Wellbeing Economics

Overview #

Wellbeing economics is an approach to economic theory and policy that places human and ecological wellbeing at the centre of decision-making. Rather than treating economic growth as the primary indicator of progress, this framework argues that societies should be assessed by their ability to enable people to live healthy, connected, meaningful, and ecologically grounded lives. Wellbeing economics therefore offers an alternative to GDP-centred policymaking by focusing on multidimensional measures of quality of life, environmental integrity, equity, and democratic participation.

1. Intellectual and Historical Foundations #

1.1. Limitations of GDP as a Measure of Progress #

Wellbeing economics emerges from a long-standing critique of GDP as a proxy for societal wellbeing. Scholars in economics, sociology, and public health have demonstrated that GDP does not capture essential determinants of quality of life such as mental health, ecological stability, social cohesion, inequality, or unpaid care work. Research since the 1970s has consistently shown that beyond a certain threshold, increases in GDP contribute little to subjective wellbeing in high-income nations.

1.2. Human Development and Capabilities Approaches #

The intellectual foundations of wellbeing economics draw heavily on the human development paradigm, pioneered by Amartya Sen and Martha Nussbaum. Their capabilities approach argues that development should focus on what people are able to be and do, not merely on economic output. This perspective has also shaped the United Nations Human Development Index (HDI), which broadened global debates about development metrics.

1.3. Public Health, Social Epidemiology, and Social Determinants #

Public health research has played a decisive role in wellbeing economics. Studies on social determinants of health show that income inequality, social isolation, housing insecurity, and environmental degradation have profound impacts on physical and mental health. These findings demonstrate that wellbeing cannot be reduced to individual choice or market access but is produced through structural conditions.

1.4. Ecological Economics and Sustainability Science #

Wellbeing economics incorporates ecological limits into its analytical framework. Ecological economics has established that human wellbeing depends on stable ecosystems, clean air and water, and climate regulation. This connection strengthens the argument that a narrow focus on economic growth can undermine long-term wellbeing by accelerating environmental breakdown.

2. Core Principles of Wellbeing Economics #

Although approaches vary across countries and institutions, several principles are widely recognised.

2.1. Multidimensional Indicators of Progress #

Wellbeing economics advocates replacing or supplementing GDP with comprehensive indicator sets that measure health, education, environment, inequality, life satisfaction, and social connection. These dashboards provide a more holistic picture of societal progress.

2.2. Prevention and Long-termism #

Research in public health, economics, and environmental studies demonstrates that upstream, preventative investment—such as in early childhood development, climate resilience, and social infrastructure—yields significant long-term wellbeing gains. Wellbeing economics places such preventative strategies at the centre of policymaking.

2.3. Equity and Distribution #

Equitable distribution of resources is considered fundamental. Studies consistently show that societies with lower inequality achieve better social, health, and trust outcomes. Wellbeing economics therefore integrates distributional analysis into policy design, recognising that average measures alone can conceal deep disparities.

2.4. Participation and Democratic Engagement #

Wellbeing is shaped not only by outcomes but by processes. Participatory governance, deliberative democracy, and community engagement are integral to wellbeing economics because they foster agency, trust, and legitimacy, all of which are shown to influence wellbeing outcomes.

2.5. Ecological Integrity #

Wellbeing cannot be sustained in the absence of ecological health. The framework emphasises the need to maintain climate stability, biodiversity, and safe environmental boundaries. This principle aligns wellbeing economics with planetary boundaries science and broader sustainability transitions.

3. Wellbeing Indicators and Measurement Tools #

3.1. Wellbeing Dashboards and National Indicator Sets #

Governments and research institutions increasingly use dashboards that track economic, social, environmental, and cultural indicators. These tools allow policymakers to assess trade-offs and prioritise interventions that enhance quality of life rather than merely increasing output.

3.2. Subjective Wellbeing Measures #

Surveys of life satisfaction, sense of purpose, and emotional wellbeing provide insight into how people experience their lives. These measures are now widely used in international datasets and national statistical agencies.

3.3. Social and Ecological Metrics #

Indicators of inequality, housing security, social capital, carbon emissions, biodiversity, and resource use provide essential context for evaluating societal wellbeing. The combination of subjective and objective measures provides a fuller understanding of social conditions.

3.4. Indigenous and Cultural Indicators #

In several countries, especially Australia and Aotearoa New Zealand, wellbeing economics increasingly integrates Indigenous frameworks that emphasise relationality, Country, cultural continuity, and collective flourishing. These indicators recognise that wellbeing is culturally situated.

4. Policy Applications and International Examples #

4.1. Wellbeing Economy Governments (WEGo) #

A coalition of governments—including Scotland, Iceland, and Aotearoa New Zealand—has formed the Wellbeing Economy Governments partnership. These governments integrate wellbeing metrics into budget processes, legislative evaluation, and strategic policy planning. Early evaluations indicate enhanced cross-sectoral coordination and greater alignment between social and environmental objectives.

4.2. Wellbeing Budgets in Aotearoa New Zealand #

New Zealand’s Wellbeing Budgets embed wellbeing outcomes into fiscal decision-making. Investment is directed toward mental health, child poverty reduction, family violence prevention, and environmental protection. This approach demonstrates how wellbeing economics can reshape national budget practice.

4.3. Local and Municipal Approaches #

Cities increasingly adopt wellbeing frameworks to guide planning, urban design, and community development. Indicators such as walkability, social cohesion, green space access, and participatory governance are used to assess urban wellbeing. Municipal uptake illustrates the adaptability of wellbeing economics across different governance scales.

4.4. Health and Social Policy Integration #

Wellbeing economics encourages collaboration across health, housing, transport, and environmental sectors. Its emphasis on systemic relationships has influenced integrated care models, social prescribing, and community-level health initiatives.

5. Evidence Base and Research Insights #

5.1. Relationship Between Wellbeing and Economic Growth #

Cross-national studies show that beyond moderate income levels, wellbeing increases very little with additional GDP. Moreover, high growth rates can correlate with ecological degradation, stress, and social fragmentation, suggesting that growth alone is insufficient for wellbeing.

5.2. Social Infrastructure and Community Cohesion #

Research in urban studies, sociology, and public health highlights the importance of social infrastructure—libraries, community centres, parks, shared spaces—for strengthening social connection, mental health, and collective resilience.

5.3. Environmental Wellbeing #

Environmental indicators such as air quality, green space access, and exposure to climate risk strongly correlate with health and life satisfaction. Wellbeing economics therefore situates environmental policy as core rather than peripheral to economic strategy.

5.4. Equity and Distributional Dynamics #

Extensive evidence links inequality to poorer health outcomes, reduced trust, lower social mobility, and increased social tension. Wellbeing economics incorporates these findings by emphasising redistribution and structural fairness.

6. Intersections with Other Transformative Frameworks #

Wellbeing economics frequently intersects with:

• Doughnut Economics, which integrates wellbeing principles with ecological ceilings and social foundations.
• Degrowth and Post-growth scholarship, which similarly question growth dependency and re-prioritise human flourishing.
• Localisation and community resilience movements, which emphasise social connection, participatory decision-making, and ecological stewardship.
• Public health and social determinants frameworks, which inform its emphasis on prevention and structural change.

These intersections illustrate the wider shift towards economic models that prioritise human and planetary wellbeing.

7. Challenges and Considerations #

Despite growing momentum, wellbeing economics faces several practical challenges:

• Implementation complexity: Integrating multidimensional indicators into policy processes requires substantial analytical and administrative capacity.
• Institutional inertia: Existing economic systems, including fiscal rules and financial markets, often prioritise growth metrics.
• Political narratives: Framing reforms around wellbeing can encounter resistance if associated with reduced economic competitiveness or perceived loss of material prosperity.
• Measurement debates: Determining which indicators to include, and how to balance trade-offs, remains a core methodological challenge.

These issues underscore the need for careful design, long-term commitment, and broad public engagement.

8. Future Directions #

Emerging research and policy trends point towards:

• Integration of climate resilience and wellbeing metrics, enabling alignment between social policy and environmental transitions.
• Strengthening Indigenous-led wellbeing frameworks, particularly in settler-colonial contexts such as Australia.
• Expanded wellbeing budgeting, including at state, regional, and municipal levels.
• Deeper participatory governance models, such as citizens’ assemblies, that centre collective wellbeing in economic decision-making.

These developments suggest that wellbeing economics will become increasingly influential as societies search for pathways that combine ecological sustainability with equitable and meaningful lives.