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APPENDIX ON METHOD - THIS WEB-PAGE 

The national accounts are the foundation for our index, and they are expressed 
in dollars. 

Accordingly if the non-economic aspects of the index are to be aggregated with 
the economic aspects, some way must be found to express them as additions to or 
subtractions from the economic aspects – all measured in dollars. 

We have often done this by deducting amounts from our index for phenomena like 
obesity, mental illness or overwork that are associated with substantially reduced 
wellbeing. 

The extent of this effect is calibrated in dollars by consulting the evidence 
(usually from subjective wellbeing surveys) and asking this question, 

“How much would one have to reduce a person’s income to produce a reduction in
wellbeing which is similar to the reduction in wellbeing generated by this effect 
(such as obesity)?” 

If a particular condition improves over time – for instance if the rate of obesity 
falls – the index will capture the improvement because the negative adjustment 
to the index becomes less negative – in just the way that lower depreciation of 
capital for instance would increase NNI. 

This procedure of making deductions for phenomena that are associated with reduced 
welfare has been followed both for simplicity and because it makes intuitive sense. 

Yet it is a shortcut made with the uses of the index kept in mind.  

We could have done the converse – by calculating how much the absence of such 
conditions is associated with above average wellbeing and then adding that to
our index. 

Both methodologies produce similar results in measuring the change in wellbeing 
from period to period, but they do so by producing equal and opposite changes as 
adjustments to the economic index at a given time.  

The largest deductions to wellbeing come from the negative impacts of poor health, 
employment-related satisfaction and delayed early childhood development as outlined
in Table 18 at the end of our report. 

In fact to properly integrate our approach into the national accounting methodology
in such a way that it produces a dollar denominated measure of wellbeing in the base 
year would involve methodological complications that are well beyond the scope of 
this exercise and that could be subject to a variety of objections in any event. 

Nevertheless, our method produces a realistic measure of changes in wellbeing from 
period to period, which is a central aim of the exercise.  
 
Home | Index |O'view |Glossary | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | References | Appendix on Method 
	 Acknowledgements | Boxes - 10 | Figures - 11 | Tables - 18 | Disclaimer | Copyright


                
                
                



                
        

















































































                
                
                



































































                
                
                



























































































































                
                
                



































































                
                
                











































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