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APPENDIX ON METHOD
Home | Index |O'view |Glossary | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | References | Appendix on MethodAcknowledgements | Boxes - 10 | Figures - 11 | Tables - 18 | Disclaimer | CopyrightAPPENDIX ON METHOD - THIS WEB-PAGE
The national accounts are the foundation for our index, and they are expressed
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
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
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 MethodAcknowledgements | Boxes - 10 | Figures - 11 | Tables - 18 | Disclaimer | Copyright