The HM Treasury Green Book supplementary guidance sets out how to use wellbeing evidence robustly and consistently, so you can use it with confidence to inform policy development and capture the social value of policies and programmes. It provides a methodology for placing a monetary value on wellbeing outcomes which are traditionally harder to compare in value-for-money terms.
We worked with Pro Bono Economics to produce a practice guide for capturing the wellbeing impact of charities and estimating the cost-effectiveness of their activities. It is especially useful for charities that have data gaps or don’t collect data to measure wellbeing specifically and presents step-by-step guidance alongside a worked example.
The benefits of a wellbeing approach
Traditional economic analysis makes comparisons based on monetary outcomes and calculated cost-effectiveness to inform decision-making.
This may not always be appropriate in practice, particularly in contexts where the desired outcomes are not directly financial, such as reduction in anxiety, employment or strengthening of community pride.
Wellbeing cost effectiveness is a measure of how much an intervention costs to provide a unit improvement in wellbeing. A wellbeing approach builds on a standard cost benefit analysis, speaking to what really drives charitable efforts: improving people’s quality of life.
Through their activities, charities and civil society as a whole play an important role in generating social value, and ultimately, wellbeing. While many organisations are improving wellbeing drivers, such as physical and mental health, they may not be measuring wellbeing directly.
The updated guidance supports organisations and evaluators to estimate the monetary value of their impacts on wellbeing, whether they measure wellbeing directly or not.
Measures of wellbeing
There is a wealth of high-quality, validated measures of wellbeing from the UK’s National Wellbeing framework, which span the key drivers of individual and community wellbeing. Standardisation helps reduce inconsistencies in measurement, and makes comparisons easier via benchmarking, enabling charities to capture their impact.
To directly measure wellbeing outcomes, charities can ask beneficiaries about their quality of life before and after an intervention using standardised measures. The Treasury guidance recommends the use of the Office of National Statistics Life Satisfaction measure as a proxy for overall wellbeing.
If you’d like to capture other aspects of Subjective Wellbeing, you can use the complete Office for National Statistics Personal Wellbeing measures (ONS4), which include life satisfaction, alongside happiness, anxiety and a sense of purpose.
If you’re already using life satisfaction or the ONS4, get in touch and send us your Evaluation, to add to our review of wellbeing impact evaluations.
Explore our measures bank for more information on validated wellbeing measures.
What if I’m not measuring wellbeing outcomes directly?
For many charities, there is often a need to estimate the wellbeing impacts of an intervention based on data about other drivers of wellbeing such as unemployment or mental health.
Measurable “intermediate” outcomes that are linked to wellbeing may include:
- getting somebody into stable accommodation
- supporting beneficiary to find employment
- helping a beneficiary to improve their mental health or achieve academic outcomes.
These are outcomes that act as pathways to improvements in overall wellbeing.
We’ve outlined a seven-step approach to indirectly assess the economic benefits of a charitable intervention using wellbeing outcomes:
- Develop a logic model of key wellbeing pathways for the intervention.
- Estimate net additional outcomes
- Assess the initial wellbeing impacts by drawing on pre-existing evidence.
- Assess the wider wellbeing impacts by asking: what impact does the intervention have on the intermediate outcomes? And what impact do intermediate outcomes have on wellbeing?
- Assess the direct costs of the intervention including: costs of service delivery, overheads such as allocation of rent or management costs, and opportunity costs such as volunteer time or donated goods.
- Estimate the indirect fiscal cost savings
- Calculate the economic benefit measure using either Social Cost-Benefit Analysis or Wellbeing Cost-Benefit Analysis.
For full details and explanation, see the updated guide.
If you’re already capturing this information, we’d love to hear about it at email@example.com.
See How cost-effective is a workplace wellbeing activity?. This how-to guide and calculator helps to evaluate and compare the cost effectiveness of wellbeing activities in the workplace.