The drive towards evidence-based decision making brings many benefits, but it comes with considerable challenge for many charities. Measuring the impact of your work– whether to meet a funders’ requirements or to persuade policymakers – can be tough, especially when outcomes are complex or don’t have clear financial payoffs. Even PBE’s economists take a cautious approach in many situations.
However, wellbeing measurement is proving to be a gamechanger. It offers a consistent, straightforward, and government-endorsed approach to capture the value of much wider range of activities.
At its core, wellbeing is about improving what truly matters to people: how they feel and function in their daily lives – often referred to as their ‘quality of life’. This concept is reflected in the Office for National Statistics (ONS) definition of wellbeing: “how we are doing as individuals, communities, and as a nation, and how sustainable this is for the future.”
Wellbeing provides a rounded picture of someone’s life. It incorporates both traditional economic factors like work and income, alongside social and environmental factors like mental health, physical health and community connection. Improving these conditions can have profound and measurable impact. For the charity sector, this focus on wellbeing is a call to action: by embedding wellbeing valuation into our evaluation frameworks, we can demonstrate the true value of our work in ways that resonate with both policymakers and funders.
With evidence growing since the ONS began measuring wellbeing in 2011, it’s becoming clear that wellbeing indicators offer a rich and actionable lens through which to evaluate policy, services and other interventions.
In recent years, the ‘Green Book’ – the UK government’s manual for policy development and analysis – has increasingly incorporated wellbeing as a key metric. This guide ensures consistency in how the costs and benefits of policies are measured across government. Since 2021, additional guidance on using wellbeing evidence has been introduced.
Government officials are still embedding this additional guidance in everyday practice, as it remains relatively new. Raising awareness and encouraging people to adopt the wellbeing guidance is essential.
The Green Book highlights four stages where wellbeing evidence can have impact:
Research: identifying what matters most to people and quantifying its relative importance (eg tackling loneliness).
Strategy: shaping policies and goals that improve wellbeing outcomes.
Appraisal: comparing policy options by assessing costs and benefits, including monetised wellbeing impacts like life satisfaction.
Monitoring and evaluation: using wellbeing indicators as outcome measures to assess success.
As the famous economist Joseph Stiglitz said, “What you measure affects what you do. If you don’t measure the right thing, you don’t do the right thing.” Incorporating wellbeing into policymaking ensures that decisions prioritise what truly matters and benefits people.
But how can we measure wellbeing in monetary terms? That’s where the WELLBY (Wellbeing-Adjusted Life Year) comes in. This standardised unit allows us to measure and monetise improvements in wellbeing on a 0-10 scale, providing a common currency for comparing the cost effectiveness of different policies. A single WELLBY (a one-point improvement in wellbeing that lasts for one year) is valued at £11,800-18,900, with a central estimate of £15,300 (in 2023 prices). By monetising wellbeing, it becomes possible to integrate it seamlessly into economic evaluations, giving it equal footing with financial and productivity metrics.
Here’s an example of a traditional approach vs the WELLBY approach in measuring the impact of a mentoring programme
Tracking participants over several years to monitor their career paths, their health and their interaction with the criminal justice system.
Challenges:
Measuring changes in participant’s self-reported wellbeing over the course of their engagement with the programme .
Benefits:
For charities, this approach offers a powerful way to quantify the societal gains from targeting groups with the lowest wellbeing levels. As evidence suggests, improving wellbeing in these groups often delivers the most significant returns.
The science of wellbeing is still evolving rapidly and while the evidence is mounting on what matters for people’s wellbeing, there is still more to learn. This means that evaluations can play a particularly critical role in helping us to understand the most effective ways for charities, government departments and the private sector to improve wellbeing.
Within the next 20 years, wellbeing could become the standard method of policy evaluation across the world. This signals a future where wellbeing is not just a supplementary consideration but a central tenet of policy and programme design. For the charity sector, embracing wellbeing valuation right now, positions us as leaders in this shift, able to demonstrate the profound, measurable impact of our work.
Measuring and valuing wellbeing in policy development and charity interventions is potentially game-changing. By incorporating tools like the Green Book into our evaluation frameworks, social impact organisations can align their work with emerging best practices in policymaking. More importantly, we can ensure that our efforts are focused on what truly matters: improving lives.
As we move forward, I’m inspired to champion the adoption of wellbeing valuation in the charity sector. Together, we can not only demonstrate the value of our work but also amplify our collective impact on society.