Summary of HM Treasury’s Green Book: Valuation of Wellbeing Guidance for Appraisal

The ultimate aim in government is to improve people’s lives, and towards this aim, HM Treasury’s first Valuation of Wellbeing Supplementary Guidance to the Green Book has been published this week. 

This Guidance continues the groundwork, building on extensive work over the last 20 years, so that wellbeing science can be used robustly, consistently and with confidence in all stages of public policy, cost benefit analysis and evaluation.

The Green Book helps officials provide advice to decision makers about how to achieve an explicit policy objective and maximise social value, and sets out a rigorous yet pragmatic approach to weighing up the costs and benefits. It is vital for designing interventions that maximise the delivery of economic, social and environmental returns for UK society, for every pound of public funds spent.

Aim of the Guidance 

The practical guide, developed by a specialist Cross Government Wellbeing Economics group of the Social Impacts Taskforce (SITF) supported by the What Works Centre for Wellbeing and its teams, is launched this week by the Government Economics Service and Social Research Service. The Department for Education have also published a Schools Policy Appraisal Guide that incorporates the methodology

The aim of the Guidance is to incorporate wellbeing valuation across organisations in a clear and consistent way.  It sets out how government economists can incorporate wellbeing into cost benefit analysis with confidence including in the spending review. It has guidance on when to use Subjective Wellbeing and when to use other quantitative measures, when a single number is appropriate to use and what are credible values.    

The new guidance provides additional tools and insights to be used with the central Green Book (appraisal), its Business Case Guidance and the Blue (national accounts), Aqua (analysis) and Magenta (evaluation) Books including:

• How and where wellbeing should be considered in the relevant parts of the Green Book methodology.
• An overview of the key findings from the current wellbeing literature.
• An overview of how wellbeing evidence can inform the strategic stages of policymaking as well as ‘step by step’ guidance for analysts on how wellbeing impacts can be assessed, and in some cases where evidence allows, monetised and included in cost benefit analysis. 
• A discussion paper on approaches to monetisation of life satisfaction effect sizes. 
• Guidance on how to include wellbeing in monitoring and evaluation in line with the requirements of the Green Book.

Quick links to resources in the Guidance

• Evaluating Wellbeing Guidance
• Measures Bank
• Methods Series: discussion papers, ‘how-to guides’, and sector perspectives on how to use the latest research to define and measure wellbeing
• Policy tools to use in long listing and action planning  
• Knowledge Bank Beta with initial 16 evidence reviews and other resources
• Evaluations using ONS4 measures 
• List of surveys with ONS4  (TBC) 

What the Guidance covers

Chapters 1-3 are intended to be accessible to all policy and wider audiences.

Chapters 4 and 5 are more technical and are more specifically for Government analysts, researchers, and their providers. 

Chapter 1- Introduction

• What is wellbeing?
• Wellbeing in policy making. 

Part I: Background and overview for analysts, policy professionals and decision-makers 

Chapter 2  – An overview of wellbeing evidence and how it may relate to the standard economic assumptions generally used in formulating and evaluating policy options. 

Chapter 3 – The specific steps which analysts can take to understand where, when and how wellbeing evidence can be incorporated in compiling the strategic case and in longlist appraisal. 

Part II: Practical steps for analysts 

Chapter 4 – A step-by-step guide for analysts on how to incorporate wellbeing into consideration of social / public value and its use in social cost-benefit analysis, covering guidance on:

• Shortlisting option appraisal.
• Where wellbeing can be incorporated in Social Cost Benefit Analysis.
• Where subjective wellbeing is appropriate as a monetised value, and where qualitative description is a better option, reflecting the recent Green Book Review 2020. Stated and revealed preferences approaches are also trying to get at wellbeing impacts and use subjective wellbeing where most appropriate. 
• The most robust and casual impacts and values, that are agreed through extensive peer review and are incorporated with recommended lower and upper band values. 

Chapter 5 – How wellbeing can be incorporated in the monitoring and evaluation stages of the policy process. It covers MEL (monitoring, evaluation and learning), with a checklist, and there are annexes on measurement and sources and values.  

Chapter 6 – A checklist for analysts incorporating wellbeing into appraisal.

Annexes:  Background information to aid understanding and technical detail on the wellbeing literature discussed in this guidance:

Annex 1 – Measuring wellbeing

Annex 2 – Quantifying and monetising wellbeing effects

Annex 3 – Determining Cause and Effect in Wellbeing Studies

Annex 4 – Wellbeing Policy Tools

Annex 5 – Sources of wellbeing data 

What next?

This is an evolving field and the guidance represents a great body of work that continues to move it forward. We now have a set of tools and a working model to help policy-makers and analysts consider wellbeing throughout the policy-making process – from the definition of policy areas and objectives, to assessing options and evaluating policies.  

There are some important outstanding questions, for example:

• How to treat alternative subjective wellbeing measures?
• How to address environmental issues? 
• How do you value quality of life and number of life years together? 
• Can there be retrospective evaluation of current public spending and funds?

This field is still developing at pace and this, and the Centre’s work, are building the foundations for this in the years to come, focusing on the things that are important to measure but hard to value.