The Wellbeing Economics of Robin Hood: What Type of Society do we want to Prioritise?
By Eddie Hillier, Economist and Data Analyst at State of Life
Who should we prioritise when it comes to wellbeing: those already thriving, or those currently struggling?
Fundamentally, economics is about the study of choice. With limited resources, how should we choose to produce, consume, and distribute goods and services to maximise an outcome?
Hitting the target
We can choose between different options if we have a way to compare and rank their impacts on society. This system is called a social welfare function.
The key question is: what would this look like? Should we care about maximising the total welfare of the population, or focus on those who are worse off?
Power to the people
Professor Lord Richard Layard and Dr Ekaterina Oparina at the LSE recently decided to put this to the test, asking: What is the public’s social welfare function? Rather than making a judgement on what this should look like themselves, they surveyed a representative UK sample of around 2,000 individuals.
In particular, the paper aimed to understand how people feel about the distribution of wellbeing in society. Life satisfaction, measured on a scale from 0 to 10, is their chosen indicator.
Survey respondents were asked to complete a simple yet effective questionnaire. They were asked about many hypothetical scenarios: for example, how important is it to help someone go from a 2 to a 3 on the life satisfaction scale compared to taking someone from a 9 to a 10?
We care about helping those who are worse off
The research finds that the average person thinks it is twice as important to increase the wellbeing of someone with a low wellbeing score compared to someone near the top of the wellbeing scale.
Even though the wellbeing improvement is the same for both people (1 point), we care much more about boosting the wellbeing of someone who is struggling than helping someone who already feels great. The public are averse to inequality and more concerned with helping those who are suffering from ‘wellbeing poverty’.
Differences between groups
The authors find that these attitudes vary for different groups. For example, those with the following characteristics care more about helping those lower down the wellbeing scale:
Less satisfied with their own life
Donate to charity
Aged 18-34
Male
In a higher household income bracket
What does this mean?
A government has the choice to fund one of two interventions:
‘Mental health action’ - Treats 100 people suffering from depression or anxiety, moving them from a 3 to a 4 on the life satisfaction scale.
‘Wellbeing in the workplace’ - Helps 120 people in optimising their wellbeing at work. These individuals already felt pretty good about their lives - the intervention takes them from a 7 to an 8.
At first glance, we would judge ‘wellbeing in the workplace’ to be a more valuable option. It has the same wellbeing impact and helps more people.
However, if we care more about supporting those who are feeling worse, our priorities shift. When we apply the weights taken from LSE, we now judge ‘mental health action’ to be the more valuable choice instead.
At the coalface
At State of Life, we have explored how we can help some of the most marginalised groups in society.
Our work with the National Churches Trust has estimated the value of community services for those suffering from food insecurity, mental health problems, or addiction. We have analysed the role of community healthcare in helping those living with disabilities, long-term health conditions, and/or chronic inactivity. Our work with StreetGames looked at the impact of accessible sport for children from disadvantaged backgrounds.
Helping these groups, who may be more likely to experience low levels of wellbeing, could carry even greater value.
Next steps
The field of wellbeing economics has made incredible progress in recent years. Measuring life satisfaction is included in a huge range of UK surveys, and monetising value through the WELLBY is now endorsed by the UK government in the Supplementary Green Book Guidance for Wellbeing. At State of Life we have been busy applying these principles to measure what matters and make it count.
However, the existing guidance does not currently make adjustments based on the distribution of wellbeing, only caring about the total impact an intervention has made.
These findings from the LSE indicate there may be alternative viewpoints which focus on levelling up the wellbeing of certain groups: an intervention which gives a leg up to those who need it most will be valued higher than an equally effective proposal that helps the already advantaged. Comparing both perspectives, with and without distributional weights, would highlight a wider range of possibilities and improve decision making.
Determining how to apply these weights in practice for both primary and secondary data remains an open challenge. We are carefully navigating these implications so that we ensure a responsible and pragmatic approach.
Importantly, these views were not decided for us by academics or politicians. They were ethically grounded, chosen by the public, for the public. The people have spoken, and they want to know not only the total size of the benefit, but to whom the benefits accrue.