Burchi, Francesco (1); De Muro, Pasquale (2) (2017). 'Wellbeing indicators in the new Italian Budget Law: Methodological problems and social choices' Paper presented at the annual conference of the HDCA, Cape Town 2017.
In the last decade there has been a vivid debate on new measures of wellbeing and progress. There is widespread agreement that wellbeing is much more than ownership of economic resources and, above all, that GDP is an insufficient indicator to portrait people’s life conditions. The key turning point has been the Stiglitz-Sen-Fitoussi report on the Measurement of Economic Performance and Social Progress, and a number of initiatives launched by the European Union (“Beyond GDP”) and the OECD (“Better Life”). Despite the fact that this debate has involved both the academia and several international organizations and NGOs, it has had limited influence on governments’ policy-making so far. With the exception of very few attempts in countries like Scotland, Wales and Australia, governments have not endorsed a new vision of wellbeing and have not changed their priorities and ways to design and evaluate policies. Therefore, also the initiatives to improve the measurement of these phenomena have remained mostly an academic, intellectual exercise.
Now, the recent Amendments to the National Budget Law in Italy offer a unique opportunity to translate a new perspective on wellbeing into practice. The Law No. 163 of August 4 2016, in fact, states that a set of relevant wellbeing indicators must be identified and obliges the national government to justify its budget choices also on the basis of the predicted effects on these indicators. This new law opens a number of challenges: the present paper intends to reflect critically on the most important ones and to suggest some solutions. The main points are:
- Which and how many wellbeing dimensions? The Italian Institute of Statistics has recently elaborated the “Sustainable and Equitable Wellbeing” framework. However, it contains 12 dimensions and 134 indicators: it is impossible to identify the potential impact of government spending on all of them. In line with the recent “Constitutional Approach” (Burchi et al., 2014, 2015), we suggest to focus on the subset of dimensions that are also highlighted in the Italian Constitution and/or the different interpretative practices of this Constitutions (primarily the work of the Italian Constitutional Court). The choice of dimensions is, indeed, not a technocratic one: it concerns fundamental ethical and political principles.
- Which and how many wellbeing indicators? A balance between the objective of reflecting a more comprehensive definition of wellbeing and practical considerations related to the possibility to track the trends in these variables must be found. Moreover, it is important that different types of indicators (input, output and outcome indicators) are not mixed up.
- Should the indicators been aggregated into one index or remain as a dashboard? This implies, among other things, reflecting on trade-offs and synergies among indicators.
- How to forecast trends in wellbeing and identify the impact of economic policies on such indicators? The main challenge here is to identify the methods that can reliably predict the short-to-mid term change in wellbeing levels (aggregate or by single dimension?). Moreover, the development of a “theory of change”, i.e. a model that connects financial and economic variables to wellbeing outcomes, might be needed.