Understanding Wellbeing Valuation

By Lizzie Trotter - on 29/10/2013

With HACT shortly publishing the next stage of its work on measuring social impact in the housing sector, Social Impact Measurment Advisor Lizzie Trotter explains how the Wellbeing Valuation works and how it is being applied to HACT's work.

The social housing sector has been increasingly conscious of its need to measure and demonstrate the social value it creates. Housing providers have used dozens of different systems or frameworks to measure the difference they make in their communities but they have typically been a poor fit, usually because they require lots of time or resources or lack the robustness for findings to be meaningful and to reliably inform decisions.

We are currently working with Daniel Fujiwara, Director at SImetrica, and 10 years experience working in government, to develop a robust approach for housing providers to understand and measure their social impact. At the core of the approach is a set of values derived through the Wellbeing Valuation approach.

Wellbeing Valuation represents the latest thinking on valuation of non-market goods and is the most robust approach to social impact measurement available. The approach follows HM Treasury Green Book guidelines and is currently used by a number of government departments including HM Treasury, Department for Work and Pensions, the Cabinet Office, the Department for Culture Media and Sport and the Department for Business Innovation and Skills.   

The Wellbeing Valuation approach

The Wellbeing Valuation approach draws on large national survey data that includes people's responses to wellbeing questions and data on a large number of aspects and circumstances of their lives. A typical survey includes data on people's wellbeing plus their employment status, marital status, health status, whether they volunteer, whether they play sports, whether they live in a safe area and so on. Within the survey sample, it is possible to observe any person's level of wellbeing and their different life circumstances and to assess the relationships between these variables.

The approach uses this data to estimate the impact of the good or service and income on people's self-reported wellbeing and uses these estimates to calculate the exact amount of money that would produce the equivalent impact on wellbeing.

We will be making a book of wellbeing values relating to housing providers community investment activities available later this year. Since they are fully consistent with economic theory they can be used directly in CBA and SROI analyses.

We have been working with Oxford Consultants for Social Inclusion (OCSI) to develop a web-based system to enable housing providers to easily apply these values to their community investment activities. The tool will enable users to upload information and easily map, model and report on their social impact as well as their local economic impact. The tool will have a similar platform to HACT’s popular Community Insight  Open Data mapping tool but will represent social impact on a map, alongside housing stock and defined neighbourhoods.

Measuring social impact not only supports housing providers to comply with the Public Services (Social Value) Act) 2012 but also to use their data to inform all aspects of their decision-making to ensure they are spending their money as effectively as possible.

By using the Wellbeing Valuation approach, the housing sector has been placed at the forefront of social impact measurement. The project has initially focused on the social impact of community investment activities, but the method can be applied to other areas of business activity, such as housing management and maintenance, or the supply of new homes allowing investment in different parts of the business to be discussed in the same terms.

HACT are looking to develop this area of work beyond housing in 2014.

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