloch and Oswald, 2001) and that between income and airport noise (Van Praag and Baarsma, 2005). Fitoussi and Stiglitz (2011) highlight the value in further investigating the well-being impacts of moving towards greater flexibility in the labour market: whilst labour market flexibility is assumed to deliver strong economic benefits, it could also negatively affect two key determinants of well-being, i.e. the quality of jobs and economic security. Although Shackleton (2012) warns about the risks of adopting a “one-size-fits-all” approach to well-being at work, particularly across different countries, having better data with which to examine these trade-offs is surely important.

As noted earlier, attempts to directly compare the different drivers of subjective well-being face a number of challenges, and there will be limits to the extent that these analyses contain answers to policy trade-offs per se. Some of the interpretive challenges associated with analyses of the drivers of subjective well-being - and particularly the issue of comparing different drivers - are discussed in more detail in the interpretation section that follows.

 
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