Why we need National Accounts of Well-being

The narrow view from classical economics

When they were first being devised following the Great Depression, the original architects of modern national accounting systems were clear that welfare could not be inferred from measures of national income alone. But the Second World War led to an emphasis on productivity, which led in turn to the overwhelming concentration by governments on economic national accounting indicators such as Gross Domestic Product (GDP) as measures of success. Yet these economic indicators offer a very narrow view of human well-being. While a strong and healthy economy may be desirable, it is desirable because it allows us to get on with doing the things that are really important: living happy, fulfilling lives.

Modern society is organised around the core assumption of classical economists that continual economic growth is desirable because it delivers improved human well-being. But evidence shows this is only true to a limited extent. Read more about why policy based on measuring economic growth has not delivered well-being .

The benefits of National Accounts of Well-being

National Accounts of Well-being offer countries a chance to re-think the way they define success and work to improve the lives their citizens. In particular they offer:

  • A new way of assessing societal progress. National Accounts of Well-being, by explicitly capturing how people feel and experience their lives, help to redefine our notions of national progress, success and what we value as a society.
  • A cross-cutting and more informative approach to policy-making. The challenges now facing policy-makers, including the ‘triple crunch’ of financial crisis, climate change and oil price shocks, are unprecedented. Silo working has long been criticised; now – when the need for systemic change is clear and present – it must be overcome. National Accounts of Well-being – by capturing population well-being across areas of traditional policy-making,and looking beyond narrow, efficiency-driven economic indicators – provide policy-makers with a better chance of understanding the real impact of their decisions on people’s lives.
  • Better engagement between national governments and the public. By resonating with what people care about, National Accounts of Well-being provide opportunities for national governments to reconnect with their citizens and, in doing so, to address the democratic deficit now facing many European nations.