A tool to help decision-makers craft a better world

March 16, 2017

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David King,Social Impact Adviser, Housing Association Charitable Trust

The Housing Association Charitable Trust (HACT) were the winner of our 2016 wellbeing impact survey.

If you had the choice between marginally improving the lives of millions people or transforming the lives of a few, which would you choose?

At one end of the scale, the infamous burning of one million pounds by The KLF captures the most marginal improvement and most abstract improvement to living conditions in the UK. How? The economist Tim Harford explains that by reducing the supply of money, everyone’s pound become worth slightly more. The KLF’s motivations were not as fine tuned as an economist’s, but nonetheless, in a way that almost nobody will have appreciated, they made everyone slightly richer.

At the other end of the scale, the social sector in the UK could point to numerous examples of projects in which a few people see exceptional changes occur in their quality of life.

I doubt many organisations looking to improve lives have discussed this question directly, but all have to position themselves somewhere on the scale. Businesses may choose to invest in their communities with highly publicised one-day community cleanup events, or to create apprenticeship programmes for a few. A grant funder might be interested in measuring “bums on seats” across a programme whilst another may ask for detailed case studies to communicate what has been achieved.

But what tools do organisations have to decide how they should operate on this scale? An important idea from economics is to think about value and utility. If tiny changes in quality of life across a large population add up to more value than one or two people with significant life changes, then that should be the preferred option.

Money is often used to quantify value, but is not much use when an improvement is something people pay for very indirectly, if at all. For instance, a sense of belonging to a neighbourhood. For these improvements, organisations often create KPIs, or outcomes frameworks, to assign value, and then struggle to present figures to boards and decision makers to show what they have actually achieved.

(Source: WM Housing Group )

A method that is consistent is one that can be easily communicated. What “KPI” could be used to compare the relative value of all others? Wellbeing.

While wellbeing measurement is beginning to mature in the social sector and across government, few approaches use wellbeing to guide resource allocation. By teaming up with econometrician Daniel Fujiwara, HACT has developed a wellbeing model that allows organisations to explore both how they could improve lives and how their projects actually create the change they are looking for.

In practice, the approach is supported by an Excel-based calculator (released on a creative commons license), a more advanced web-based calculator and mapping tool, Value Insight, a fully transparent methodology, and continued research. Since releasing the largest part of the model, we’ve been asked by housing providers and other users of the methodology to look at homelessness, changes to the built environment, health improvements, and how different wellbeing scales interact (for example, the popular WEMWBS scale and life satisfaction.)

(Source: Value Insight)

Our focus is on housing, but as wellbeing captures all improvements in quality of life, our model has been used across the public, private and wider social sector. Indeed, one of the best uses of our wellbeing model is emerging in the relationship between public and private sector organisations. Using the “common currency” of wellbeing, public procuring authorities can clearly define whether they prefer projects that benefit many marginally, or transform the lives of a few.

Although the Social Value Act has been in place since 2012, our experience is that without a simple and consistent performance framework, both parties run the risk of miscommunicating. To support those looking for a simple and robust way of procuring value, we released a toolkit in 2016, which we’re looking to trial in as many organisations as possible.

Many would agree with the idea of being ‘wellbeing maximisers’, but the reality of trying to improve lives is more complicated. Organisations need to balance the improvements they can make now, with improvements they can make in the future. Though less exciting, I’d imagine more value would be created if the KLF had used one million pounds to kick-start a social enterprise that delivered a small amount of wellbeing, but year on year far into the future. Using advanced data analysis, we’ve been exploring how quality of life improvements also benefit businesses.

Even though wellbeing modelling represents a big shift forward in evidence-based decision making, it should never be used without interpretation and governance. The vision we want to realise with housing associations, charities, and other partners, is to build understanding across all of the important ‘domains of value’.

(Source: HACT)

There can never be an automated formula for rationally allocating resources to improve lives, but there can be better tools to help decision-makers craft a better world.