Wellbeing Economics is here to stay 

The Value Revolution 
The environmental side of this picture is well-known. You’d struggle to find a boardroom where the word “sustainability” isn’t on the agenda. We don’t live on a world of infinite resources – so we need to do things differently.  

Less well known – but equally important – is the issue of wellbeing, and the attendant topic of wellbeing economics. From the OECD’s Better Life Initiative to the Open Social Value Bank, and the Wellbeing Economy Alliance, this is an agenda which is developing at pace.  

Part of the motivation here stems from the growth in ESG – and the desire to apply and develop better metrics to track the social side of this triplet – good for businesses, and good for investors. Part, too, is a response to the growing recognition that GDP alone is not the all-encompassing measure which will lead us to a prosperous and sustainable future. We need to measure more and think of value in a more holistic way.  

Is GDP the right measure? 
It was for this reason that the backdrop of my talk to Børsen was a quote from Robert F. Kennedy – who argued back in 1968 that GDP “measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.” 

When it comes to wellbeing, emerging data underlines Kennedy’s point: As research shows, whilst GDP per capita in India doubled between 2006 and 2018, the average life satisfaction of the population actually declined by 25%. Here in Denmark, increasing GDP per capita between 2005 and 2020 was accompanied by falling life satisfaction.  

So, there is a clear need to develop stronger methodologies to measure how initiatives boost wellbeing – and how cost-effective these interventions or initiatives are. Progress on this front has taken leaps through the development of so-called WALYs – Wellbeing Adjusted Life Years – which allow the quantification of the happiness return on investment.  

At this point it is worth stressing that this is not just an academic, abstract agenda. We only need to flick through the pages of the European Commission’s latest strategic foresight report – the body’s annual publication, setting out concerns, focuses, opportunities, and threats for the coming years – to get a sense of how far wellbeing has moved up the agenda, in a relatively short period of time.  

Boosting wellbeing is a win-win-win 
In a document Politico describe as “The EU’s take on where the world is going,” the word ”economy” appears sixteen times – the word “wellbeing” appears fifteen. It’s becoming increasingly clear that we can’t sustainably grow the former without focusing on the latter. 

Analysis has shown that companies with strong ESG scores outperform the average within their broader market. Another paper shows that a one-unit increase in happiness, on a 0-to-10 scale, increased employee productivity by 12%. An American study, with more of a focus on the wellbeing agenda, looked at the performance of companies which had achieved high scores in the Corporate Health Achievement Award. Again – across all tests CHAA portfolios out-performed the S&P average. And – perhaps even more pertinently – a meta-analysis of 339 independent research studies found a “significant, strong positive correlation… higher wellbeing at work is positively correlated with more business-unit level profitability.” 

From stranded assets to quitting employees – employees with a strong sense of wellbeing are over 80% less likely to look for a new job – the biggest dangers are faced by the firms who don’t embrace the new value paradigm. There’s a happy harmony here, however, in that a sustainable business strategy – one that respects planetary boundaries, and seeks to increase wellbeing – is, ultimately, the route to remaining a financially sustainable business.