Well-being and multidimensional deprivation: some results from the OECD Better Life Initiative Nicolas Ruiz

Context: Well-being beyond GDP President Sarkozy set up the Stiglitz-Sen-Fitoussi Commission (SSFC) in 2009 EU Communication on “GDP and beyond” and EU 2020 Agenda (2009 and 2010) G20 Leaders statements in 2009, 2010 and 2011 Conclusions of OECD Ministerial Council (2010) Bhutan-UN resolution on new holistic approach to development with well-being at the core of new economic and social goals 2

Context: Well-being beyond GDP Question is not why: well-being beyond income is not a new concept Question is more how: which measures for better policy? Demand: governments would like to have a robust framework for monitoring well-being and shape adequate policy agenda Desiderata: the proposal should be understandable by all, technically solid, operationally viable and easily replicable by countries 3

The OECD response Started almost 10 years ago: one-off reports (i.e. “Alternative Measures of Well-Being” in Going for Growth 2006), three World Fora on ‘Statistics, Knowledge and Policies’, OECD-hosted Global Project, Wikiprogress.org Involved in work of the Stiglitz-Sen-Fitoussi Commission Since 2010: two main streams of work –analysis/dissemination: making best use of existing statistics: OECD Better Life Initiative –methodological/research: setting the foundation for better metrics in the future (e.g. SWB guidelines, wealth standards, CO2 footprints, non-market production) 4

The OECD Better Life Initiative 5 Presents measures, analysis, and future statistical agenda on the dimensions that matters the most in people’s life OECD Better Life Initiative How’s Life? (report) Your Better Life Index (interactive web tool)

The OECD Better Life Initiative OECD countries and some major partner countries (Russia, Brazil; South Africa, India, Indonesia in future) Analytical perspective: –Households and people, rather than economic system –Outcomes, rather than inputs or outputs –Inequalities alongside averages in each dimension –Looking at both objective and subjective aspects of well- being –Sustainability (‘elsewhere and later’) as linked but also distinct from current well-being (‘here and now’) 6

The OECD Better Life Initiative 7 Core framework

The OECD Better Life Initiative Relevance of indicators - face-validity -easily understood, unambiguous interpretation -amenable to policy changes -possibility of disaggregation by population groups Quality of supporting data - official and well-established sources; non-official data used as place- holders in a few cases -comparable/standardized definitions -maximum country-coverage -recurrent data collection Significant documentation and testing 8 Selection criteria

Flagship publication: How is Life? Average well-being achievements in 11 dimensions Inequalities in these achievements across gender, age and socio-economic status Changes of well-being over time when the information is available Drivers of well-being 9

Well-being through a fully disaggregated approach 10

Well-being through a fully disaggregated approach No strict well-being dominance 11 Number of green lights out of 22 headline indicators Number of red lights out of 22 headline indicators 60%

Well-being through a fully aggregated approach Your Better Life Index 12

Well-being through a fully aggregated approach Multidimensional index of well-being Aggregation over 11 topics Inequality neutral Interactive tool where weights have to be set by the user New release yesterday Gender-inequality sensitive index Try it at the coffee break:

Well-being through a fully aggregated approach Looking at deprivations which batter individuals at the same time Gallup-based evidence Following Alkire and Foster multidimensional counting method (JPE, 2011): –Identification : selecting of dimensions and sub- dimensions (i.e. elementary indicators) –Setting the dimensional cut-offs –Setting the aggregation cut-off 14

Well-being through a fully aggregated approach 15

Well-being through a fully aggregated approach 16

Well-being through a fully aggregated approach 17 Subjective well-being and health in high well-being countries Housing and social connections in low well-being countries

Well-being through a intermediate approach (work in progress) 18 How to reconcile the appeal of a complete ordering, scalar approach with the assumption-free dashboard presentation? Simple Venn diagrams Multivariate stochastic dominance Direct representation of dependency in addition to margins (i.e. central tendency in each dimension+ intersection information) Is an intermediate posture really feasible?

Well-being through a different approach (work in progress) Equivalent income computation Literally beyond GDP: coupling GDP and compensating variations in a way consistent with social choice theory All differences in non-income well-being dimensions are converted to income differences A different ranking of countries emerge 19

Thank you! oecdbetterlifeinitiative.org oecdbetterlifeindex.org 20