EDITED 23/7/2018: We previously suggested that the latest version of the Green Book is the first update for 15 years. Although the 2018 version of the Green Book is the first full revision since the 2003 version, there was an updated version published in 2011 in which there was reference to using subjective wellbeing data in cost-benefit analyses

It’s exactly one month since the Government updated the Treasury Green Book, guidance on how to appraise and evaluate policies, projects and programmes. While the original Green Book already mentioned wellbeing, the updated version explicitly states that wellbeing is the aim of appraisal. The Centre’s Head of Evidence explores what the subtle, yet important, shift means for putting wellbeing at the heart of policymaking.

The Government has updated the guidance for how to appraise and evaluate policies, projects and programmes. Reading the new version, the prominence of wellbeing was a welcome improvement, and one the Centre was proud to have helped shape.

If you flip through to page twelve of the new Green Book, section 2.3 you’ll find:

Economic appraisal is based on the principles of welfare economics – that is, how the government can improve social welfare or wellbeing, referred to in the Green Book as social value.

For those of us working to make wellbeing a key lens through which policy is made and evaluated, this seems like good sense.

But the wellbeing references don’t end there. You can also find it threaded through:

  • the stage of generating a long list of options
  • through to comparing options, even stating that there are some cases where it makes most sense to compare the wellbeing impacts of policy
  • a dedicated page on our website.

What does the updated guidance mean for you?

This is best answered by asking: what do you do differently when you incorporate wellbeing in analysis?

At a strategic level, policy focuses on the areas that we know are most important for improving our lives. For example, mental health is given a greater emphasis, a change which we have already seen through the Increasing Access to Psychological Therapies programme. Emotional health in schools becomes a priority, alongside attainment. Our local economic strategies focus on quality jobs, the local conditions which allow people to have positive social interactions, rather than only on GDP.

We can think about wellbeing evidence when developing options

In Section four the Green Book explains:

4.15 Individual and society’s wellbeing is influenced by a number of interrelated factors including health, relationships, security and purpose. At the long-list appraisal stage, evidence on the determinants of wellbeing can help describe Business As Usual and the purpose or scope of an intervention through SMART objectives. It may help to identify interventions which have an impact on wellbeing or another outcome which is affected by wellbeing. This supports the development of a long-list of options or the most efficient way of implementing a proposed solution.

4.16 Where appropriate evaluations of previous or similar interventions, international and wellbeing evidence, should be used to design options that build on what works, to avoid repeating past mistakes. This is particularly important when considering the scope of a proposal and the service solution (the technical means of delivering the intervention). …

For example, when thinking through options to reduce negative impacts of flooding: there are a large number of options including flood defences, early warning systems, insurance, preventative options including planning and land use. Thinking about the domains of our lives which are important for wellbeing makes us think about everything from:

  • community resilience, about ensuring those living in a flood-prone area know when there is an elderly neighbour, etc;
  • to making sure that flood defences are designed in a way which doesn’t block access and still enables physical activity and community connection.  

To give another example: to reduce congestion on a motorway between two major cities, there are a long list of options. When incorporating the wellbeing evidence, we think broadly in our options. Departments consider:

  • physical health, for instance active travel;
  • mental health and relationships, such as commuting time and strain;
  • opportunities and implications for those with the lowest wellbeing;
  • how people are involved in decision-making;
  • environmental impacts, for example through emissions.

Departments are already improving the evidence base and including these types of options across all aspects of our lives, so this text simply sets out this good practice.

You include impacts that are harder to quantify

What can be more challenging is quantifying some of these impacts.  In Section six, looking at valuing impacts, the Green Book explains:

6.21 Subjective wellbeing evidence aims to capture the direct impact of a policy on wellbeing. The evidence can challenge decision makers to think carefully about the full range of an intervention’s impacts… The evidence can also help challenge implicit values placed on impacts by providing a better idea of the relative value of non-market goods.  [bold added]

The aim of wellbeing analysis is to better demonstrate the full implications of policies. The government has already begun the work of improving our understanding of such impacts.

For example, how do we include the additional benefits of ‘good relationships’ when we are assessing a policy, to take into account the additional time, resources – and costs – they bring? How can we assess the impacts on community cohesion when comparing a number of transport options?

How do we quantify the experiences of awe or wonder we may feel in a beautiful building, a wild space; or the feeling of belonging from shared cultural experiences?

Some of these wellbeing impacts are monetised, where robust figures are available and we can ‘triangulate’ these with other evidence sources to confirm that the figures do make sense.

Or, it may be that these impacts on wellbeing are quantified to understand their scale – and perhaps added to analysis using switching points (“how much would this change in relationships have to be worth, to make this a less-preferred option?”)

In some cases, you simply compare the impacts on wellbeing. It may be the case that a policy is looking at how to improve community or family relationships and it is more appropriate to compare between options by looking at the costs and the impacts on wellbeing. The Green Book states:

For use in short-list appraisal it may be appropriate to use subjective wellbeing as the outcome variable for Social CEA in certain circumstances . It is recognised that the methodology continues to evolve and it may be particularly useful in certain policy areas, for example community cohesion, children and families [16]. Where valuations are considered robust enough for inclusion in Social CBA, benefits or costs must not be double counted, which could occur if a benefit or cost arising from a policy were counted by different valuation methods

Footnote 14: Where there is evidence that wellbeing fully captures all the outcomes affected by a proposal and there is sufficient evidence available for different options being considered.

Footnote 16: The What Works Centre for Wellbeing have published a guide on the use of wellbeing evidence in cost-effectiveness analysis, available on the analyst web page: https://www.whatworkswellbeing.org/appraisal

The Green Book links to our analyst web page, for advice on using wellbeing analysis in Government.

What is next?

The Social Impacts Task Force and the Centre are continuing to work in priority areas, to build on the existing guidance on wellbeing analysis in Government and share approaches.

You can take ten seconds to sign up for alerts in the top right-hand column of this page to receive more on the initial guidance in the summer.