Reader’s guide to the country profiles
Current well-being, headline indicators
In the country profiles that follow, average levels of current well-being are assessed through a standard set of headline indicators (Table 5.1, below) that has been developed through previous editions of How’s Life? These indicators have been evaluated against several different quality criteria, introduced in How’s Life? 2011. The set continues to evolve over time as new and better data sources become available (see Box 5.1). Full details of the definitions, observed values, time series and source information can be found in the Online Data Annex: Current Well-Being (www.oecd-ilibrary.org/economics/how-s-life-2017_how_life-2017-en). Inequalities in well-being are described in Chapter 2.
Table 5.1 includes a small number of changes made to the headline indicator set since the 2015 edition of How’s Life? (OECD, 2015a), reflecting several recent measurement advances:
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For the income and wealth dimension, household net financial wealth per capita (sourced from the OECD National Accounts database) has been replaced by household net wealth per household (from the OECD Wealth Distribution database). Conceptually, net wealth is closer to the target construct of interest, since financial wealth excludes major non-financial assets that are central to households, such as home ownership. Recent data collections have enabled the country coverage of the net wealth measure to be extended.
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Under the jobs and earnings dimension, the indicator probability of becoming unemployed has now been replaced by a labour market insecurity measure, developed as part of the OECD’s Job Quality framework (Cazes, Hijzen and Saint-Martin, 2015; OECD 2017a). The measure is based on information about the probability of a worker becoming unemployed, the average duration of unemployment, and the unemployment benefits received in the event of unemployment in each OECD country. This indicator provides a measure of the average expected monetary loss associated with becoming and staying unemployed, and is expressed as a share of previous earnings.
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Also in the context of jobs and earnings, the newly developed job strain indicator (from the OECD Job Quality database) has been added to the headline indicator set, as a measure of the quality of the work environment. This reflects the proportion of employees experiencing a number of job demands (i.e. physical demands, work intensity, working time inflexibility and perceived job insecurity) that exceeds the number of resources available to them (i.e. work autonomy, training and learning opportunities, perceived opportunity for career advancement and the intrinsic rewards of the job).
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For the civic engagement and governance dimension, a new measure has been added, addressing whether or not people feel they have a say in what the government does. It is sourced from the OECD Survey of Adult Skills (PIAAC) and is introduced in Chapter 4 “Governance and Well-Being”. The indicator government stakeholder engagement, previously used as a measure of current well-being, has been retained as a measure of social capital in the section on resources for future well-being (see Table 5.5 above).
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Under environmental quality, the air quality measure (annual exposure to outdoor air pollution by fine particulate matter, PM2.5) now draws on new estimates from the OECD Environment Directorate, developed for use as a headline measure in the Green Growth Indicators project (OECD, 2017b). This is shown as a 3-year rolling average, due to the volatility in the estimates.
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In addition, under the personal security dimension, an indicator on self-reported victimisation, based on a Gallup World Poll question about whether the respondent has been assaulted in the previous 12 months, has been dropped from the headline indicator set. This is because the data are no longer collected on a routine basis in the core Gallup World Poll survey.
Assessing strengths and weaknesses in average levels of current well-being
The first page of each country profile presents an overview of comparative strengths and weaknesses in average current well-being. For OECD countries, findings are presented graphically with a circular bar chart (or “wheel”), in which values have been normalised following a min-max scaling procedure in order to summarise results across indicators expressed in different units. This normalisation is done according to a standard formula that converts the original values of the indicators into numbers varying in a range between 0 (for the worst possible outcome) and 100 (for the best possible outcome).1 In the chart, the central white circle is a base representing minimum levels (0), whereas the internal white border sets the maximum for each indicator (100).2 Each country’s relative performance is depicted by blue bars, one per indicator: for both positive and negative indicators, longer bars always indicate better outcomes (i.e. higher well-being), whereas shorter bars always indicate worse outcomes (lower well-being). So to take just one example, for Australia time off is at almost the lowest point among OECD countries, but household net wealth and voter turnout are almost at the highest. If data are missing for any given indicator, the relevant segment of the circle is shaded in white. For OECD partner countries, well-being indicators are presented in a table, grouped on the basis of each country’s performance relative to both the OECD average and the average of all partner countries.
Assessing change in average well-being over the past 10 years
The second page of each country profile provides an assessment of changes over time in the headline indicators for current well-being. This is based on a simple comparison of values observed for the starting year (2005 in most cases) and the latest available year (usually 2015 or 2016). It excludes indicators for which there is currently only one time point available, and/or countries where only short time series are available. When breaks in the time series mean that change cannot be assessed over the full 10-year period, changes over the time periods prior to these breaks (e.g. between 2005 and 2013) are occasionally discussed in the text, with the years clearly indicated. To provide an “at a glance” impression, the direction of change is summarised by a set of arrows (improving ➚, worsening ➘ and no change ↔). These have been determined with reference to thresholds detailed in Annex 5.A.
Assessing resources and risks for future well-being
The third and final page of each country profile addresses the issue of sustaining well-being over time. This builds on the array of indicators introduced in How’s Life? 2013 (OECD, 2013) and presented in How’s Life? 2015 (OECD, 2015b), including a limited range of updates described in Box 5.2, below. In a dashboard format that includes both levels and changes relative to 2005, the page presents an illustrative set of measures concerning natural, human, social and economic resources (or “capital”). In addition to indicators reflecting “stocks” of resources (such as forest area), it also considers investments (such as expenditure on research and development), depletions (such as greenhouse gas emissions) and risk factors (such as smoking and obesity prevalence). Data are usually presented on a per capita basis (see Tables 5.2 to 5.5, below), and full details of the definitions, observed values, time series and sources can be found in the two Online Data Annexes (Current Well-Being and Resources for Future Well-Being) www.oecd-ilibrary.org/economics/how-s-life-2017_how_life-2017-en.
The “dashboards” featured on the third page of the country profiles should be read as follows:
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The tier shown in the dashboard refers to whether the country falls within the top third, middle third or bottom third relative to other OECD countries.3 For OECD partner countries, the “OECD equivalent” rank is shown – i.e. their level of achievement is benchmarked against the top, middle and bottom third of OECD countries. Thus, a “1” indicates that the partner country has a level of achievement that is on a par with the top third of all OECD countries, a “2” indicates achievement on a par with the middle third of all OECD countries, and a “3” indicates achievement on a par with the bottom third of all OECD countries. Characterising resource levels in this way necessarily emphasises comparative (rather than absolute) performance, and has some obvious limitations, including introducing some distortion when values that are very close in practice are assigned to different tiers on a purely mathematical basis (rather than on practical, real-world significance). However, this method helps to simplify an otherwise very complex picture, and has the advantage that the same methodology can be applied across all indicators equally.
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The change column on the dashboard refers to the point difference between the 2005 (or closest available year) value, and the current (or latest available year) value. Fluctuations above or below these points in the intervening years are not considered. To provide an “at a glance” impression, the direction of change is summarised by a set of arrows (improving ➚, worsening ➚ and no change ↔). These have been determined with reference to thresholds detailed in Annex 5.A. The years considered in order to assess changes are provided in the dashboard. The period considered is country-specific, since not all countries have complete time series. Where no information about change over time is available, or where the available time series is very short, this is indicated by “..” in the change column.
Where data are missing (and thus neither the tier nor the change can be considered), the indicator is listed in a separate row at the end of each table of the dashboard. This is done in order to highlight key data gaps.
Tables 5.2-5.5 include a small number of changes made to the resources for future well-being indicator set since the 2015 edition of How’s Life?:
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Under natural capital, CO2 emissions from domestic consumption (drawn from the OECD Structural Indicators STAN database) have been added to the dashboard, as a complement to greenhouse gas emissions from domestic production. When read together, the two measures make it possible to assess whether a country is succeeding in reducing both its domestic emissions from producing goods and services domestically (wherever these may be consumed), and the emissions associated with its overall consumption patterns (which can embody emissions produced both at home and abroad, as in the case of imported goods).
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Also under natural capital, the air quality measure exposure to PM2.5 air pollution now draws on new estimates from the OECD Environment Directorate, developed for use as a headline measure in the Green Growth Indicators project (OECD, 2017b). This is shown as a 3-year rolling average, due to the volatility in the estimates. The same change has been made in the headline indicators of current well-being.
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Among the economic capital indicators, household net financial wealth per capita (sourced from the OECD National Accounts database) has been replaced by household net wealth per household (from the OECD Wealth Distribution database). This is consistent with the change made to the headline indicators of current well-being.
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For social capital, volunteering through organisations (sourced from the OECD Study on Adult Skills) has been added as an investment factor. This reflects work to develop the statistical agenda on measures of volunteering, as reported in Chapter 5 of How’s Life? 2015 (OECD, 2015c), “The value of giving: Volunteering and well-being”.
Notes
← 1. The normalisation is done according to a standard formula that converts the original values of the indicators into numbers varying in a range between 0 (for the worst possible outcome) and 100 (for the best possible outcome). The formula is:
(value to convert – minimum value)/(maximum value – minimum value)
When an indicator measures a negative component of well-being (e.g. unemployment) the formula used is:
1 – [(value to convert – minimum value)/(maximum value – minimum value)]
← 2. The intuition provided by the visualisation used for this chart can be hindered in some cases due to the presence of outliers in certain indicator sets. For this reason, the min-max scaling procedure that has been used fixes the top and bottom of a set at the third highest and lowest values.
← 3. This has been determined by ranking countries from worst outcome (1) to best outcome (35), and then dividing that rank by the total number of OECD countries in the sample. The resulting values (ranging from 0 to 1) are then categorised as follows: countries with values ranging from zero to 1/3 are assigned to the bottom tier; those with values greater than 1/3 but less than or equal to 2/3 are categorised as middle tier; and those with values greater than 2/3 but less than or equal to 1 are assigned to the top tier.