Apocryphally, it is said that Einstein once said that not everything that matters can be measured, and not everything measured actually matters. Whether he said it or not doesn’t matter. The point is that evidence-based policy has been crying out for holistic measurement of human flourishing for decades and few governments have had the courage to nail their colours to the mast. 

The Wellbeing Budget, one in March 2024 and another planned for October 2025, suffers all the same problems as the Sustainable Development Goals (SDGs), but therein lies its hope and promise. It’s not perfect and some of the data is in desperate need of a post-COVID update but The Hon Dr Jim Chalmers’ Wellbeing Budget is a signal of hope for multiple reasons relating to intergenerational equity, climate change, and future sustainability. This is because it recognises human wellbeing as a metric in its own right, alongside a dashboard of indicators of which GDP is but one input to the system as a whole. We’ll return to its role in climate change and sustainability but suffice for now that wellbeing as a social measure has the capacity to help theoretically integrate the SDGs themselves as well as improve the lot of ordinary Australians. It pulls together many disparate and often competing indices into a global system, whilst helping signal to the world, alongside Wales, Scotland, Iceland, New Zealand, Germany (and before all of them, Bhutan), that social flourishing is a truly multidisciplinary endeavour and the proper goal of economic output. 

Wellbeing is not, as former LNP minister Josh Frydenberg would have it, some trussed up hippie esotericism, but has a long history of sober quantitative analysis spanning half a century, led by economists, sociologists and neurologists to build on a history of philosophy going back to Aristotle, through Enlightenment thinkers like Bentham, to the modern day. In 1975 two notable classic curves across countries were produced by Easterlin (1974) and Preston (1975), almost simultaneously, demonstrating the effect of GDP on subjective wellbeing and life expectancy respectively. Both were, in contrast to the assumptions of classical economics, curvilinear. They didn’t grow with greater wealth but stabilised at a plateau, at least cross-sectionally, and even suggested that greater economic growth (and so carbon emissions) could be antithetical to human health and wellbeing. The fact that they both demonstrated the same characteristics act as a form of convergent validity and the same curves have emerged for every year for half a century since. As well as Easterlin and Preston, the recently departed sociologist (and friend) Ruut Veenhoven (1996) dedicated a lifetime to harmonising data across countries; psychologist Diener (1984) examined wellbeing across cultures, Nobel laureate Khaneman (2006) brought it into mainstream economic theory, Marks and associates (2006) introduced it to sustainability with the Happy Planet Index. A vast literature unknown to Frydenberg has grappled with serious quantitative and scientific issues surrounding its measurement. Now countries are taking notice.

After generations of focus on GDP — a metric even its own architect Simon Kuznets (1934) criticised for failing to measure human wellbeing — we finally have a paradigm shift regarding economic growth not so much as the main outcome of good governance but merely one of many inputs to human social flourishing. That the Wellbeing Budget should come as an initiative under a governing Labor Party in Australia is hardly surprising given most of Australia’s historic contributions to human welfare — the eight-hour day (1856), women’s voting rights (1861), the secret ballot (1858), legalising trade unions (1876) and many more — became world firsts under the spiritual tradition, if not the official banner, of Labor. 

Dr Jim Chalmers, who did his PhD on political science and public policy, first floated the idea of a wellbeing budget in 2020, to which then Treasurer Josh Frydenberg, responded by scoffing at the idea as laughable. This doesn’t surprise me as I recall discussing the concept with Frydenberg’s colleagues at ADC Forum as early as 2013 and receiving the same response. Three years earlier I’d also received dumbfounded scorn when presenting the concept of a wellbeing dashboard to the Australian Bureau of Statistics, even as I explained the results of the Sarkozy Commission (Fitoussi, Sen & Stiglitz, 2010) recommending the same and driven by no less than two Nobel laureates in economics, Joseph Stiglitz and Amartya Sen. Long before this, in the 1990s, when I’d attempted to pitch the concept to university departments, so ingrained was the silo mentality that the faculty of economics told me it was a medical project, medicine told me it was better suited to politics, and politics sent me back to economics because it was too quantitative and beyond their realms of expertise. It took 15 years to find a home for a serious quantitative study of human wellbeing across countries and time — the Monash Sustainable Development Institute. 

Within disciplines, the knowledge and the data already existed 20 years ago and beyond to mount a tsunami of evidence in favour of Dr Chalmer’s wellbeing budget, not just within Australia but worldwide. In fact, the first assault on the presidency of GDP came from Amartya Sen (1985, 1999) when he helped developed the United Nations Human Development Index (HDI), placing education and life expectancy alongside economic output. Since then, the HDI has lost currency merely because more developed nations have populated the upper echelons of the index. Meanwhile the UN and WHO curated some 10,000 variables capable of testing across time and nations to broaden the concept from single metric to dashboard. But it’s taken decades for academies and government departments to catch up, to realise that we’ve now surpassed the point where any one discipline can address wicked social problems. The answers now lie inexorably in the gaps between disciplines. And this Labor government is the first to have the vision and courage to embrace this new empirical reality, one that represents a step change in post-Enlightenment scientific method, not only for the sake of the Australian citizenry, but for generations to come.

After decades of neoliberal growth economics, the dominant discourse from the Chicago School based almost entirely on the hard-nosed idiocy of rational choice theory, the concept of wellbeing, which embraces much more of the human condition than viewing people as mere ‘lightning rods of pleasure and pain’, has finally reemerged, nearly 250 years after Adam Smith (1776) first wrote the word ‘wealth’ with the original intention of capturing the breadth of social flourishing connoted by ‘wellbeing’. Jim Chalmer’s Wellbeing Budget builds on a wealth of new evidence that moves substantively towards what Keynes (1930) described when he said ‘the day is not far off when the Economic Problem will take a back seat where it belongs and the arena of the heart and the head will be occupied or reoccupied by our real problems — the problems of life and human relations, of creation and behaviour’. No longer deflected by theoretical tangents, the Wellbeing Budget finally puts human wellbeing and social flourishing as the true and proper outcome of economic endeavour. 

The economy should serve humanity, not the other way around. Is that so hard to understand?

Jim Chalmers’ Wellbeing Budget is a signal of historical importance to the Australian market because it places human wellbeing as the apex of economic activity. This is critical, and perhaps almost too late, after half a century of efficiency economics and rational choice theory driving privatisation, loosening labour laws, casualisation of the workplace, obscene profiteering, rising inequities, especially intergenerational inequities, erosion of community cohesion and its rippling effects. As the current Treasurer says in his introduction to the Wellbeing Budget, the dashboard of indicators has emerged from long consultation and is not designed to supplant but supplement the metric of GDP. That they chose to pursue a dashboard of wellbeing metrics is appropriate to some degree as a single metric of wellbeing has proved elusive, a veritable Holy Grail in the development literature, for decades.

Veenhoven’s Happy Life Year (1996) was a valiant attempt, precursor to a new version by Layard (Helliwell, Layard & Sachs, 2017) from the Earth Institute. Both sets of data converge on the idea, of deep significance to the SDGs, that all major indices tend to operate in a curvilinear structure representing metabolic homeostasis (Cummins et al., 2014), where moderated (and so ideologically agnostic) optima appear to maximise both wellbeing and life expectancy. The same even occurs with GDP, wealth equity, and carbon emissions (Read, 2013), suggesting a moderated peak not only maximises human outcomes but simultaneously achieves a form of Pareto efficiency, wherein everybody wins including the planet and future generations.

The Wellbeing Budget could go a lot further, not just by updating the datasets and more regularly evaluating pockets of disadvantage, but extending the range of years and integrating its theoretical underpinnings. The data and methods today now exist to develop a hierarchical structure where human needs can be much more precisely targeted in a rollout based on the brutal efficiency of a cost:benefit analysis, effectively squeezing maximum utility from a series of strategic investments representing minimal, but clever, outlays. The methods available include a series of empirical tests that triangulate on the same data across countries, across time, and across multitudinous measures (even in some cases across species). The other issue is that wellbeing as a concept has some problems associated with serious social ramifications that emerge if careful distinctions are not made between happiness, quality of life, life satisfaction, marginal utility, revealed preferences, and a host of others. Part of the problem with the concept of happiness, both in religion and as a precept formulated by the US Constitution, is that it elevates one of many evolved emotions with distinct and important roles to play in human adaptability.

The importance of studying wellbeing across countries (and species) is that most of the evidence of the past century has emerged from countries that are WEIRD — western, educated, industrialised, rich, and democratic. And so the assumptions of WEIRD researchers working from within WEIRD nations inevitably skew their understanding of human wellbeing, especially as the notion is awash with value-based assumptions, usually driven by the faddish preoccupations of the day rather than a fresh appreciation of time-invariant human needs that withstand the tests of time. Most of the data on wellbeing has been unassailably range-restricted to the experiences of wealthy westerners to such a degree that the only way to break through the invisible boundaries of the researcher’s own culture has been to open up the range of inquiry to all countries, subcultures within countries, and even using evidence going back to paleolithic and pre-agrarian societies. Without opening up the range of inquiry, the notion of human wellbeing is straitjacketed into a worldview that is, inevitably, hopelessly unsustainable, vastly privileged, possibly patriarchal and mostly materialistic. 

On a scale of 1-10, how satisfied are you with life as a whole? Note the word ‘satisfied’. Thankfully, there’s been a shift away from questions focused on the fleeting and philosophically questionable notion of eudemonic ‘happiness’ towards those based more on contentment and satisfaction of actual human needs, wherein policy can make a proper difference. As of 2023, this same question or a version of it has been asked of a total of 135 countries (by Gallup and Eurobarometer), some with data stretching back to 1960. Subjective wellbeing is a metric with a long history but often defies ratio measurement. At best it achieves an ordinal ranking, which means it comes with a host of statistical issues. It’s important to make sure that the question is linguistically equivalent and back translatable, especially in a multicultural society, that the numeric scale is understood, and that the question varies appropriately with hard ratio metrics from the laboratory — things like cortisol secretion, dopamine, evoked potentials, neurological activation of reward centres and a host of others. It doesn’t come without issues but it’s a lot stronger as a measure than some would assume, my own work showing it varies appropriately with life expectancy and human height, not only in today’s data but stretching back half a century. 

And it doesn’t end there. Beyond range restriction in time and culture, it is range restricted by academic discipline. As can be seen from the dashboard developed by Treasury, the concept of wellbeing is necessarily multidimensional (although this comes with its own issues described later). And so, part of the traditionally visionless resistance resides in the academic silos of intradisciplinary parochialism that arise from scientific reductionism. Carving up little bits of the bigger problem so as to isolate causal relationships focuses the researcher, laser-like, on the minutiae whilst missing a much bigger holistic picture. It also means that parallel literatures emerged in different disciplines, all using different heuristics and developing different terminologies to describe what amount to convergent concepts. The problem of language has left all researchers in the field, as well as governments relying on their expertise, in a position where they must master multiple disciplinary languages, Babel-like, even before making sense of underlying theories with the capacity to tie them all together. Much like Maslow’s hierarchy of needs, a lack of conceptual integration leaves Maslow, without the addition of a hierarchy, offering little more than a list. This is what happened with the SDGs — they were so desperate to be inclusive that every metric was hurled into the mix, even when half of them undermined the other in a spiraling dance of unintended consequences and internal feedback loops. They were a list in need of a hierarchy with no way of creating one. 

When all the work of consultation has been done, when every discipline and pressure group has had its say in measuring what matters, the task of inclusivity satisfied, there still remains a yawning gap in theoretical integration, which is why the SDGs managed to include everything and explain nothing. All it did was add wellbeing and ecology to the Millennium Development Goals, hurling against the wall nothing much more than an impossible wish-list of aspirational demands that couldn’t be measured because half the nations in the world lacked statistical capacity to measure what was asked of them. What’s more, the underlying linearity of assumptions, and the perennial belief that more of everything is always better, meant that half the metrics on the dashboard counteracted one another. To achieve energy independence and equitable prosperity across and within nations, inevitably meant wholesale destruction of marine and terrestrial ecologies, thus demolishing equity across generations and into the future. This is the tip of the iceberg. 

The vastness of applying quantitative reductionism to the interconnected issues of climate, intergenerational equity, and human wellbeing was left to meta-analyses and literature reviews, and rarely among researchers capable of seeing outside of their own discipline. Or else it was left to artists. Big picture thinking and reductionistic scientific method are hard to do at the same time.

The Wellbeing Budget hosts a range of proxy indicators within a five-fold dashboard that stands on the principle of equity. The metrics in Table 1 are paraphrased for brevity.

A Brief Snapshot

Issues abound here, just as they do within the SDGs. In Australia, overall life satisfaction continues to fall since 2014 whereas people older than 70 maintain the highest levels, along with the lowest homelessness. Here emerge issues of intergenerational inequity — those above 65 own 70% of Australia’s wealth despite representing only 16% of the population. Our own Fabians work on suicide, deaths of despair and wellbeing (see Issue 6, ‘Waithood’ — Australia’s suicide crisis in younger generations) suggests there is likely a survival effect that requires measurement using Kaplan Meier curves to account for generational attrition. For life expectancy, gains since 2003 disguise a major slowing, and reversal in some age groups, as most of the heavy lifting is being done by health services keeping people alive rather than the economic system creating healthier lifestyle outcomes with aa focus on prevention. 

To this, evidence comes from a range of other variables — rising chronic illness in the middle class and inner regional residents (the same group), rising homelessness (in all but older groups on average), rising housing costs and cash flow problems since 2014, rising irregularity in jobs (affecting almost 30% of all Australians), falling leave entitlements, and cost of living. Later, data shows rising participation in creative pursuits only among the young, suggesting a broad shift from material to experiential consumption values in this age group, partly driven by embracing more sustainable lifestyles but also because they have all but given up on saving for home ownership.

In only three years leading up to 2022, the percentage of people suffering some form of online attack rose from 58-75% — trolling, pornography, bullying and identity theft. The sexual and family violence data fails to measure data across time and typically underestimates male rates due to under-reporting (previous self-report surveys by the author found equal sexual victimisation between men and women). Some of these measures, like feelings of safety and trust in institutions have been standard questions in international datasets for decades. Though useful they could be vastly improved. Superimposed over all of this is a rising sense of fear surrounding geopolitical events at a global level, the metric of national safety having fallen from 90% in 2005 down to 53% in 2022. 

The newly created Australian Disaster Resilience Index shows a high of 80% of the population living in moderate to high risk of natural disasters (for more see www.fern.expert). Greenhouse gas emissions have been falling steadily (by 27%) since 2007, as they should as Australia was among the top three emitters, and much of this has been from efforts to embrace renewables. Air quality has been improving since 2019, as have protected marine and terrestrial ecologies, but biological diversity is still falling rapidly and needs bold policy adjustments to reverse the trend. Both humans and animals sustained a massive hit during the 2020 megafires, from which some species never recovered. A similar issue resides in the waste metrics. Whereas waste generated has risen from 2.8 — 3 tonnes per person since 2014, at least the amount being recycled has risen, at least officially, from 60 to 63%, a small gain yet both vast improvements on 49% in 2008.

Although recently fashionable to include economic and fiscal data under the sustainability banner this is a faddish approach due in large part to greenwashing efforts by major corporates and sloppy adoption of jargon. The values are entirely antithetical to one another and should never be grouped as if they maintain intercorrelated factor structures. This is misleading to untrained readers. Notwithstanding this minor criticism, economic diversity is improving when ranked against other nations but note that economic complexity, though it reflects economic diversity and so resilience, also harbors within it deeper and more intractable carbonisation and an erosion of human freedoms — more interdependence and more economic interactions can often impede social flourishing at a human and ecological level. It is akin to the Asian Development Bank measuring national human and economic development by satellite measures of concrete paving against forestation — a failed and misleading proxy that could be replaced with superior measures or else weighted. Gross debt to GDP ratio, representing fiscal responsibility, has skyrocketed from 8.8% to 54% since the GFC, making the Labor promise of a surplus the first in 15 years. 

Of the social cohesion metrics one promising outcome is the rise in First Nations languages being spoken at home, from 50,000 to 80,000 in 20 years — a move towards reversing cultural extinction. Another is that 20 years has seen parliamentary representation shift from predominantly white men to values closer to proportional representation of women (now 45%), indigenous (4.8%), and LGBTIQA+ (3.5%). Likewise, the gender pay gap has fallen from 18% in 2014 to 13% in 2022. 

Sense of belonging, especially as it relates to the Australian way of life, has declined from 100% in 2007 to 81% in 2022. This could be related to demographic shifts in those born overseas. For example, the proportion of households speaking a language other than English has risen from 16 to 22% over the 14 years preceding 2021, representing a demographic shift accounting for 6% of Australian respondents being new arrivals, mostly reflected in rising numbers of people speaking Chinese Mandarin and Punjabi. This then partly explains why acceptance of diversity has risen to 78% — the two metrics are correlated and so partly redundant. They also converge on the finding that 16% of people born overseas have suffered discrimination over the past 12 months, but not much higher than the national level at 13%.

In all, Dr Chalmer’s efforts to put Australian wellbeing on the economic dashboard is perhaps one of this government’s most laudable achievements so far, paint a picture of Australian flourishing that signposts a range of critical social issues looming on the horizon. If it can be harnessed, strengthened and tightened into its full potential it will become, I dearly hope, a dashboard of immense significance not only for sustainability but for the Australian people. I also hope it offers empirical evidence driving policy that will once again rebuild the social contract that has been sorely eroded by decades of obscene inequality and bad policy focused on the moronic single metric of GDP growth so beloved of the opposition. Dr Chalmer’s has produced a signal that Australia is finally taking the wellbeing of its people seriously, and hopefully this will embolden courageous policy for the younger generations so desperately in need of true and abiding hope for a better future — not one smashed by fossil fuel subsidies, collapsing ecosystems, geopolitical tensions, job and housing insecurity, food and water shortages, rising dependency ratios and inflation. If we can shift our economic focus to human wellbeing within planetary boundaries then we might once again have a chance to give young Australians a tilt at establishing their own families, however that might look, and living meaningful lives. 

A global expert on forensic psychology as it relates to climate change, Prof Paul Read completed his PhD entitled Human Needs, Equity and Wellbeing in the Context of Global Sustainability whilst working on the Sustainable Development Goals with the United Nations and related work on climate change and bushfires with Australian firefighting agencies and police. He has profiled mass shooters in the US and bushfire arsonists in Australia whilst focusing on his main work testing human needs for planet-friendly socioeconomic flourishing subserving human wellbeing. 

References

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