The Wellbeing of the Nation 2017

The requirement for a set of national well-being or progress indicators has grown in recent years. Government and policy-makers need to know how Ireland is performing in a general sense, need data to assess economic and social conditions in the country, and require evidence to evaluate policy outcomes. Objective, independent, and important information will also be useful to the citizens of Ireland to aid their decision-making from both personal and business perspectives.

The publication of the Report of the Commission on the Measurement of Economic Performance and Social Progress in 2009 brought the question of priorities to the fore for official statistics.^[1] This report was carried out by Nobel laureate economists Joseph Stiglitz and Amartya Sen and co-ordinated by French economist Jean-Paul Fitoussi. It was a result of a commission established by French President Nicolas Sarkozy in 2008 entitled the ‘Commission on the Measurement of Economic Performance and Social Progress’. The resultant report focused on the strengths and weaknesses of GDP, the quality of life measurement over the previous 30 years, and highlighted some problems with measuring sustainability.

One of the main arguments of the report was that, while a major economic indicator such as Gross Domestic Product (GDP) is a useful measure of the overall progress of an economy, it tells us little about the actual well-being of citizens or the distribution of economic success or failure amongst a nation’s citizens.^[2] It posits that other indicators such as health, education, and social connectedness are also required to supplement the more traditional economic indicators in measuring the progress of a society in full.

This limitation of GDP as a measure of society was identified by the main developer of National Accounts, Nobel Laureate Simon Kuznets, who stated;

“The welfare of a nation can . . . scarcely be inferred from a measure of national income.”

    Kuznets, National Income 1929-1932

GDP is a very strong measure of the size of an economy with a well-developed methodology which is internationally comparable. It is still regarded as the best indicator of an economy’s overall health. However, it has limitations, which include;

• It does not capture the economic well-being provided by goods and services households produce for themselves.
• GDP measures income, but not its distribution.
• GDP does not measure wealth, financial or otherwise, which can have an impact on individual’s well-being.

Additionally from an Irish perspective, the highly globalised nature of the economy and its effects on GDP were demonstrated with the level shift in GDP in the National Accounts for 2015.  The highly complex nature and structure of the Irish economy was reflected in these results, which were compiled in accordance with the international standards for the statistics.

What is well-being?

The National Economic and Social Council’s (NESC) document ‘The Developmental Welfare State’, states ‘in a globalised world, the strength of Ireland’s economy and of its society will rest on the same foundation – the human qualities of the people who participate in them’.^[3] This view feeds into well-being, which can be said to measure how people feel about their lives as a whole. Well-being, in its broadest sense, can be viewed as a measure of all aspects of life. As a result, it is a complex multi-dimensional issue influenced by factors such as the state of the environment, the educational levels of the population, economic performance, public safety, and the health of the population, amongst others.

International perspective on well-being

Substantial work has been carried out on well-being internationally, notably in Canada and the UK, where new and existing data has been blended to provide an indication of national well-being. In Canada, a single composite index of well-being, the “Canadian Index of Well-being”, was constructed to attempt to provide a uni-dimensional perspective on what is a complex multi-dimensional topic.^[4] Much work has also been carried out by the Office of National Statistics (ONS) in the United Kingdom in their ‘Measuring National Well-being’ reports.^[5] The Australian Bureau of Statistics developed “Measures of Australia’s Progress” to help answer the question, “Is life in Australia getting better?”^[6] This is a set of indicators covering a broad range of social and economic topics to help Australians form their own view of how Australia is progressing. The state of Virginia in the United States of America, among others developed a set of indicators to show how the state is doing in areas that affect the quality of life of its citizens.^[7]

International bodies such as Eurostat and the Organisation for Economic Co-Operation and Development (OECD) have developed well-being publications (“Quality of Life” and “How’s Life” respectively). These publications provide comparisons of countries across various topics which are deemed pertinent to society as whole.^[8][9]  

Irish perspective on well-being

Research has been carried out previously in Ireland concerning well-being, including the NESC report– “Well-being Matters: A Social Report for Ireland”.^[10][11] This two-volume report identifies people as being at the centre of economic and social progress, and highlights the limitations of GDP as a measure of society. Members of the Whitaker Institute in the National University of Ireland, Galway, have also carried out much work on the development of a set of societal well-being indicators for Ireland.^[12]

The United Nations have also recently developed a set of Sustainable Development Goals.^[13] This set consists of 17 “Global Goals”, with 169 targets among them. They cover a broad range of development issues, including ending poverty and hunger, improving health and education, and combatting climate change. Ireland has been involved in this from an early stage, and is one of the six countries involved in a pilot mapping exercise of the data.

Measuring well-being

There are various methods by which well-being can be measured, and two of these measures are outlined here.

1. Composite well-being index

As mentioned previously, a composite index has been used in Canada as a means of measuring well-being. The data is collected and then weighted according to the effect it has on well-being. This results in a single figure which can change over time. This approach allows a particularly difficult concept such as well-being to be expressed in a relatively simple terms, deriving one figure for well-being. A drawback of this method is that much of the detail is lost and users cannot clearly see what is driving the movement of this index. It also calls for very difficult decisions to be made regarding the importance of each indicator to the well-being of society, and on how the weights are apportioned.

2. Dashboard

An alternative method of measuring well-being is to provide a dashboard which displays many indicators and details whether they have increased or decreased individually. This allows interested parties to examine individual indicators in detail. The main drawback is that, by its nature, some indicators will most likely show an increase, while others show a decrease, making it difficult to draw a conclusion on the overall trend in well-being.

Well-being and the Central Statistics Office

Consultation took place between the CSO and other experts in the indicators’ development, including:

• The Whitaker Institute of the National University of Ireland, Galway
• The National Economic and Social Council
• The Department of Health.

The CSO has an important role to play in the development of relevant well-being indicators, and has some experience in this area, with reports such as ‘Regional Quality of Life in Ireland 2013’ and ‘Men and Women in Ireland’.^[14][15] The Statistics Act, 1993, article 10(1), states that a function of the Central Statistics Office “shall be the collection, compilation, extraction and dissemination for statistical purpose of information relating to economic, social and general activities in the State”.^[16]

The National Statistics Board’s document ‘A World Class Statistical System for Ireland’ presents the strategic priorities for official statistics in Ireland for 2015-2020.^[17] Citing the Stiglitz-Sen-Fitoussi report’s work, this document identifies the development of a set of societal indicators on well-being as a priority for official statistics in Ireland.

Future steps

The release of well-being data is a new initiative for the CSO, and will be developed in the future. The domains identified, and the indicators comprised within each one, will be reviewed periodically. This is of particular importance as improvements in data collection methods could potentially lead to an increase in the quantity of data available. The improvement of access to sources of administrative data will provide an opportunity for the CSO to provide insight to other areas of life that impact well-being. Future opportunities to collect pertinent data will be availed of, and indeed work has already begun on this. The Survey of Income and Living Conditions (SILC) in 2019 will have a well-being module attached, and this will provide further insight to this topic. The previous SILC well-being module in 2013 provided data on subjective well-being, satisfaction with green areas, and satisfaction with personal relationships. The addition of extra data points to these indicators is welcomed, and will allow any changes to be presented. The Household and Financial Consumption Survey will be undertaken in 2018, and the results of this will supply data on the income and expenditure and will allow measurement of concepts such as financial constraints of households.

Work has begun on an interactive dashboard similar to the Key Short-term Economic Indicators dashboard, which can be found on the CSO website^[18]. This will provide the public with an intuitive and easy-accessible source for well-being data and will be developed in 2018.

[1] Also known as the Stiglitz-Sen-Fitoussi report