Measuring well-being means looking at multidimensional development outcomes at the national and regional level from the perspective of people (individuals and households) rather than indicators of economic growth alone. This requires taking into account a broader range of metrics than have traditionally been used to monitor national progress, describing people’s current material conditions and quality of life, the distribution of outcomes across population groups and locations, and the systemic resources that are needed to underpin the sustainability of people’s well-being into the future.

On 15 May 2020, the OECD Council invited Costa Rica to become a member. At the time of preparing this publication, the deposit of Costa Rica’s instrument of accession to the OECD Convention was still pending; therefore Costa Rica does not appear in the list of OECD members and is not included in the OECD averages reported.

Have improvements in national income in Latin America and the Caribbean been mirrored across the different areas of people’s lives? The report addresses this question through a range of indicators, based on the OECD Well-Being Framework. It focuses on a selection of 11 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Paraguay, Peru and Uruguay), referred to henceforth as the “focal countries”.

The gains in well-being in countries in the LAC region between 2000 and 2019 were considerable. However, the pace of progress has slowed considerably since the mid-2010s. Further, many of the natural, human, social and economic capital resources that underpin the sustainability of well-being were already under threat or in decline before the pandemic, and structural problems such as high levels of informality and inequalities persisted to 2019. The COVID-19 pandemic risks reversing many of the well-being gains achieved in recent decades, as well as deepening pre-existing challenges. A well-being approach to policy would support LAC countries in addressing the highly interconnected societal challenges they face, but mainstreaming a well-being approach in Latin America will require broad public and political support, as well as institutional mechanisms that anchor well-being priorities into long-term government operations. Improvements in data on all policy-relevant aspects of well-being are also needed.

Poverty, extreme poverty and income inequality have declined considerably in the 11 focal countries since 2000, but have remained high. Since around 2014, household income and consumption have stagnated, while satisfaction with living standards began to fall in the region. While until 2019, employment levels were comparatively high in the region, recent data show that the COVID-19 crisis had a negative impact on employment and unemployment. Across Latin America as a whole, more than half of all workers are in informal employment and typically lack access to social programmes and protection against unfair dismissal. Regarding housing quality, on average for the focal countries with available data, only around half of households had access to sanitation services, and only 70% had access to clean drinking water.

Over the past two decades, quality of life has improved across a number of dimensions in the focal countries, especially in terms of health, knowledge and skills. Continued progress is needed, however, to ensure that the majority of the population enjoys improved health and education outcomes, and the impact of the pandemic is setting back achievements in both these areas. Safety is a high concern in the region, as average levels and trends mask large differences between countries. Voting rates saw little change, but perceptions of government have worsened since 2004, on average. While air quality has improved over the past decade, many people remain exposed to harmful particle levels. Finally, overall, life satisfaction and social network support decreased, while the share of people experiencing mostly negative emotions increased between 2019 and 2020, underlining the negative toll of the first year of the pandemic.

Latin America is home to much of the world’s biodiversity. However, its biodiversity is declining twice as fast as the OECD average, eroding the natural capital upon which the region’s current and future well-being depend. The risks to human capital include the rapidly rising prevalence of overweight and obesity and the large number of youth who are not in education or employment. Slow investment growth implies a weak foundation for future well-being, while the high burden of repaying foreign debt is a persistent risk. Multiple social uprisings in 2019 clearly indicated the fragility of the social contract in the region, which is confirmed when looking at dwindling support for electoral democracy, low trust in government and in others, and high levels of perception of corruption, discrimination, and an unfair distribution of income. The COVID-19 pandemic is compounding pressures on all types of capital that underpin future well-being.

It is impossible to fully evaluate the well-being situation of a society without considering inequalities, and previous chapters have included various indicators of “vertical” inequality (such as the Gini coefficient) and deprivation (such as poverty rates). This chapter focuses on “horizontal” inequalities, or inequalities across different population groups, by gender, age, territory (urban vs rural), ethnicity and race, and educational attainment. Overall, while the focal countries have made progress in reducing inequalities in a number of well-being areas, such as education and employment, important gaps still remain. The consequences of the pandemic are likely to deepen the disadvantages experienced by vulnerable groups, widening inequalities in well-being outcomes. Overall, women, children and youth, those living in rural areas, Indigenous and Afro-descendant peoples, and those with lower education tend to experience worse material conditions, although the picture is more mixed when looking at indicators of quality of life and human and social capital.

The LAC region faces a number of persistent challenges to societal well-being, which are being aggravated by the COVID-19 pandemic. Addressing these challenges calls for a multidimensional approach to public policy. This chapter describes how such an approach can help LAC countries to address the highly interconnected challenges they face by: 1) systematically focusing government action on the well-being outcomes of greatest need; 2) fostering a more coherent, whole-of-government approach to improving societal well-being; 3) encouraging more anticipatory governance; 4) strengthening the social contract between governments and citizens; and 5) leveraging new forms of international co-operation. Practical examples are provided of how a multidimensional approach can be embedded throughout the policy cycle.