Wellbeing Cost-effectiveness Analysis and Existing Approaches

The fourth chapter is targeted mainly at readers who wish to quantify how much benefits and costs are generated by future or existing policies and programmes. The chapter compares the authors’ basic methodology for wellbeing cost-effectiveness analysis (CEA) with existing approaches to decide on public resource allocations. The main comparison is with cost-benefit analysis (CBA), but they also compare it with multi-criterion approaches, social rates of return analyses, and business case scenarios or impact assessments. The authors start with a quick reminder of their basic methodology for wellbeing CEA, after which they sketch the current practice of CBA, highlighting the differences in a stylized, non-technical manner. They also sketch the relationship between WELLBYs (wellbeing years) and QALYs (quality-adjusted life-years), deriving a proper translation between the two measures, which will culminate in the important distinction between the individual willingness-to-pay for a WELLBY and the social costs of producing a WELLBY. They then answer some crucial questions as to how more wellbeing knowledge can be incorporated into existing approaches, including the question of the monetization of wellbeing effects for current-practice CBA. Apart from analysts, this chapter is also of interest to academics in the fields of health and wellbeing as it discusses in depth the differences between WELLBYs and QALYs. The discussion on wellbeing approaches from around the world is of importance to all those tasked with embedding wellbeing into their own country’s public-sector systems.

The Case for Wellbeing as the Goal of Government and Constraints on Policy-making

The first chapter is targeted at readers who are interested in the general push to include subjective wellbeing in governments’ policy-making institutions. It discusses the origin of the idea that governments should care about wellbeing; how wellbeing is already incorporated in many policy evaluations and appraisals; how a wellbeing-oriented bureaucracy fits in with the democratic process; and how the realities of policy-making often limit the use of formal wellbeing analyses and give rise to the importance of general knowledge about wellbeing amongst all decision-makers. To begin with, the chapter gives a quick synopsis of the basic vision at the heart of this book: what ‘more wellbeing’ would mean for policy-making and what steps would need to be taken to realize it. It is this basic vision which will unfold in the different chapters that follow and which forms the book’s basic motivation. The chapter ends with a quick overview of the institutional trajectory yet to be undertaken to have wellbeing policy embedded in the government machinery.

Wellbeing Measurement and Policy Design—Measures, Key Findings, and Wellbeing Frameworks

The second chapter is targeted at readers who wish to know what matters for subjective wellbeing, and in particular for those who wish to design policies in order to improve it. It begins with an extensive discussion on the direct measurement of wellbeing, covering both prevalent current measures and promising future measures, after which it presents some key findings and rules of thumb on what influences wellbeing. It then organizes the wellbeing lessons for governments by discussing the relation between wellbeing and four areas where government is very active: the provision of basic comforts, the regulation and production of experience goods and skills, the importance of status concerns, and social identities. This come with rules of thumb on how to recognize possible improvements and some indication as to what would be good value for money in terms of interventions. This chapter also discusses frameworks of wellbeing to aid appraisals, evaluations, and overall policy thinking in different areas. It presents a mental framework that embeds wellbeing into the whole economy (a capital framework) and then apply the theories and general framework to mental health and relationship-type interventions. The chapter ends with a taxonomy of thinking about wellbeing in government departments, including departments directly oriented towards some aspect of wellbeing (like health) and others that are oriented towards enabling the government to function (like tax authorities) or towards identity (like culture).

Wellbeing Policy Evaluation and Appraisal

The third chapter offers a methodology for those readers who are tasked with actually conducting policy evaluations and appraisals based on subjective wellbeing data, including wellbeing cost-effectiveness and cost-benefit analyses, impact assessments, or business plans. It first gives a simple and fairly non-formal exposition of how wellbeing cost-effectiveness works. It then sets up the methodology formally and discusses the various technical standards and issues that might arise when implementing them, for example double-counting of impacts. The chapter illustrates the methodology using various examples, ranging from simple to more technical. It also introduces and discusses data sources related to wellbeing, with a particular focus on the United Kingdom at present but also beyond, as well as rules of thumb and matters associated with the use of evidence and literature on wellbeing more generally.

Applying Wellbeing Insights to Existing Policy Evaluations and Appraisals

The fifth chapter shows how insights from wellbeing could complement existing policy evaluations and appraisals, using real-world case studies from government departments and agencies. For each case study, it first summarizes the current evaluation or appraisal approach, including its internal logic. It also makes general remarks to give some academic and policy context. The chapter goes on to show how insights from wellbeing could be brought to bear on these cases. In most cases, the authors sketch what a wellbeing-augmented cost-benefit analysis (CBA) or a fully fledged wellbeing cost-effectiveness analysis (CEA) might look like. A final case study applies a wellbeing CBA at the global level for illustrative purposes to assess two very different policy responses during the Covid-19 crisis, one the being a laissez-faire, business-as-usual response to the pandemic and one being a containment and eradication response involving the kind of lockdowns and preventive measures we have seen in most countries worldwide.