Simetrica-Jacobs Contributes to New Guidance on Wellbeing Analysis

The U.K. Government has published new guidance for the economic appraisal of wellbeing, to supplement Her Majesty’s (HM) Treasury Green Book methodology. Wellbeing is an important consideration used to help inform policy, project and program appraisal, and this new guidance will help to implement wellbeing analysis as part of the Green Book methodology used in the U.K.

The Green Book is the U.K. Government’s guidance on options appraisal and applies to all proposals that concern public spending, taxation, changes to regulations and changes to the use of existing public assets and resources. It supports the design and appraisal of proposals that both achieve government policy objectives and deliver social value.

The new supplementary guidance was prepared by the Social Impacts Task Force including Jacobs’ Associate Director of Economics Iven Stead in his previous capacity as Economist within the U.K. Government Department for Transport. Simetrica-Jacobs CEO and Visiting Fellow at the London School of Economics Daniel Fujiwara also made important contributions to the new guidance. In particular, Daniel’s research findings were incorporated into the derivation of a new unit value for wellbeing valuation, the “WELLBY.”

Put simply, the WELLBY equates to a one-point change in life satisfaction per person per year on a 0-10 scale. The supplementary wellbeing guidance proposes that a change in life satisfaction can be converted to a monetary value by multiplying by £13,000 ($16,588¹). This is the recommended standard value of one WELLBY in 2019 prices and values.

For example, a study finds that a change to a workplace policy will result an improvement in wellbeing of 0.2 points of life satisfaction for employees sustained over a period of two years. The monetary estimate of this change in wellbeing is calculated as follows: wellbeing valuation = 0.2 x £13,000 ($16,588¹) = £2,600 ($3,318) per person per year for two years.

As the example shows, the use of a single unit value per “WELLBY” is transparent and easy to apply. The same WELLBY value can be applied to all individuals regardless of income and it can be used to value both losses and gains in life satisfaction. The emergence of the WELLBY means that we now have an accessible way to capture wellbeing in our appraisal of U.K. policy, projects and programmes, providing an important step towards better-informed decision-making. 

Through the use of rigorous application of Green Book-compliant approaches, including those used in Simetrica-Jacobs’ research, projects and tools, we are helping our clients understand how they can transform the wellbeing in our regions, cities and communities through better-informed and more equitable decision making.

¹ exchange rate conversion based on average for the year to 31 December 2019