Incorporating well-being indicators in the policy-making ...

Incorporating well-being indicators in

the policy-making process

The 2019 Equitable and Sustainable Well-being Annex to the

Economic and Financial Document

Susan Battles, Eleonora Romano and Pietro Zoppoli

Department of the Treasury - Economic and Financial Analysis and Planning

Italy-Germany: Bilateral meeting on demographic change and equal living conditions

Rome, 25th June 2019

Outline

The well-being conceptual framework

Institutional framework at international level

Well-being measurement in Italy

Well-being into policy-making in Italy

Most recent data

Methodological aspects and further work

2

Incorporating well-being indicators in the policy-making process

The well-being conceptual framework

3

• Quality of life: from economic welfare to the wider concept of well-being

• Multidimensionality: economic, social, environmental

• Monetary vs. non-monetary dimensions: trade-offs or win-win situations

• Going beyond GDP: complementing traditional economic measures


Institutional framework at international level

4

• OECD’s pioneering work (early 2000s)

• Report by Commission Stiglitz-Sen-Fitoussi (2009)

• European Commission’s Communication On GDP and beyond – Measuring progress in a changing world (2009)

• Eurostat Quality of life - Facts and views (2015); Final report of the expert group on

• quality of life indicators (2017)

• OECD

• Better Life Initiative-Measuring Well-Being and Progress: How's Life? Measuring well-being (2011; 2013; 2015; 2017)

• 2018: Beyond GDP-Measuring What Counts for Economic and Social Performance + For Good Measure: Advancing Research on Well-being Metrics Beyond GDP

• United Nations Sustainable Development Goals (2015) – 2030 Agenda


5

• Equitable and Sustainable Well-being (ESW) indicators by Istat-CNEL

• Framework defined by a committee of experts and civil society (2010): 12 domains and about 130 indicators

• Annual report on Istat-ESW in Italy published by Istat since 2013

Well-being measurement in Italy

The 12 domains of Istat-ESW (2018)

1. Health 7. Security

2. Education and training 8. Subjective well-being

3. Work and life balance 9. Landscape and cultural heritage

4. Economic well-being 10. Environment

5. Social relations 11. Innovation, research and creativity

6. Politics and institutions 12. Quality of services

Source: Istat, Rapporto BES 2018 Incorporating well-being indicators in the policy-making process

Well-being into policy-making in Italy (1)

6

• ESW indicators systematically embedded in the budgetary process

• Monitoring of ESW indicators throughout the year (reform of the budget law - L. 163/2016)

April: ESW Annex to the Economic and Financial Document (EFD) presented by

the Ministry of Economy and Finance

o evolution of ESW indicators over the previous 3 years

o forecasts for the current year and over the budgetary process horizon (unchanged

legislation/policy scenario)

February: Report on ESW indicators by the Ministry of Economy and Finance

o evolution of ESW indicators in light of the budget law (up to year t+2)

• Data on the evolution of the 12 ESW indicators

Italian National Institute of Statistics (Istat): time series and update up to t0 (e.g. 2018)

Ministry of Economy and Finance: forecasts/impact evaluations t, t+1, t+2, t+3 (e.g. 2019-2022)



7

• Committee for the selection of ESW indicators to include in the policy making process: MEF, Istat, Bank of Italy + 2 academic experts

inspired by Istat-ESW methodological framework

Criteria for the selection of indicators: parsimony, data availability and timeliness, feasibility, sensitivity to policy changes

12 ESW indicators chosen (adopted by means of a Ministerial Decree - October 2017) covering 8 Istat-ESW domains

possible future revision of the set of indicators

• Gradual development of methodologies to forecast ESW indicators

at present forecasts/impact evaluations available for 5 ESW indicators

information exchange and collaboration with Istat and other institutions



8

The 12 ESW indicators by domain

ESW domain ESW indicator

Economic wellbeing 1. Per capita adjusted disposable income 2. Disposable income inequality 3. People living in absolute poverty

Health 4. Healthy life expectancy at birth 5. Excess weight (overweight & obese)

Education and training 6. Early leaving from education and training

Work and life balance

7. Non-participation rate, by gender 8. Ratio of employment rate for women aged 25-

49 years with preschool age children to the employment rate of women aged 25-49 without children

Security 9. Predatory crime rates (burglary rates, pick-

pocketing rates, robbery rates)

Politics and institutions 10. Efficiency of civil justice (length of civil

proceedings)

Environment 11. Emissions of CO2 and other greenhouse gases

(tons of CO2 equivalent per capita)

Landscape and cultural heritage 12. Illegal building rate

* In red the 5 indicators with available forecast/impact evaluation methodologies Incorporating well-being indicators in the policy-making process

1. Per capita adjusted disposable income (nominal values, euro)

Citizenship Income

Extension of the

favourable flat-rate

scheme (up to

65.000 euros)

Contract renewal

for public

employees

Hiring in the public

sector

9

Source: 2016-2018: Istat, National Accounts. 2018 data are provisional. 2019-2022:

MEF-DT forecasts.

21835 22234

22699

23150

23674

24157

24690

23151

23688

24177 24655

15000

16000

17000

18000

19000

20000

21000

22000

23000

24000

25000

2016 2017 2018 2019 2020 2021 2022

Adjusted disposable income per capita (nominal values)-unchanged legislationAdjusted disposable income per capita (nominal values)-policy scenario


Adjusted disposable income, GDP per capita and deflators Nominal and real values; index number 2016=100; % change y/y for deflators)

10

Source: 2016-2018: Istat, National Accounts. 2018 data are provisional. 2019-2022: MEF-DT forecasts.


0

1

2

3

4

5

6

7

8

9

10

90

95

100

105

110

115

120

2016 2017 2018 2019 2020 2021 2022

Consumption deflator (% change y/y; rhs)

GDP deflator (% change y/y; rhs)

Adjusted disposable income per capita

(nominal values)Adjusted disposable income per capita

(real values)Nominal GDP per capita

GDP per capita

2. Disposable income inequality (S80/S20)

Income support schemes

Citizenship Income

Minimum income («ReI» up to

2019)

’80-euro bonus’

Extension of the favourable

flat-rate scheme (up to 65,000

euros)

20% substitute tax regime for

individual entrepreneurs, artists

and professionals with

revenues between 65,000 and

100,000 euros

Higher income threshold (4000

euros) for non dependent

children (age < 24)

11

Source: 2016-2018: Istat, Eu-Silc; 2017 and 2018 are Istat flash estimates. 2019-

2022: MEF-DF forecasts.

5.9 6.0 6.0

5.7 5.6 5.6 5.6

4

5

6

7

2016 2017 2018 2019 2020 2021 2022


3. Absolute poverty (% values) Poverty measure on

consumption

expenditures

(household-based)

o Many absolute

poverty thresholds

(household

composition,

geographical area,

municipality type)

o Istat consumption

expenditures

survey

12

Source: Istat, Indagine sulle spese delle famiglie; MEF (GDP per capita, 2010 chain-linked prices).

2018 data on absolute poverty are provisional.

3.6 3.5 3.5 4 4

4 4.3

5.6

6.3 5.7

6.1 6.3 6.9

7.2

3.3 2.9 3.1 3.6 3.9

4.2 4.4

5.9

7.3 6.8

7.6 7.9

8.4 8.5

-8

-6

-4

-2

0

2

4

6

8

10

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

GDP per capita (% change y/y)

Household absolute poverty (differences y/y)

Individual absolute poverty (differences y/y)

Household absolute poverty (head count ratio)

Individual absolute poverty (differences y/y)


7.0

8.4

3. Absolute poverty (% values)

13

AN IMPACT EVALUATION OF THE CITIZENSHIP INCOME (CI) ON ABSOLUTE POVERTY

PRE CI (2017 microdata) POST CI

Absolute poverty

headcount ratio

(households)

Absolute poverty

headcount ratio

(individuals)

Poverty gap ratio

Absolute poverty

headcount ratio

(households)

Absolute poverty

headcount ratio

(individuals)

Poverty gap ratio

North 5,4 7,0 20,1 4,8 6,5 15,9

Centre 5,1 6,4 18,3 4,3 5,6 14,4

South & Islands 10,3 11,4 22,7 6,6 8,4 16,0

Italy 6,9 8,4 20,9 5,3 7,0 15,7

Source: PRE CI: Istat, Indagine sulle spese delle famiglie 2017; POST CI: MEF-DT impact evaluation


4. Healthy life expectancy at birth (average number of years)

14

Source: Istat, Tavole di mortalità della popolazione italiana and Indagine Aspetti della vita quotidiana; MEF (PIL pro capite). 2018

data are provisional. Incorporating well-being indicators in the policy-making process

1.3

0.2

-3.3

-2.2

-0.1

1.0 1.3 1.7

1.0

2.3

0.8 0.6

-0.5

0.0 0.1 0.8

-0.1 -0.2

56.4 57.7 58.2 58.5 58.2 58.2 58.3 58.8 58.7 58.6

81.4 81.7 81.9 81.9 82.2 82.6 82.3 82.8 82.7 83.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

30

35

40

45

50

55

60

65

70

75

80

85

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GDP per capita (%change; rhs) Healthy life expectancy at birth (change; rhs)

Healthy life expectancy at birth Life expectancy at birth

5. Excess weight (overweight & obese) (% values)

15

Source: Istat, Aspetti della vita quotidiana (excess weight); MEF(GDP per capita).


1.6

0.9

-1.8

-6.0

1.3

0.2

-3.3

-2.2

-0.1

1.0 1.3

1.7

1.0

0.2 0.3

-0.2

0.9

-0.5 -0.3 -0.1 -0.3

0.5

-1.4

0.7 0 0

45 45.2 45.5 45.3

46.2 45.7

45.4 45.3 45

45.5

44.1

44.8 44.8 44.8

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

35

37

39

41

43

45

47

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GDP per capita (%change; rhs) Excess weight (change; rhs) Excess weight

6. Early leaving from education and training (%values)

16

Source: Istat, Labour Force early leaving from education and training), MEF (GDP per capita).


0.3

1.6 0.9

-1.8

-6.0

1.3

0.2

-3.3

-2.2

-0.1

1.0 1.3 1.7

1.0

-1.0 -1.7

-0.9

0.1

-0.5 -0.5 -0.8 -0.5 -0.5

-1.8

-0.3 -0.9

0.2 0.5

22.1

20.4 19.5 19.6

19.1 18.6

17.8 17.3

16.8

15.0 14.7 13.8 14.0

14.5

-8

-6

-4

-2

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

18

20

22

24

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GDP per capita (% change; rhs)

Early leaving from education and training (change; rhs)

Early leaving from education and training

7. Non-participation rate (%values)

Citizenship income

«Patto per il

lavoro» (labour

market active

policy)

Pension reform

Employment

incentives

Hiring in the public

sector

Childcare vouchers for

nursery fees (public

and private)

17

Source: 2016-2018: Istat, Labour Force Survey. 2019-2022: MEF-DT forecast.


0 -0.1 -0.2 -0.2

18.2

17.3

16.6 17.1 17.3 17.2 17.2

25.9

24.5

23.6 23.4 23.1

22.8 22.3

21.6

20.5

19.7 19.9 19.9 19.7 19.5

-1

1

3

5

7

9

10

12

14

16

18

20

22

24

26

28

2016 2017 2018 2019 2020 2021 2022

Policy scenario - Unchanged legislation (rhs) Male Policy scenario - Unchanged legislation (rhs)

Female Policy scenario - Unchanged legislation (rhs) Male

Female Total

8. Ratio of employment rate for women aged 25-49 with preschool age

children to the employment rate of women aged 25-49 without children

(% values)

18

Source: Istat, Labour Force Survey.

69.7

70.6 70.9

72.4

73.3

71.7 72.4

75.1 75.4

77.5 77.8

76.0 75.5

73.8

64

66

68

70

72

74

76

78

80

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


9. Predatory crime (burglary rate, pick-pocketing rate, robbery rate)

19

Source: Ministry of the Interior data and data from Istat (Indagine sulla Sicurezza dei cittadini). 2018 data are provisional.

8.5

10.1

11.8 10.5 10.2

11.1

13.6

15.2 16.0 16.3

15.0 13.6

12.4 11.8

5.0

6.3

6.5

5.0 4.5

4.5

5.3

5.7

6.4 6.9

6.6

6.2

6.1

5.6 1.3

1.4

1.5

1.3

0.8

0.9

1.1

1.7

1.8 1.6

1.4

1.4

1.3

1.1

14.8

17.8

19.8

16.8

15.5

16.5

20.0

22.6

24.2 24.8

23.1

21.1

19.8

18.6

0

2

4

6

8

10

12

14

16

18

20

22

24

26

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

burglary rate

pick-pocketing rate

robbery rate


10. Efficiency of civil justice (average length of civil proceedings)

20

Source: Ministry of Justice, Dipartimento dell'organizzazione giudiziaria, del personale e dei servizi - Direzione Generale di

Statistica e Analisi Organizzativa. * Settore CIVILE - Area SICID al netto dell'attività del Giudice tutelare, dell'Accertamento

Tecnico Preventivo in materia di previdenza e dal 2017 della Verbalizzazione di dichiarazione giurata.

471 469

494

482

460

445

429

400

420

440

460

480

500

520

2012 2013 2014 2015 2016 2017 2018


11. Emissions of CO2 and other greenhouse gases (tons of CO2 equivalent

per capita)

Renewal of

energy

efficiency

incentives

Bonus-malus

mechanism to

incentivise the

purchase of

low- and zero-

emission cars

21

Source: 2017: Istat provisional data; 2018: Istat estimates; 2019-2022 MEF-DT forecast.

7.2 7.2 7.1 7.1 7.0 6.9 6.9

0

2

4

6

8

10

2016 2017 2018 2019 2020 2021 2022


12. Illegal building rate (number of illegal buildings/100 legal buildings)

22

Source: Cresme, Centro ricerche economiche sociali di mercato per l'edilizia e il territorio. 2018: Istat, provisional data.

11.9

9.9 9.0 9.4

10.5

12.2

13.9 14.2

15.2

17.6

19.9 19.6 19.8 19.0

5

7

9

11

13

15

17

19

21

23

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


Methodological aspects and further work

23

Innovative and challenging approaches (research activity)

Literature review (theoretical and empirical) for each ESW indicator

Development of adequate analytical tools

Indicators/phenomena heterogeniety

Data sources (microdata, national accounts)

Avalilability, timeliness of data (e.g. territorial disaggregation)

Underlying dynamics, sensitivity to public policies

Economic models

Micro approach: microsimulation, impact evaluation (e.g. inequality and poverty)

Macro approach: forecast (e.g. CO2 emissions)

Connection with Macroeconomic forecasts


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