Luke Archer - Projecting the impact of policy on income and wellbeing

  • Presenting author: Luke Archer (The University of Leeds)

  • Authors: Luke Archer, Nik Lomax, Robert Clay, Hugh Rice, Alison Heppenstall

  • Session: C01A - Dynamic / Long term [2] - Wednesday 9:00-10:30 - Ceremonial Hall

Determining the best way to allocate public money through a number of potential initiatives is a complex problem at all levels of government. Improvements in health and wellbeing are most often the goals of these initiatives, so policy makers must make decisions incorporating both the cost of the initiative and the expected value gained. In this paper, we present a measure that encapsulates both household disposable income and wellbeing, based on a metric called Equivalent Income (EI). The EI calculation adjusts disposable income for trade offs in seven wellbeing domains (income plus: employment, physical health, mental health, neighbourhood safety, housing, social isolation). Using discrete choice experiments (DCE’s), IE provides a rounded picture of wellbeing: if an individual were in perfect health and happy with all other domains, their disposable income remains unchanged. However if an individual were in less than perfect health, the DCE’s reveal the amount of disposable income they would be prepared to give up to achieve good health. Using a dynamic microsimulation called MINOS, we project the impact of a number of cash transfer policies on EI, including child maintenance grants and the implementation of the national living wage. MINOS is a discrete time modular microsimulation based on the Understanding Society longitudinal survey, from which we estimate transition probabilities and generate input populations. The wellbeing domains are operationalised within MINOS, allowing us to investigate how cash transfer policies affect both income and wellbeing together.