Linking Policies to Well-Being Outcomes Through Micro-Simulation

A major challenge in the measurement of well-being and progress is to link indicators of high-level societal outcomes with specific policy interventions. This is important not only for better informing the public, but also to provide the means for policy makers and advisors to assess the impacts of their policies and programmes and to increase their effectiveness and cost-efficiency. This paper looks at four major areas of social policies– health status, literacy and learning, economic security, and economic inequality– with the aim of understanding how to link broad outcome measures of progress in these areas, on the one hand, and the policies bearing on them, on the other. Emphasis is given to the powerful benefits to be derived from coupling longitudinal, multivariate data and powerful statistical methods with recently developed analytical tools such as micro-simulation. The paper also emphasises the need for “principled” summary indicators, i.e. indicators embedded within coherent data systems, and the importance of internationally comparable data based on common concepts and definitions.