Chapter 2: A Roadmap to Well-Being It would be nice to think that the path to an economy well-being would be as simple as a well-being compass, a map and virtuous strides following Dorothy along the yellow brick road to visit the Wizard of Oz for guidance. Dorothy and her colleagues realized that the solutions they were looking for (a brain, a heart, courage, and getting back to Kansas) could be found within themselves. The practical tools and processes for designing and building an economy of well-being will likewise be found within our communities and driven by our convictions that a new paradigm is possible. Can Well-being be Measured? One of the questions I am often asked is 'can well-being and happiness actually be measured?' Based on the recently released World Happiness Report, economics, psychologists, social scientists and others are demonstrating that measuring happiness and well-being is possible. Moreover, when something can be measured it becomes a science and thus achieves some sense of legitimacy. New surveys such as the Gallup World Poll (GWP), the World Values Survey (WVS) and other surveys have been designed specifically to measure subjective well-being asking people to rate their life satisfaction (today), their current perceptions of happiness, their sense of their happiness yesterday (remembered well-being; "Overall, how happy were you yesterday), and the positive affects (e.g. enjoyment, happiness, laughter) and negative affects (e.g. worry, sadness, anger, depression) on happiness. When life satisfaction, happiness and these other questions are asked, they tell a very similar story about the likely sources of a good life. Happier nations (which include Denmark, Finland, and Canada) tend to have higher average incomes, healthy life expectancy, stronger sense of personal freedom, less likely to perceive widespread corruption in business and government, and people are more likely to have someone they can call on in times of trouble. There are a common set of objective determinants of subjective well-being that are emerging suggesting we can combine both subjective happiness surveys with regular monitoring of the conditions of well-being that are known to contribute to higher self-rated life satisfaction and happiness. Strong correlations have been found from research that show that life circumstances (conditions of well-being) have a strong influence on subjective well-being or happiness and that many subjective measures of well-being are highly correlated with objective measures of well-being. For example, subjective measures of well-being have been correlated with a variety of objective measures that include facial expressions, brain-wave patterns, cortisol measures in individuals, and community and national suicide patterns. Measures of subjective well-being can be used to predict subsequent events and behavior that are of importance to local governance. For example, many happiness measures are predictive of sickness so that collecting measures of happiness on a regular basis could be part of health maintenance and delivery of health services. Another example is that persons with disabilities tend to have lower subjective well-being ratings which is connected to the extent to which individuals can maintain strong social connections. According to some researchers, happiness follows a U-shape or smiley face pattern over the course of a human lifespan (see Figure xx). We are happiest at a young age (before puberty) and again in old age (65 years +). Happiness or life satisfaction declines sometime after 11-12 years of age and then nose-dives between 40-50 years of age. 'Human happiness hits the lowest point around the ages of 40 to 42,' writes Melbourne University researcher Dr. Terence Cheng, who led a longitudinal study into the U-bend phenomenon.24 But don't worry, even as you reach the bottom of your happiness curve in your 40s, you have another 30 years or more to recalibrate, count your blessings, and pursue a life of purpose and work that brings genuine meaning and joy to your life. * * * Five-Assets Sustainable Livelihood Model Measuring Assets The Sustainable Livelihood Model, developed in the early 1990s as an outcome of the Brundtland Commission work on sustainable development, provides a good framework for assessing individual and community assets (see Figure xx). The model uses 5 asset classes (personal, human, social, physical, financial) and 6 sub-asset characteristics recognizing that everyone has assets on which to build and support individuals and families to acquire assets needed for long-term well-being. FIGURE 15: SUSTAINABLE LIVELIHOODS MODEL 72 Source: Department for International Development. (1999). Sustainable Livelihoods Guidance Sheet: Introduction. http://www.livelihoods.org/info/info_guidancesheets.html#1. The definition of sustainable livelihoods was originally defined as follows: A livelihood comprises the capabilities, assets (stores, resources, claims and access) and activities required for a means of living: a livelihood is sustainable which can cope with and recover from stress and shocks, maintain or enhance its capabilities and assets, and provide sustainable livelihood opportunities for the next generation; and which contributes net benefits to other livelihoods at the local and global levels and in the short and long term.37 This definition is closely aligned with the City of Edmonton's working definition of poverty which related to the lack of resources and access to necessary resources for individuals to participate fully in society. The City of Edmonton set an ambitious goal to eliminate poverty within a generation through the EndPovertyEdmonton initiative in 2016. I served as a measurement advisor to the initiative proposing the Sustainable Livelihoods framework as a way of tracking the success of lifting 10,000 Edmontonians out of poverty within 5 years, the target set by the City. The Sustainable Livelihoods five-assets model could be used to assess individual and household assets of those persons living in financial poverty. By assessing the conditions of the assets for individuals and families living in poverty and then investing in strengthening these assets could be the key to lifting people out of poverty. Several years ago I had discussed the Sustainable Livelihood model with the United Way of Northern Alberta as a model for measuring the success of United Ways efforts to help the most disadvantaged in the community. In order to understand the pathway out of poverty to well-being I believe it is necessary to understand the key drivers that give rise to poverty conditions. The relative socio-economic 37 Department for International Development. (1999). Sustainable Livelihoods Guidance Sheet: Introduction. http://www.livelihoods.org/info/info_guidancesheets.html#1 73 conditions that currently result in conditions of poverty (measured currently in terms of lowincome conditions) can be assessed and the relative impact of policy changes, interventions/innovations, and other strategies/actions to alleviate conditions of living that result in poverty (i.e. the lack of resources (deficits) and inaccessibility to resources that detract from the pursuit of a given standard of livelihood). While poverty tends to focus on the lack of life resources, an asset-based approach looks at what resources people currently have for a certain quality of life. The Sustainable Livelihood Model provides a good visualization of how poverty elimination initiatives may lead to lifting people out of poverty into a flourishing state of well-being. This takes taking an asset approach to solving some of the most challenging societal challenges. Some of asset building actions may include providing low-cost sustainable affordable housing, through models like Habitat for Humanity, which I will discuss later in the book. Other efforts might include a living wage policy for cities that encourage all employers to appreciate what a living wage is and to ensure their employees receive such a wage to ensure they can flourish and participate fully in society. Using a Sustainable Livelihoods model as the basis of accounting for the success of actions to eliminate poverty can be an effective means of demonstrating progress and value for the investments made in building up assets and therefore overall community well-being. Other key measures of happiness, including a stronger sense of belonging and inclusion in society, will also become key measures of success. The model recognizes that everyone has assets on which to build and support individuals and families to acquire assets needed for long-term well-being. They may focus on a more limited (e.g. specifically economic) or wider set of assets (e.g. personal, cultural, social, political). 74 The Well-being Economy and the UN Sustainable Development Goals The United Nations recently established 17 Sustainable Development Goals (SDGs),169 targets and 304 indicators which is tended to describe 'the future we want' for the world in terms of sustainable development. The SDGs could be viewed as a set of human rights that taken together could amount to an economy of well-being, thought they are not specifically designed with that aspiration in mind. One of the shortcomings I observe, is that while the goals are aspirational and may lead to a more sustainable economy they are not grounded on any theoretical model or science of well-being. Moreover, the 17 sustainable development goals, actions and proposed progress indicators are not organized within an asset accounting model as proposed. FIGURE 16: UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS 75 Source: United Nations. https://sustainabledevelopment.un.org/?menu=1300 accessed May 30, 2017. For many nations, particularly developed nations like Canada and European nations, the 17 goals constitute a check list that most progressive nations will have already achieved, with some exceptions such as pockets of poverty amongst certain cohorts of the population (e.g. poverty amongst First Nations in Canada). Let's take for example, the #1 goal of ending poverty applied to my own city of Edmonton, Canada. I was part of the EndPovertyEdmonton task force whose aspiration was to developed poverty elimination strategies and progress measurement systems for the City of Edmonton, within a generation. I suggested that one way of ending poverty in wealthy countries like Canada is to commit to ensuring all people earn a living wage -- a wage sufficient to meet life's needs. This would require a commitment by both public sector and businesses to pay a living wage, which is a wage that would be sufficient to meet basic life needs to participate fully in any society. However, on a global scale what would it cost to eliminate poverty if every person in poverty was guaranteed a living wage? In 2015 there were an estimated 935 million people (12.7% of the world's population) living below the extreme poverty line of $1.90 per day or roughly $500 per year. In 2005, according to poverty facts currently roughly 50% of the world's people (over 3.2 billion) live on $2.50 per day while 80% (5.15 billion) live on $10 per day or less. The richest 1% (about 73 million) of the world's population owns 50% of the world's total wealth of $125 trillion. According to Forbes magazine, there were an estimated 123,800 multi-millionaires of which 1,810 were billionaires in 2015. Their aggregate net worth was $6.48 trillion or an average net worth of $3.58 billion each. The combined wealth of the world's billionaires ($6.48 trillion) is a value 1.4 times larger than Japan's GDP (the world's 3rd largest economy with GDP of US$4.7 trillion) or 35% of US GDP (the world's largest economy with a GDP of US$18.6 trillion). Some 76 economists including Jeffrey Sachs (author The End of Poverty: he End of Poverty: Economic Possibilities for Our Time, 2005) have proposed providing a daily cash transfer of $0.50 per day or $200 per year to the estimated 650 million living in extreme poverty or on less than $1.90 per day or $694 per year. Based on these figures the total annual cost of eliminating poverty for the world's extremely poor would be a mere $130 billion or a mere 0.11% of the world's total GDP 38 (US$119.4 trillion estimated GDP in Purchase Price Parity (PPP)39 or only 2.0% of the total net worth of the world's 1,810 billionaires.40 This would constitute a bold step in achieving the first UN SDG goal of eliminating poverty. However, this still does not solve the issue of billions of people who are not earning a living wage from their labor. I've estimated that roughly 5.0 billion people (68% of the world's population) live below a living wage (a wage sufficient to meet life's basic needs). A living wages varies from one country to the next. For example, in Africa a living wage can range from US$3.58-$14.39 per day; in Edmonton Alberta a living wage would be roughly $140.00 per day ($17.56 per hour).41 If we assume a median living wage of US$9.00/day for Africa applied to the 5.0 billion people living below a living wage, then the estimate annual global cost of paying a living wage increment would be roughly $11.7 trillion per annum or 9.8% of the world's annual GDP. This is slightly higher than China's GDP of $11.4 trillion. Adding $11.7 trillion in global disposable income would be like adding the spending power of another China, the world's 2nd largest economy. Of course, eliminating poverty is not simply about improving the wages of the poor; poverty includes the lack of services or access to education, employment, and decision making. SDG 38 John McArthur with the Brookings Institute suggests there are 300 million fewer people living in extreme poverty or 650 million people living in extreme poverty conditions. See https://www.brookings.edu/blog/futuredevelopment/ 2017/06/01/how-many-countries-could-end-extreme-poverty-tomorrow/ 39 CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html 40 The cost would present only 0.26% of the combined GDP of the 10 richest countries in the world; 89.4% of the world's total GDP. 41 Edmonton living wage estimates for 2015 are based on the Edmonton Social Planning Council Tracking the Trends, 2015. P. 38. 77 Goal #3 is to 'ensure healthy lives and promote well-being for all at all ages.' This goal is more of a developing-nation issue than for countries like Canada with high life expectancy, generally higher rates of health, access to clean drinking water and very low pollution-related illnesses. Some have criticized the SDGs for being contradictory, because in seeking high levels of global GDP growth, they will undermine their own ecolgical objectives. From the perspective of an economic model, the SDGs in my opinion are not connected to an accounting architecture such as the five asset capital model I have proposed for nations and governments. That does not preclude municipal, provincial or national governments adopting the 17 SDGs within a five capital asset accounting and reporting model that is based on the science of well-being. Many of the SDGs and the targets and progress indicators are similar to the objective and subjective well-being indicators that I have used to evaluate community well-being in Canada. The Well-being-based Governments At the municipal, provincial or state and national level well-being can be made the central organizing principle and aspiration for societies as a whole. At present most economies are governed to achieve high levels of economic progress is measured by single performance measure, the GDP. Making well-being the central governing principle of all levels of governments would provide governments with the capacity to not only measure what matters to most citizens (namely the well-being of their families and communities) but also be a means of demonstrating value for programs, services and taxes. New public sector accounting systems that measure well-being conditions and progress will be necessary to supplement and even replace the dominant money measures of progress such as the GDP. New indices such as the Canadian Index of Well-being (CIW) can provide governments, at all levels, to measure and monitor well-being conditions relative to an economy's GDP. The Canadian Index of Wellbeing measures eight domains of well-being - Education; Living Standards; Community Vitality; Democratic Engagement; Healthy Populations; Time Use; Leisure and Culture; and the Environment. Excerpted from An Economy of Well-Being: Common-Sense Tools for Building Genuine Wealth and Happiness by Mark Anielski All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
