Andrew G Haldane: Whose recovery?
Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of
England, in Port Talbot, Wales, 30 June 2016.
* * *
Accompanying charts can be found at the end of the speech.
The views are those of the author and not necessarily those of the Bank of England. I would like to thank Mauricio
Armellini, Christine Boykiw, Mark Carney, Ian Derrick, Chris Duffy, Jeremy Franklin, Emma Hardaker-Jones, Steve
Hicks, Dena Jacobs, Arpad Morotz, Ben Nelson, Lizzie Peck, Alice Pugh, Lee Robinson, Mark Robson, Arthur
Turrell and Sebastian Walsh from the Bank and Elaine Chamberlain, Alan Newman and Phil Wales from the ONS
for contributions and comments.
It is a great pleasure to be here in Port Talbot. I want to discuss the UK's economic fortunes.
The past few weeks have been dominated by the run-up to the EU referendum vote and its
aftermath. This has generated considerable uncertainty about the economy, about policy and
about politics - a heady cocktail. I will come to those uncertainties, and their implications for
monetary policy, at the end. But I wanted to start by assessing the UK's economic recovery so
far, as this provides important context for what happens next.
Last year I visited Nottingham on one of my regular regional visits. As with today's, these visits
are crucial for helping the Bank of England make sense of the economy. My first stop was a
lunch for local business people. There, I spoke about the recovery in the UK economy over the
past three years, the dramatic improvement in the jobs market and the high degrees of
confidence among companies and consumers. This met with several knowing nods, a few
furrowed brows and some gently probing questions. Overall it seemed we were all on the same
economic page, if not always on the same paragraph or line.
My next visit was to a community centre in Nottingham with half a dozen local charities and
community groups. This was something of a new departure for me. Typically, the Bank's
regional visits have tended to focus on company contacts in the public and private sectors. I
hoped speaking to this different group of organisations, drawn largely from the voluntary sector,
might provide me with a different perspective on the fortunes of the economy, the jobs markets
and degrees of confidence in the recovery. It did not disappoint.
I began by speaking about the UK's economic recovery. I never got as far as the improvement
in the jobs market or surging confidence. I was stopped in my tracks by a forest of furrowed
brows and a phalanx of probing questions, not all of them gentle. "What exactly do you mean
by recovery?" one asked. "My charity is dealing with 50% more homeless people than three
years ago." Every other charity in the room had similar stories to tell. Whether it was food
banks, mental health problems or drug addiction, all of the numbers were up. The language of
"recovery" simply did not fit their facts.
On subsequent regional visits, including this one in Wales, talking to companies, community
groups and charities, I have encountered the same conundrum. For many, the economic
recovery is visible and tangible - in sales, in jobs, in investment. But for others it is barely
visible and for some non-existent. How to reconcile the macro data with these micro accounts?
Were these stories outliers? Or was I neglecting an important missing ingredient in the UK's
economic fortunes? Put differently, whose recovery were we actually talking about?
These questions have a particular resonance here in Port Talbot. Prior to the crisis,
unemployment in the local area was similar to the Welsh and UK average at around 5%. But
the region was hit hard by the recession, with unemployment peaking at 13% in 2014. Despite
recent falls, it remains at 9% - well above its pre-crisis peak and levels in Wales and the UK.
Today, over one in five households have no-one in work. Recent uncertainty about the future
of the local steelworks, and the jobs of the 4,000 workers there, has further complicated the
picture. Here in Port Talbot, the language of "recovery" may also fail to fit the facts.
Against that background, I want today to take a look at the performance of the UK economy
over recent years. By slicing and dicing the data in different ways, it is possible to assess how
different segments, sectors and regions of the UK have performed during the recovery. That
means looking at aggregate metrics of economic health, such as income, employment and
wealth. But a different lens is provided by looking at these metrics on a disaggregated basis
and at non-standard measures of societal well-being.
Taken together, these disaggregated data tell a rather more nuanced story about the UK's
recovery: a recovery which for most has been slow and low, for many partial and patchy and
for some invisible and incomplete. This uneven economic surface helps reconcile the macro
data and the micro stories from my regional visits - the "recovery puzzle". It also has
implications for what happens next to the economy in the light of the referendum, including
monetary policy, on which I will conclude.
Why it matters
Before turning to the data, it is worth spending a moment on why this matters. Why look at the
distributional pattern of activity when monitoring the economy as a whole and when setting
monetary policy? This might seem like a strange question. Surely the fortunes of different
sectors and segments of society are important? Yet, at least viewed from one angle, the
distribution of gains and losses across the economy and across society ought not to much
matter, at least when it comes to setting monetary policy. Here is why.
The tools available to monetary policymakers, like the Bank of England, are small in number.
The Bank can set only one interest rate - the interest rate on Bank of England money. This
interest rate affects every region, every sector, every company and every individual that uses
Bank money. In practice, this means pretty much everyone in the UK. In other words, monetary
policy affects the fortunes of the whole of the UK economy and it does so equally. The Bank
cannot set a different interest rate for the steel and the shipping industries, for Port Talbot and
Portstewart, for Wales and West Lothian.
If monetary policy is singular, does that imply it should be set in a way which is single-minded?
In other words, should monetary policy focus only on the economy-wide picture, taking no
account of developments across different sectors or regions, income and age ranges, savers
and borrowers? My answer to that, quite different, question is a resounding no. That is for four
distinct reasons.
First, we know that official data on the economy are noisy and mis-measured. They also often
fail to capture fully some areas of economic activity - for example, sectors of the economy that
are either rising rapidly (such as the digital economy) or contributions that fall outside of the
National Accounts framework (such as volunteering). Forming a picture of the whole economy
from official statistics is rather like doing a jigsaw puzzle with half of the pieces missing and
the other half slightly water-damaged.
This is not a criticism of statistical agencies: the UK's Office for National Statistics (ONS), down
the road in Newport, do a fantastic job of tracking our economy, to say nothing of the help they
have provided with this speech. It is simply that, in a dynamic economy, it is impossible to track
everything with statistical precision.1 Faced with those uncertainties, it is often useful to try to
form pictures using disaggregated subsets of the jigsaw pieces - much as we do when
completing a large jigsaw puzzle. As with a jigsaw, this can help in understanding the bigger
picture.
Second, standard measures of economic activity, such as GDP, are not perfect metrics of
societal well-being. This problem has long been recognised, including by the original architects
of GDP.2 It is one reason why statistical agencies in a number of countries, including the UK,
have recently begun publishing a broader range of measures of well-being, social as well as
economic, subjective as well as objective. These provide a different window on how economies
and societies are performing over time and across sectors.
Third, even though monetary policy cannot discriminate between regions, sectors or
individuals, that does not mean its impact is exactly the same across each of these groupings.
It is not. The effects of interest rates, whether higher or lower, affect savers and borrowers very
differently. And the impact of so-called Quantitative Easing (QE) is also likely to be different
across cohorts of society.3 Understanding the differential impact of monetary policy across
these sectors is important in general, as well as for gauging whether policy is working through
its intended channels.
Fourth, and perhaps most important of all, the distribution of outcomes across different groups
can matter greatly for the well-being even of the economy as a whole. To see that, consider a
simple example. Imagine the economy comprises two regions, one with income of 10, the other
with income of 90. Now imagine income falls by 5 in region one but rises by 10 in region two.
At least as measured by GDP, the economy and society as a whole is 5% better off.
But is it? The income of the already-rich has risen by just over 10%, while the income of the
already-poor has fallen by 50%. Does the former really swamp the latter when it comes to the
well-being of society? There are grounds for doubt. Empirical studies show that every extra
pound of income or wealth yields less satisfaction than the last. A millionaire values a £1,000
lottery win less than someone on the living wage. For economists, this goes by the name
"diminishing marginal utility". Yes, I know we should get out more.
If they are sufficiently unevenly distributed, income losses by the poor may more than offset
gains by the rich in a social welfare sense, even if not in a GDP sense. In our simple example,
imagine people's satisfaction has a logarithmic relationship with income, consistent with
diminishing marginal utility. Then, we find that social welfare is almost 10% lower after than
before the changes, even though GDP is 5% higher. When it comes to assessing how societies
are doing, the distribution of gains and losses really matters.
The role of the Bank of England is to serve the good of the UK people, as it has been since its
inception in 1694. Monetary policy is very unlikely to be the most effective tool for changing
the distribution of gains and losses across society - other macroeconomic tools are better
placed. And, indeed, doing so would be inconsistent with the Bank's monetary policy mandate.
But policymakers, including central banks, do need to dive beneath the statistical surface to
understand the economy region by region, city by city, town by town, sector by sector,
household by household. Indeed, that is the very purpose of regional visits like this one.
The economic jigsaw
Before turning to the distribution of outcomes, let me start by looking at measures of economic
health for the economy as a whole. When it comes to economy-wide measures of activity,
economists typically look at metrics such as output (often measured by GDP), employment
(such as the number of people in jobs) and wealth (financial, property etc). These are,
essentially, different pieces of the same economic jigsaw.
Chart 1 plots these three measures over the past decade. All three suffered a severe set-back
at the time of the global financial crisis: peak-to-trough, GDP fell by 6%, employment by 2%
and wealth by 11%. These are significant falls. They are confirmation, if it were needed, that
the UK entered a deep recession - indeed, a "Great Recession" - between 2008 and 2009.4
Since 2009, however, all three measures have begun to recover: GDP has risen by around
14%, employment by around 8.5% and wealth by around 35%. These are strong recoveries.
Indeed, all three measures now exceed their pre-crisis peaks: GDP is 7% higher, employment
6% higher and wealth over 30% higher than in 2008. When economists refer to the UK's
"recovery", these are the metrics they typically use to keep score: incomes, jobs and wealth
have all "recovered" their crisis-related losses.
So why has that recovery not been felt, at least by some? One explanation may simply be that
this time's recovery is slower than those in the past. At a corresponding stage of recovery after
the UK recessions of the 1970s, 1980s and 1990s, GDP was 6%, 19% and 18% higher
respectively than today (Chart 2). Even after the Great Depression of the 1930s, GDP was
16% higher. For those with a long enough memory, this time's recovery is likely to feel quite
anaemic, relative to those in the past.
A second potential explanation may lie in the fact that aggregate activity measures are
sometimes a poor proxy for the average person's income. GDP is a measure of the size of the
economic pie, a pie that has grown substantially larger since 2009. But so too has the number
of people eating it. Taking the two together, GDP per head has risen significantly more slowly
than aggregate GDP since 2009. Indeed, GDP per head today is only around 1% above its
pre-crisis peak (Chart 3).
GDP measures income from all UK-based activities. But not all of that income flows to UK
citizens. Some flows abroad to foreign owners of UK assets and some income is earned
domestically on UK investments abroad. The amount of net income flowing overseas currently
stands at around 3% of GDP. This is a record high. If we take net overseas income out of GDP,
to give a measure of net national disposable income per head, it has recovered even more
slowly than GDP per head. It is currently at levels little different than its pre-crisis peak (Chart
3). National income per head suggests there has scarcely been any recovery.
Moreover, not all the income earned nationally flows directly and immediately to households.
For example, some accrues to companies who may save it rather than distributing it to
households as wages or dividends. Net savings by UK companies currently stand at around
1% of GDP. That means, when we look at household disposable income per head, we find it
has essentially flat-lined since 2009 (Chart 4). Even as GDP has recovered, household
incomes have essentially stagnated.
Even the notion of the "average household" needs careful interpretation. Looking at a different
"average" - the household in the centre of the distribution or median - suggests this flat-lining
in disposable incomes may have pre-dated the crisis (Chart 4). Half of all UK households have
seen no material recovery in their real disposable incomes since around 2005. Or, put more
evocatively and provocatively, the majority of UK households have faced a "lost decade" of
income.
Next let's look at employment. The aggregate numbers here are hugely impressive, with
21⁄2 million new jobs created since 2010. The UK unemployment rate has fallen like a stone,
from 8.5% in 2011 to around 5% currently. And the news gets better. Chart 5 breaks down
these new jobs into full-time, part-time and self-employment. It is clear that the lion's share of
the jobs' increase over the past few years is accounted for by rises in full-time work. This has
been not just a jobs-rich recovery, but a full-time, jobs-rich recovery.
Yet the nature of work may matter every bit as much as headline jobs numbers. Work is about
more than just the money; it adds to life satisfaction and self-esteem and lowers anxiety and
depression.5 And there have been several notable shifts in the nature of employment which
may have affected people's satisfaction with their job. One is in the changing nature of
employment. The number of people in self-employment has risen from 3.6 million in 2005 to
around 4.7 million today and so, less dramatically, have numbers of workers on temporary
contracts. Those on zero-hours contracts have risen from 120,000 to 800,000.
Some of this shift in employment practices is likely to have been a voluntary choice by workers
to increase their job flexibility - for example, those nearing retirement or returning to work after
childcare seeking part-time employment. But this is not the full story. Around 15% of those
working part-time would prefer to be in full-time employment. And around a third of those on
temporary contracts would prefer to be on permanent contracts. For those individuals, the
darkside of labour flexibility - job insecurity - may be being felt.
Some measures of job insecurity are consistent with that. For example, job insecurity would
tend to lower the likelihood of people moving jobs.6 As Chart 6 shows, job-to-job flows began
rising slowly after 2010 but remain at levels well below their pre-crisis levels. Meanwhile,
surveys suggest around a quarter of workers currently are afraid of losing their jobs, the highest
level in several decades.7 Citizens Advice has recently estimated that around 4.5 million
workers in England and Wales are in insecure employment.8
Even those in a job, secure or otherwise, may not be working as much as they wish. Around
three and a half million people, or almost 10% of the working population, say they would like
to work longer hours (Chart 7). In 2007, that number was two and a half million. The number
of extra hours these people would like to work - around 12 hours per week or 35% of the
average working week - is also material. Even if these survey numbers overstate the actual
number of extra hours people might wish to work, they leave a sizable fraction of the working
population not unemployed, but under-employed.
When it comes to the pay of those in work, the picture is also a subdued one. Chart 8 plots
mean and median weekly earnings growth for full-time UK employees, in nominal and real
terms. Nominal earnings today are around 7% higher than in 2009. But in real terms earnings
are still around 5% below this peak. This is the longest period of flat or falling real wages since
at least the middle of the 19th century. Although the recovery of the past few years has been
jobs-rich, it has been notably pay-poor.
Finally, let's look at household wealth. As with employment, the headline gains here have been
impressive, with aggregate net wealth increasing by almost £3 trillion since 2009. Chart 9
breaks down these wealth gains by asset type - pensions, property, financial, physical. This
suggests these gains have come principally from rises in property and pension wealth. In other
words, the gains have been skewed towards those in society who own their own home or who
have sizable pension pots.
That skewed wealth picture is confirmed if we look at measures of median, as opposed to
mean, wealth using household-level data (Chart 10). Since 2006, average net household
wealth has risen by around 25%, from £345,000 to £435,000. Over the same period, median
household wealth has increased more modestly, by around 15%, from £200,000 to £225,000.
Overall, then, although the aggregate data suggest a fairly robust recovery, a drill-down paints
a more nuanced picture. The rising economic tide has not lifted all boats. Indeed, a sizable
fraction of households have seen no recovery in their disposable incomes, a rise in job
insecurity and at best modest rises in their wealth. For them, the "recovery puzzle" may not be
so puzzling. These data also suggest that distributional factors may be important when
understanding "whose recovery". Let me now turn to those.
Disaggregating the jigsaw
There are a number of ways in which the economic jigsaw can be rearranged to provide a
different picture of the UK's economic fortunes. Let me briefly consider four cuts of the data:
by region; by income; by age; and by housing tenure. Each provides a somewhat different,
though complementary, window on whose recovery we are talking about.
(a) Regional distribution
Chart 11 shows the regional pattern of real GDP per head since 2007. For most regions, these
show a fall in 2008/09 followed by a recovery thereafter. The regional profiles of recovery are,
however, quite different. For example, in only two regions - London and the South-East - is
GDP per head in 2015 estimated to be above its pre-crisis peak. In other UK regions, GDP per
head still lies below its pre-crisis peak, in some cases strikingly so. For example, in Northern
Ireland GDP per head remains 11% below its peak, in Yorkshire and Humberside 6% below
and here in Wales 2% below.
Regional patterns of real household disposable income show a broadly similar pattern: in most
regions incomes are estimated to have broadly flat-lined since 2009 at lower than pre-crisis
levels. In other words, disposable incomes in most regions have not experienced any real
recovery. Perhaps it is not such a surprise, then, that the language of "recovery" fails to fit in
many of them.
Another notable pattern in regional income gains and losses is that the largest gains have
come in regions where income was already high - London (incomes more than 30% above
the UK average) and the South-East (14% higher). Contrarily, some of the larger losses have
been in regions where income was already-low - Northern Ireland (18% lower than the UK
average) and Yorkshire and Humberside (14% lower). Put differently, since the crisis the
regional distribution of incomes has widened.
This widening of the income distribution means that aggregate GDP figures may over-state
somewhat the impact of the recovery on societal well-being: gains by the already-rich boost
well-being by less than equivalent losses by the already-poor. To demonstrate that, Chart 12
plots an illustrative measure of "social welfare". This is constructed by aggregating up regional
measures of well-being on the assumption they have a logarithmic relationship with GDP per
head.9 This is plotted alongside aggregate GDP per head.
Although conventionally-measured GDP per head has recovered to above its pre-crisis peak,
the same is not true of aggregate well-being, so defined. It fell after the crisis and has remained
at those lower levels over the past three years; it currently stands just below its 2007 peak. In
other words, in a subjective well-being sense, there may have been no real recovery in the UK
over the past few years.
If we turn from income to wealth, the picture is much the same. Chart 13 plots median wealth
on a regional basis since 2007. This has risen across all regions. But the pattern is again
uneven, with the largest gains in London (47%) and the South-East (25%), whereas in Wales
the gains are smaller (8%) and in the North East there has been a small fall in wealth. With
wealth in the former regions already higher than in the latter, the upshot has been a widening
in the regional distribution of wealth.
As with income, these wealth data can be translated into a measure of social welfare. Chart 14
plots that relative to aggregate wealth since 2007. The well-being benefits from higher wealth
have been roughly half as large as would have been the case had these gains been evenly
distributed regionally. This evidence goes some way towards reconciling the macro data and
the micro stories from my regional visits. Whose recovery? To a significant extent, those living
in London and the South-East of England.
(b) Income distribution
A different lens on recovery comes from looking at how income gains are distributed across
households. Chart 15 plots real household disposable income per head across households
grouped into five income categories. Because household spending differs materially
depending on someone's income - for example, poorer households spend proportionately
more on food and energy - we deflate the income of each group using a price index which
reflects their different spending patterns.
Chart 15 paints a fairly reassuring picture. In general, lower income groups have fared
somewhat better than higher income groups since the crisis: the lowest income quintile has
seen disposable incomes rise by around 5% since 2007, while the highest quintile has seen
income fall by around 5%. Those in the bottom half of the distribution have seen incomes rise
since 2007, while those in the top half have seen them fall. This reflects the impact of the
benefits and pensions system in supporting lower income households.
As a result, the distribution of incomes across the UK has probably narrowed a little since 2007.
Income inequality has, if anything, fallen. That means, when we look at measures of social
welfare aggregated across different income groups, we find it has not performed very
differently than aggregate real disposable income since the crisis (Chart 16).
These patterns of gains and losses are, however, very different when we turn to wealth. Chart
17 plots the distribution of wealth gains since 2010 across income quintiles. It suggests a
dramatically uneven pattern. Those in the bottom two-fifths of the income distribution have
seen virtually no gains in their wealth since 2010. Indeed, those in the bottom 20% have seen
their wealth fall over this period. By contrast, those in the top quintile have seen their wealth
increase by almost 20%.
This uneven pattern of gains and losses in wealth has widened what was already a fairly wide
wealth divide: in 2010, those in the bottom income quintile had average net wealth of £70,000,
compared with £587,000 for those in the top quintile. That means the gains in social well-being
since 2008 are likely to have been considerably more modest than the rise in headline wealth
would imply: these gains have largely been harvested by the already-asset-rich and not at all
by the already-asset-poor.
Looking across the income distribution, then, it is clear that recovery has been associated with
both the incomes and, more strikingly, the wealth of the least well-off having broadly flat-lined.
Recovery has not lifted all boats, especially some of the smaller ones. This pattern may go
some further way towards solving the recovery puzzle. Whose recovery? To a significant
extent, those already asset-rich.
(c) Age distribution
A third dimension of recovery is how it has affected different age groups. Chart 18 looks at the
evolution of nominal average hourly earnings across different age groups. It suggests a
significant inter-generational income shift has been underway over recent years. Nominal
earnings of those under-30 have risen by a cumulative 6% since 2007, while those over-50
have seen cumulative gains of 22%.
Household-level data, which looks at all sources of income, suggests an even more striking
inter-generational divide. Chart 19 plots average real disposable income across three
household types: pensioners and working age adults with and without children. Since 2007,
pensioners have seen their real disposable incomes rise by 9%. Over the same period,
incomes for working age households with children have increased by 3% while those for
working age adult households without children have fallen by 3%.10
These aged-related disparities in income are mirrored, and amplified, when we look at the
distribution of wealth. Chart 20 looks at the evolution of wealth across the age distribution since
2007, while Chart 21 shows a breakdown of the gains. All of the £2.7 trillion rise in wealth since
2007 has been harvested by those over the age of 45, two thirds by those over the age of 65.
By contrast, those aged 16-34 have seen their wealth decline by around 10% over the period.
Given this evidence, it seems likely perceptions of recovery will differ radically according to
age. Those over 50 have seen material gains in both income and, notably, wealth. For them,
recovery will have felt tangible. By contrast, those under-40 have seen their disposable
incomes and wealth fall. For them, recovery is likely to have felt invisible. Whose recovery? To
a significant extent, those over the age of 50.
(d) Housing tenure distribution
Finally, consider the impact of housing tenure. This has undergone seismic shifts over recent
years. Charts 22 and 23 show the proportions of UK households renting or with a mortgage.
Those under 50 have seen a secular rise in renting and a fall in mortgaged households. Among
young adults, these shifts have been dramatic. In 1977, one in four 25-year-olds were renters.
By 2014, that fraction had risen to two-thirds. The number of households aged 21 to 25 with a
mortgage has fallen by a factor of three.
While these trends in housing tenure are long-lived, the financial crisis has clearly amplified
them. Since 2007, the share of renters among those aged between 25 and 34 has risen by 12
percentage points. Among 35-49 year olds, the share of renters has increased by over two
thirds. By contrast, those over 50 have seen a much smaller change in housing tenures. These
shifts are likely to reflect the combined effects of a rise in UK house prices relative to income
and, since the crisis, a reduction in mortgage availability for the young.
Whether someone owns or rents a property need not affect their well-being, other things equal.
But when it comes to the UK housing market, other things are rarely equal. The combination
of rising demand for rental property, and constrained supply, has led to more rapid rises in
rents than in household incomes. As a fraction of household income, rents have doubled since
the early 1980s from around 10% to over 20% today. For the rising fraction of households who
are renting, this will have eaten into their disposable incomes.
Chart 24 shows a measure of household income which subtracts the amount spent on housing
by each household. The conventional measure of household disposable income, using
average mortgage costs across households, has increased by 1-2% since 2007. Over the
same period, the housing cost-adjusted measure of household disposable income has
increased by less than 1%. Once housing costs are taken into account, the improvement in
household living standards is even harder to discern.
The impact of housing costs is also likely to have fallen unevenly across different cohorts and
regions. Chart 25 show rents as a fraction of income across different regions. What stands out
is the much larger than average rent proportion in London and, to a lesser extent, the
SouthEast and South-West. These additional housing costs would good some way towards undoing
the over-performance of these regions in disposable income terms since the crisis.
What is true across regions is also true across income and age cohorts. Charts 26 and 27 look
at the change in household income and wealth across different housing tenure-types since
2007. Gains in both income and wealth have been far larger for owner-occupiers than for
renters. This helps explain the uneven pattern of wealth gains by age since the crisis, as older
cohorts are more likely to be owner-occupiers.
Taken together, then, the rising cost of rents, and the rising share of renters, appears to have
caused a further erosion of some households' income since the crisis, particularly renters, the
poor and the young. For those cohorts, rising housing costs are likely to have contributed to
the sense of this being an invisible recovery. Whose recovery? To a significant extent, those
owning their own home.
The social jigsaw
So far, we have looked at relatively standard measures of economic health and wealth, the
staple diet of economists like me. But there are now many studies showing that objective
measures of economic health and wealth do not always correspond well with individuals'
subjective sense of well-being and fulfilment.11 Let me give a simple example to bring this point
home.
The highest per capita income region in the UK is London, where the average person earned
£24,000 per year in 2014. At the bottom of the per capita income league table was Northern
Ireland, where the average person earned £15,000 per year in 2014. Yet when it comes to
measures of life satisfaction, the tables are completely turned. London ranks at the bottom of
the regional league table of happiness, while Northern Ireland occupies (by some distance)
pole position.
In part for those reasons, a number of countries have over recent years developed indices of
well-being, drawing on a much wider array of economic, social and environment factors. For
example, in the UK the Office for National Statistics (ONS) has begun tracking 43 separate
measures of well-being grouped into 10 categories: personal well-being, relationships, health,
participation in civic society, where we live, personal finance, the economy, education and
skills, governance and the natural environment.
These different metrics are slightly