The United Kingdom has adopted a versatile well-being valuation methodology to enhance policy appraisal capability in government, known as well-being adjusted life years, or WELLBYs. The “Green Book” and supplementary guidance produced by HM Treasury provide support for government analysts wishing to apply this methodology in different contexts.
The WELLBY Well‑being Valuation Method in the United Kingdom
Abstract
The United Kingdom government has been developing well-being valuation methodology for policy use for many years, and in 2020, HM Treasury updated its core reference guide for policy appraisal and evaluation (known as the Green Book) to enhance the pre-existing guidance on well-being, followed by the release of supplementary guidelines on well-being analysis in 2021. The supplementary guidelines focus on the use of an analytical approach developed by academics at the London School of Economics known as well-being adjusted life years, or the WELLBY method.
Broadly speaking, HM Treasury guidance presents a two-step method for monetising well-being impacts in policy appraisal, where sufficient supporting evidence is available. First, reasonably robust estimates of the causal impact of a given outcome on subjective well-being levels need to be obtained and translated into WELLBYs (wellbeing adjusted life years). The calculation of the WELLBY is dependent on the availability of ex ante and ex post data on life satisfaction scores for the target population on a 0 to 10 scale. In other words, when people in a sample of interest are asked how they would rate their overall level of satisfaction with their lives, with 0 being the lowest possible level of satisfaction and 10 being the highest possible, an aggregate mean life satisfaction score for the population can be derived. Changes in average life satisfaction scores can provide summary information about the broader well-being impacts of contextual factors, including policy interventions. The WELLBY is defined as a one-point change in life satisfaction on a 0 to 10 scale, for an individual for one year. In a second step, the resulting change in life satisfaction (expressed in WELLBYs) can be converted to a monetary value by multiplying by GBP 13 000. This is the recommended standard value of one WELLBY in 2019 prices and values, based on a widespread and robust evidence base, and representing the midpoint between low estimates (GBP 10 000) and high estimates (GBP 16 000).
This method has been widely applied across the United Kingdom government. For example, a 2022 inclusive growth strategy document used the WELLBYs approach to estimate that raising the bottom 25% of places to the United Kingdom average life satisfaction score would be worth between GBP 57 billion and GBP 92 billion. Research commissioned by the Department of Culture, Media and Sport has also applied the method to monetise the value of culture and heritage for health and wellbeing. A cross-departmental network of government analysts, the Wellbeing Analysis Board, meets regularly to share research findings and discuss ways to better integrate well-being policy appraisal and evaluation methods in different policy contexts.
UK Department for Culture, Media and Sport (DCMS) and Frontier Economics (2024), Culture and Heritage Capital: Monetising the Impact of Culture and Heritage on Health and Wellbeing, https://assets.publishing.service.gov.uk/media/678e2ecf432c55fe2988f615/rpt_-_Frontier_Health_and_Wellbeing_Final_Report_09_12_24_accessible_final.pdf.
UK Department for Levelling Up, Housing and Communities (2022), Levelling Up the United Kingdom, https://www.gov.uk/government/publications/levelling-up-the-united-kingdom.
UK HM Treasury (2021), Wellbeing Guidance for Appraisal: Supplementary Green Book Guidance, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1005388/Wellbeing_guidance_for_appraisal_-_supplementary_Green_Book_guidance.pdf.
UK HM Treasury (2020), The Green Book, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1063330/Green_Book_2022.pdf.
Frijters, P., Krekel, C., Sanchis, R. et al. (2024), “The WELLBY: a new measure of social value and progress”, Humanities and Social Science Communications, 11:736, https://doi.org/10.1057/s41599-024-03229-5.
OECD (2024), How’s Life in your country? Country note: United Kingdom, https://www.oecd.org/en/publications/how-s-life-2024-country-notes_2603b12c-en/united-kingdom_0c1cb30a-en.html.
OECD (2023), Economic Policy Making to Pursue Economic Welfare: OECD Report for the G7 Finance Ministers and Central Bank Governors, May 2023, Japan, OECD, Paris, https://www.oecd.org/content/dam/oecd/en/publications/reports/2023/05/economic-policy-making-to-pursue-economic-welfare_7a77b55b/ccc5634c-en.pdf.
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