National accounts of well-being: bringing real wealth onto the balance sheet

National accounts of well-being: bringing real wealth onto the balance sheet

Life's richness beyond income: modelling national accounts of well-being 

In the wake of the world financial crisis, persistent poverty and the threat of climate change, it is increasingly apparent that economic growth alone is an inadequate means to more stable and content societies. But planning processes rely on accounting systems which are, as yet, confined to economic indicators such as Gross Domestic Product (GDP). Is it possible to redesign national accounts to better measure people’s well-being? The New Economics Foundation (NEF) has now released a report which presents a working model of National Accounts of Well-being.

When national accounts systems were first designed seventy-five years ago, it was recognised that measures of national income alone did not reflect societal welfare. After the Second World War, however, economic productivity quickly became the yardstick of a country’s progress. In the meantime, well-being has transformed from a philosophical concept to a scientific one. It is now considered to refer to the dynamic process that gives people a sense of how their lives are going through the interaction between their circumstances, activities and psychological resources or ‘mental capital’. While a combination of objective and subjective factors are important for assessing well-being, it is the subjective dimensions which have been lacking in national government assessments so far.

Using data from a 2006/2007 European cross-national survey on well-being designed by the University of Cambridge, NEF and other partners, the report analyses how 22 European countries perform in relation to the well-being of their citizens, finding that:

  • countries with high levels of personal well-being do not necessarily have high levels of social well-being, and vice versa
  • Scandinavian countries are the top performers on overall well-being, whilst Central and Eastern European countries have the lowest well-being
  • Levels of well-being inequality vary considerably between nations

The report concludes that creating a system of National Accounts of Well-being is an ambitious undertaking requiring extensive co-operation between governments, academics and citizens. To begin with, it recommends that:

  • political parties make manifesto commitments to National Accounts of Well-being
  • national statistical offices initiate efforts to measure well-being
  • the European Parliament and European Commission take lead roles in furthering the National Accounts of Well-being agenda
  • further exploration, analysis and dialogue is stimulated at international, national and local levels on the potential structure of National Accounts of Well-being

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