Wellbeing economy monitor: December 2022 update

3. Framework for the Monitor

The causal relationships between issues such as employment, health and environmental sustainability are highly complex. Each outcome has multiple causes and in turn has an effect on other outcomes. This makes it very difficult to select a small list of indicators that can effectively summarise progress towards a wellbeing economy.

There are a range of approaches to capturing the various domains which are relevant to collective wellbeing. For example, the OECD maintains the Better Life Index, which allows users to compare countries across 11 topics that the OECD has identified as essential, in the areas of material living conditions and quality of life^[1].

For the purposes of this initial version of Scotland's Wellbeing Economy Monitor, we have chosen to group the selected indicators using the four capitals approach. As set out in the report by the Advisory Group on Economic Recovery^[2] and in our Economic Recovery Implementation Plan^[3], this well-established approach provides a simplifying framework and helps us understand the interconnectedness of the economic drivers of collective wellbeing. It encourages us to consider how we are impacting on our key natural, human, social and produced/financial "capital", or resources, the latter arising from the combination of natural and human/social resources.

If we are sustaining, investing in and nurturing these four types of resources, we can be confident that we are increasing our capacity to deliver wellbeing for current and future generations, even if the causal mechanisms through which this happens are highly complex.

By focusing on future as well as current wellbeing, this set of measures also provides a rounded picture of the resilience of the economy.

The four capitals approach was explained in Towards a Robust, Resilient Wellbeing Economy for Scotland: Report of the Advisory Group on Economic Recovery. In that report the four capitals were labelled environment, people, community and business. For the purposes of the Wellbeing Economy Monitor, we have used slightly different names for the four capitals, but the meaning remains the same. The Advisory Group's description is summarised in the figure below: