Improving well-being by making carefully considered choices

For decades it was more or less taken for granted that wealth in the Netherlands would continue to grow. It is now clear, however, that there are actually limits to such growth. A different approach and a broader perspective are therefore needed, with the emphasis on well-being. In other words, a perspective that focuses not just on wealth in the Netherlands, but also on welfare and well-being in a broad sense.

Want to know more?

See our paper ‘Verdienvermogen: voor lange termijn welvaart én welzijn’ (‘Earning capacity: wealth and well-being for the long term’) (May 2022).

Wealth and well-being are not the same thing. An excessive focus on economic growth leads to a high level of wealth, but possibly at the expense of people’s welfare and well-being. A broad concept of well-being has emerged that creates a link between the economic aspect and well-being.

What is this broad concept of well-being?

So what exactly does this broad concept of well-being cover? That is a difficult question to answer. Quality of life, welfare, and happiness clearly play an important role. These are, of course, all rather subjective concepts that can soon give rise to debate.

As a result, different definitions of the concept of well-being are in use around the globe. In Europe this issue has been receiving renewed attention, including from the Stiglitz, Sen and Fitoussi commission. In the Netherlands a Temporary Parliamentary Committee delved more deeply into the topic in 2015 and 2016, while Statistics Netherlands (CBS) has developed the Monitor of Well-being & the Sustainable Development Goals.

A definition has emerged: ‘Well-being refers to the quality of life here and now and the extent to which it is or is not achieved at the expense of the well-being of future generations and/or people elsewhere in the world.’

The principles are nothing new

One important point to bear in mind is that, in the pursuit of well-being, GDP still plays an important role – but in a carefully considered way, with economic growth not coming at the expense of our general level of well-being. That is a real change of perspective, also in the opinion of Thijmen van Bree, who works on economic issues as a researcher and consultant at TNO.

At the same time, Van Bree stresses that the principles behind well-being in a broad sense are nothing new: ‘Economists are often accused of thinking only about growth in wealth. But if you look at economic theories, you’ll see that there has always been a focus on aspects we now associate with well-being. For example, Arnold Heertje – familiar to many of us from high-school economics textbooks – often stressed that wealth is about more than just economic production, consumption, and income.’

Van Bree continues: ‘Another famous Dutch economist, Jan Tinbergen, also found a neat way of putting it: “The well-being of humanity, that’s what economics is all about.” In this respect, the concept of well-being is nothing new. However, it is now receiving much more attention in policy and governance circles. And the principles behind well-being are now really being put into practice, which is a big difference. However, it is clear that there could be some pinch points, as in the Netherlands we are already reaching the limits in many areas.’

Accumulation of challenges

Is the Netherlands the first country to come up against the limits of wealth growth? This question was recently the focus of a Financial Times article. The author of that article, Simon Kuper, describes a bike ride through Leiden, the city where he grew up. The field where he used to play all the time is now covered with houses. And his old football club has also made way for new development.

Simon Kuper briefly describes some of the challenges facing the Netherlands: lack of space, a tight labour market, problems with foundations due to a combination of rising sea levels and drought, the earthquakes in Groningen caused by gas extraction, and nitrogen emissions exceeding EU standards. That’s without mentioning other problems, such as persistent traffic congestion and overloaded energy grids in our densely populated country.

The second most densely populated EU country

The term densely populated is no exaggeration: on 1 January 2020 there were an average of 517 people per square kilometre in our country. That makes the Netherlands the second most densely populated EU country after Malta. And the Dutch population will continue to grow, to 18 million in 2024 and 19 million in 2034. Then there’s the question of the ageing population. By 2040 a quarter of the population is expected to be 65 or older.

Difficult to map everything out

Planning bureaus are, of course, also aware of the demographic projections and their effects on welfare and well-being. Their reports include emphatic warnings about the problems to be expected in the future. Frequently, they also outline possible solutions.

‘Often it all remains rather abstract and theoretical,’ says Diana Vonk Noordegraaf, Senior Consultant Strategy and Policy at TNO. ‘In itself this is understandable, as we are currently dealing with a number of wide-ranging and complex transitions. It’s important to be able to properly assess the consequences of decisions for different groups.’

‘The impact of technological innovations in the future is also hard to predict. This makes it difficult to map out an overall picture. And then there’s the added challenge of the disparities within groups and regions and how these will evolve over the longer term.’

The right balance

It is always nice when we are able to measure and visualise something. For a long time GDP provided us with a reference point. After all, economic growth results in a graph with a reassuring upward trend. But while a healthy economy is absolutely a prerequisite for wealth, it does not automatically guarantee improvements in well-being. Indeed, well-being is about striking a balance between different economic and social interests.

Involving citizens more

Diana Vonk Noordegraaf: ‘For a long time, policy decisions were based mainly on statistics, without a proper understanding of the less easily measurable social consequences. Most importance was attached to the economic impact. Slowly but surely, that is now changing.’

‘One example is the energy transition. Looking ahead to our future energy system, the independent Energy System 2050 Expert Team says that “the citizens of the Netherlands must be properly heard and involved to allow the transition to proceed in an equitable manner”. This is undoubtedly because this is a major social challenge, as part of which citizens are being asked to make significant changes. At TNO we think it can make a huge difference if citizens are allowed to share their thoughts on solutions more often. There really is a lot of room for improvement in this respect.’

How do you make well-being measurable?

Coming up with ways of measuring well-being remains a challenge. TNO researcher Thijmen van Bree: ‘When experts from different fields work together, it’s never long before the question of measurability comes up. Once they’ve decided together what the discussion should be about, they immediately ask themselves how they can calculate the impact.’

‘Measurability is also necessary so you can later demonstrate the progress you have made. Measuring aspects that contribute to well-being in a broad sense is not straightforward. The issues you are dealing with are often subjective. Nevertheless, to get a better handle on this, special monitoring tools, models, and assessment frameworks are being developed inside and outside the Netherlands.’

Well-being, a comprehensible story

Could you explain to your friends, in a single sentence, what well-being is and what it involves? Undoubtedly you could, but the chances are a long story would follow, with plenty of subclauses and technical jargon.

‘Explaining briefly and concisely what well-being in a broad sense means is quite a challenge,’ agrees Van Bree. ‘But it certainly involves tackling major social problems, which requires the help of citizens and other parties. It’s therefore important to be able to explain well-being and the associated tensions and dilemmas in a simple way. That’s another important aspect to consider.’

Paradigm shift

Diana Vonk Noordegraaf: ‘If we really want to put well-being into practice, a paradigm shift is needed. The most important thing is to understand that we have to consider all interests and all parties in every policy choice we make.’

‘What needs and values should be taken into account? What uncertainties are there? How do we deal with scarce resources? We need to make these questions explicit in order to make well-considered decisions that benefit well-being in a broad sense.’

‘Will that be easy? Definitely not! But if we succeed, we, and future generations too, will get a very beautiful country in return.’