(Illustration by Helena Pallarés)
To solve the social, economic, and environmental challenges we face today, we need to rethink the status quo. Governments and other institutions around the world need to embrace new ways of thinking and actively engage in widespread systems innovation to make real progress toward a healthier, more prosperous world. Yet most continue to frame their work within traditional economic models, without recognizing the damage it is causing to society and the planet. This framing often manifests in downstream measures, such as treating respiratory diseases exacerbated by air pollution, rather than investing in public transportation; rebuilding after floods caused by climate change, rather than divesting from fossil fuel and investing in clean energy; or focusing on health interventions related to poor diet, rather than improving agricultural supply chains and encouraging consumer demand for healthy food. While efforts to mitigate the effects of larger problems are vitally important, they do not attend to their root causes and interconnectedness.
Instead, we need an economic system that takes a preventative approach to social and environmental challenges to ensure that the kinds of related, follow-on problems mentioned above do not occur in the first place or are far less severe. Thankfully, the wheels are already starting to turn. Some countries are expanding how they measure economic success in a way that includes well-being and sustainability. They are working together to envision and implement a new economic model called the "well-being economy.” The well-being economy encompasses a diverse array of ideas and actions aimed at advancing social well-being through governance structures that support peaceful co-existence and meet basic human needs. A well-being economy provides people with equal opportunities for advancement, a sense of social inclusion, and stability—all of which contribute to human resilience—and, importantly, sustains and supports harmony with the natural world. It aims to serve people and communities first and foremost, and offers a promising path toward greater social well-being and environmental health.
The Limitations of Economic Growth
Over the past 40 years, human activity and the prioritization of economic growth over factors such as equality, education, health, and social relationships has depleted Earth’s natural resources faster than they can replenish. According to the Living Planet Index, the planet’s biodiversity continues to decrease, while droughts, wildfires, and extreme temperatures increase. This environmental degradation has a profound impact on the global population’s health and economic security. An estimated 7 million deaths are linked to high air pollution levels every year, for example, and by 2030, between 68 million to 132 million people will be living in poverty as a direct result of climate change.
The prevailing economic system of capitalism uses metrics such as gross domestic product (GDP) to measure societies’ success, while frequently disregarding socio-economic inequalities and impacts on global health and well-being. According to the 2018 World Inequality Report, income inequality has significantly increased at a global level since 1980. The same report estimates that although the average income of the bottom 50 percent of the global population has risen during the last decades, those individuals earned half the income compared to the 1 percent of richest individuals. Gender inequalities persist globally as well, with the United Nations estimating that women earn 16 percent less than men on average globally.
Economic inequality harms societies; it can increase anxiety and illness and fuel social and political unrest. The COVID-19 pandemic has aggravated health, economic, and social issues, and has prompted some governments to rethink the definition of a healthy and prosperous society and consider how the economy can support greater global well-being.
Three Principles of a Well-Being Economy
A well-being economy recognizes that people need to restore a harmonious relationship between society and nature, enjoy a fair distribution of resources, and live in healthy and resilient communities, and these elements are beginning to emerge in the individual policies of several countries.
1. Restoring a harmonious relationship between society and nature. A well-being economy not only supports quality of life for all—including good physical and mental health, and the ability to pursue aspirations—but also sustainability for the planet. A healthy and prosperous society begins with nature, viewing it as both a resource to meet consumption needs and a system of which we are a part.
One example of a country implementing policies to restore society’s relationship with the environment is Costa Rica, which ranks among the Social Progress Index's top performers. Costa Rica is the only tropical nation that has reversed deforestation, and it has committed to aligning its national priorities with global climate action by setting a carbon-neutral 2050 target. Its National Decarbonization Plan includes strategies for all sectors of the economy, including public and private transport, energy, industry, waste, and agriculture. Meanwhile, in 2018, the country generated 98 percent of electricity from renewable sources for the fourth consecutive year and aims to reach 100 percent by 2030.
2. Ensuring a fair distribution of resources to address economic inequality. Developing a well-being economy involves many aspects of society, including economic security, safety, health, and community. Countries with higher average levels of well-being tend to have greater equality between population groups and fewer people living in deprivation.
In recent years—due to collective action, political intent, and policy instruments such as legislation, budgeting, and quotas—Iceland has ranked first globally for bender equality ;according to the World’s Economic Forum’s Global Gender Gap Index. The Icelandic Cabinet, for instance, comprises five women and six men, compared to the global norm of one in five ministers being women. It is also reflected in the country’s parental leave policy, in which both men and women receive three months of paid parental leave (that cannot be transferred to the other parent), and the introduction of an Equal Pay Certification, based on an equal pay management system that prohibits gender discrimination practices in the workplace.
3. Supporting healthy and resilient individuals and communities. In a successful well-being economy, everyone lives in dignity, has a sense of connection and belonging, and actively engages with their communities. People have equal access to means that support their basic human needs, including support for physical, psychological, emotional, social, and spiritual well-being. Countries that understand the connection between individual and collective well-being and the role of the economy in fostering well-being are implementing policies that support satisfactory housing conditions, safety, strong relationships within communities, and trust in politics.
According to the 2019 edition of the OECD Better Life Index, Canada ranks above average in measures related to housing, personal security, social connections, civic engagement, and work-life balance. It has accomplished this in part through limiting the number of daily and weekly hours an employee is allowed to work, and through overtime pay requirements. For instance, it has implemented policies that encourage supportive and flexible working practices, such as the Full-Day Kindergarten Programme, which encourages schools to offer before- and after-school programming like childcare, and offers parents greater flexibility with their commitments. At the same time, 93 percent of Canadians claim they have a strong social network, while reporting high levels of life satisfaction—a measure defined by how people evaluate their life as a whole.
Embedding Collective Well-Being More Broadly
Some governments are going beyond the kinds of individual policies and practices described above, and adopting a holistic approach to decision-making in order to develop well-being economies. This is apparent in national policy frameworks that mandate collaboration between government departments and public bodies, place well-being in the center of budgeting decisions, and introduce indicators of prosperity other than GDP. These broader initiatives are putting collective well-being at the heart of economic policymaking, and allowing policy makers to set targets and objectives that focus explicitly on promoting well-being.
Noting the catalytic role the economy can have in building healthier societies, the national and regional governments of Scotland, Iceland, and New Zealand came together at the 2018 OECD Wellbeing Forum and formed the Wellbeing Economy Governments (WEGo) partnership, with Wales joining them in April 2020. The partnership aims to share expertise and transferable policy practices to further advance their common ambition of building a well-being economy.
Even before the conference, these governments were making progress toward embedding well-being in national policy more broadly. For example, Wales launched the Wellbeing of Future Generations Act in 2015, with the aim to improve social, economic, environmental, and cultural well-being in the country. The act mandates public bodies to collaborate with each other, people, and communities to address current and future challenges such as poverty and climate change. Public bodies are required to work toward all set goals, and a new future generations commissioner role supports them in achieving long-term impact.
Launched in 2007 and reviewed in 2018, Scotland's National Performance Framework aims to create “a more successful country with opportunities for all of Scotland to flourish through increased well-being, and sustainable and inclusive economic growth.” The framework demonstrates a shift toward broader economic, social, and environmental progress by defining 11 national desired outcomes; these include inclusive, empowered, resilient, and safe communities, and reduced poverty through more equal sharing of opportunities, wealth, and power. To measure the progress toward these outcomes, the government has introduced a set of 81 indicators, including loneliness, community ownership, food insecurity, and wealth inequality.
More recently, in April 2020, the Icelandic government approved a framework of 39 indicators to assess the country’s well-being, focusing on social, economic, and environmental factors. Indicators include trust in politics, mental health, job satisfaction, work-life balance, and environmental and social justice. The government is working with the national statistics office to collect the data and monitor the indicators on a regular basis, with the intention of informing both government policy and its five-year fiscal strategic plan.
Meanwhile, New Zealand’s first Wellbeing Budget, introduced in 2019, places citizen well-being and environmental sustainability at the heart of budgeting decisions. Informed by living standards data and advice from government science experts, the budget takes into account social and environmental factors, the quality of economic activity, and the long-term impact of current policies. The budget requires that government departments work toward: supporting the physical and mental well-being of communities, creating opportunities for a just transition to a climate-resilient and sustainable economy, improving living standards for the indigenous population, reducing child poverty, addressing domestic violence, and supporting a thriving nation through innovation.
By redefining the goals and expectations of politics, businesses, and society, countries can transform the traditional economy focused on economic growth into an economy that builds and sustains a healthy and prosperous world. As the examples above illustrate, policy makers have a vital role to play. Government leaders must open themselves to new ways of thinking and commit to widespread systems innovation, using the principles of a well-being economy to help guide the way.
Support SSIR’s coverage of cross-sector solutions to global challenges.
Help us further the reach of innovative ideas. Donate today.
Read more stories by Anna Chrysopoulou.