How should government policies be chosen? There is a growing demand that public policy should be more focused on what matters to people. The EU and OECD have urged their members to put people and their wellbeing at the centre of policy design, and the Treasury in the UK now permits the appraisal of policies by how they affect people’s wellbeing. Other countries, for example New Zealand and Australia, as well as the Nordics (Denmark, Norway), are following in these footsteps.

The aim of our project is to enable policy-makers to appraise policy options using one overarching concept: the wellbeing of those affected, defined as their subjective, self-reported mental states. To achieve this aim, we are developing a wellbeing simulation model – WELLMOD – to simulate the impacts of different policy options on both individual wellbeing and the public purse. This practical tool will allow policy-makers to select those policies that yield the highest wellbeing per unit of cost, and so to maximise wellbeing in society subject to budget constraints.

WELLMOD will tell us, for any policy option:

• How the proposed policy will affect the objective conditions for wellbeing (e.g. health, employment, or income).
• How much a person’s wellbeing will change as a result of the change in these objective conditions.
• How much extra public money will be required (or how much will be saved) as a result of the initial policy change, including the implementation costs of the intervention.
• How the original wellbeing inequality in society will change following the policy change.

The ratio of (iii) to (ii) will yield the cost-effectiveness of a policy option in terms of its impact on wellbeing, i.e. the social unit cost. This figure can then be used by policy-makers to rank options within and between policy domains from the highest to the lowest cost-effectiveness, effectively enabling them to maximise wellbeing in society for a given level of budget expenditure.

Currently, such a model does not exist. WELLMOD would be the first of its kind – in Europe and worldwide. Our project harbours the potential to impact both policy-making and people’s lives.

KEYWORDS:

wellbeing, modelling, micro-simulation, policy analysis, policy appraisal, policy evaluation, wellbeing cost-effectiveness analysis.