The Italian experience with equitable and sustainable wellbeing indicators in the budget cycle

In 2016, Italy decided to assess the effects of economic, social, and environmental policies adopted by the Government, which together contribute to a good quality of life. 

Twelve wellbeing indicators were linked to the economic and budgetary process. This led to an Annex to the Economic and Financial Document and an annual report on indicators of equitable and sustainable wellbeing that is presented to the Parliament by 15 February each year. 

The Annex to the Economic and Financial Document is prepared at the time when economic planning starts, and proposals are assessed for their impact on wellbeing. It shows the trend of equitable and sustainable wellbeing indicators over the last three years and forecasts for the following three years. 

What was the process?

In November 2016, a high-level committee chose to use the theoretical framework of the equitable and sustainable wellbeing project to select twelve equitable and sustainable wellbeing indicators. 

In June 2017 a final report was submitted to the Ministry of Economy and Finance, which adopted the indicators in October 2017. The indicators selected belong to monetary (economic wellbeing) and non-monetary (health, education and training, work and life balance, safety, policy and institutions, environment, landscape, and cultural heritage) domains. 

As of April 2018, both the Annex to the Economic and Financial Document and the Report submitted to Parliament monitor the performance of all indicators. From 2020 both documents had qualitative and quantitative sections:

• The qualitative section in the Economic and Financial Document describes the policy priorities and measures adopted after the Budget Law, while in the Report to Parliament, it describes the policies adopted with the Budget Law and other regulatory measures. 
• The quantitative sections in both documents describe the indicators through retrospective analysis, with gender and territorial breakdowns, and focus on specific indicators or issues, as well as forecasts and impact assessments of some indicators.

What worked?

The Italian experience of evaluating public policies in the light of their effect on indicators of equitable and sustainable wellbeing is a good example of synergy between research institutions and central government. 

It is based on the close collaboration between the Ministry of Economy and Finance and the Italian National Institute of Statistics (ISTAT), which is responsible for providing the theoretical framework and the necessary data for monitoring and forecasting. ISTAT rapidly improved how it collects and makes data available. There is also a continuous exchange on methodologies to build econometric models for forecasting indicators. 

The continuous exchange between the Ministry of Economy and the other institutions since 2017 has led to a steady increase in the number of estimated wellbeing indicators, which have risen from four in 2017 to eight in 2022. 

One future objective is to provide a forecast for all indicators, as well as a change in the way indicators are chosen. This means that targets will be set firstly in terms of improving wellbeing, and then indicators are chosen that are sensitive to policy.