Measuring well-being: the importance of the right geographic scale

June 18, 2019

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by Paolo Veneri, Head of Territorial Analysis and Statistics Unit, OECD Centre for Entrepreneurship, SMEs, Regions and Cities

 

To coincide with the 10 year anniversary of the publication of the Report by the Commission on the Measurement of Economic Performance and Social Progress, the Carnegie UK Trust is publishing a series of blogs which outline the approach taken to measuring and improving wellbeing by different governments, organisations and initiatives around the world.

The way we measure the progress of society is crucial to achieve a real improvement in the lives of people. The importance of going beyond GDP as the single measure of such progress has gained a prominent role in the public policy debate for more than a decade, thanks in part to the work initiated in 2007 by the so called Stiglitz-Sen-Fitoussi Commission. The Commission emphasised that policy makers in all contexts should design and inform their actions by ‘measuring the right thing’.

This implies looking at a set of sound well-being indicators, accounting for the different dimensions of people’s lives, from those related to material conditions, such as income, jobs and housing, to those related to ‘quality of life’.

However, ‘measuring the right thing’ is most effective if done at the right scale. We live in a world where differences in economic performance and living conditions within the same country have grown significantly and become more visible. For example, living standards in several life domains are often remarkably different between large cities and other smaller or more remote places and can be at the origin of growing spatial divides. These disparities are likely to be linked to the electoral outcomes observed recently in several developed countries, where the anti-establishment vote followed clear geographical patterns.

Measuring well-being at the right scale requires a geographically granular approach, which is crucial to inform effective policy action to promote social progress. There are at least three main reasons for the importance of zooming in on well-being indicators.

The first, and perhaps most obvious, is the magnitude of differences in living conditions observed in different areas of the same country. Differences experienced by people in terms, for example, of their health, of the probability of finding a job or of the safety conditions in residents’ neighbourhood can be much starker within countries than between them.

For example, youth unemployment in Italian regions vary between 10-50%, as documented inthe OECD Regions and Cities at a Glance 2018 report. Such large within-country discrepancies exist in many well-being domains and they often apply also within the same region. For example, life expectancy – a key indicator on health – differs by more than five years between two neighbouring municipalities within the metropolitan area of Copenhagen (Well-being in Danish cities, OECD report).

The second main reason is that local living conditions and local characteristics can affect the current and future well-being of residents. A lack of access to quality services, from transport to education and healthcare, or poor environmental conditions can reduce the opportunities to prosper for people who were born or live in more disadvantaged areas, especially in the early stages of their lives.

Third, sub-national governments are vital for shaping well-being. In OECD countries, they account for 40% of total public spending, playing a crucial role in the provision of many public policies that directly affect people’s lives, including education, health or housing. Notwithstanding the importance local government for people’s welfare, the quality of local governments and the level of people’s trust in local government is far from equal between places.

Identifying the domains where improvement is most needed requires measuring well-being where it truly matters. In this sense, the OECD regional wellbeing web-tool provides a comparative picture of well-being profiles of all OECD regions. A set of sound well-being indicators for regions and cities helps policy makers initiate an informed dialogue with citizens and businesses, to set priorities for action and to monitor the results of those actions. In the region of South Denmark, for example, a comprehensive well-being measurement initiative has been able inform local policy makers on the different actions to be taken locally. While some municipalities provide high employment opportunities without attracting population, others enjoy good environmental quality but are losing jobs and schools.

As new, informative and unconventional data sources become available thanks to rapid technological change, the capacity to produce robust, timely and geographically disaggregated well-being indicators is increasing considerably.

Several statistical agencies have recently embarked on a process of modernisation driven by the opportunities emerging from new data sources and technologies, and by the need to respond to new policy demands in an increasingly data-rich environment. The OECD will continue working with its member countries to seize such opportunities and to progress towards usable data for our cities and regions, with the ambition to help them achieve stronger economic and social progress in all places.