Utilization of Well-being Indices in Policy Making: Usefulness and concerns

This paper critically assesses recent research on the policy application of well-being indicators and presents an overview of both their advantages and potential issues. Initially, we explore diverse methods for measuring well-being, including the Subjective Well-being (SWB) indicator, the OECD Better Life Index (BLI), the Inclusive Wealth Index (IWI) designed to sustain the well-being of future generations, and an approach that estimates the significance of each dimension through the stated preference method. We delineate the distinctive characteristics and merits of each indicator. Subsequently, drawing on recent studies suggesting a divergence between utility and SWB, we highlight methodological and normative concerns associated with utilizing SWB as an indicator of social well-being. We introduce strategies to mitigate these concerns. Additionally, through empirical analysis, we investigate the specific domains in which satisfaction measures derived from self-reported subjective responses exhibit a robust correlation with objective levels. Synthesizing insights from these reviews and data analysis, we pinpoint concerns that are inherent in well-being indicators and propose pragmatic solutions, offering actionable guidance for policymakers in the realm of well-being assessment.