Sen, social inclusion & Treasury’s wellbeing framework

Treasury’s mission is broad — to improve the wellbeing of the Australian people. And according to Peter Martin its wellbeing framework empowers it "to fight homelessness just as much as it empowers it to fight inflation". As Martin explained back in 2008 the framework goes well beyond purely monetary or material ideas of wellbeing.

If Treasury’s framework is broad enough to include issues like homelessness, perhaps it’s broad enough to absorb the idea of social inclusion. Integrating social inclusion into the wellbeing framework might give the idea a more definite meaning and a useful theoretical base.

Treasury’s wellbeing framework

Treasury draws on the work of Indian economist Amartya Sen to go beyond monetary measures of wellbeing. Two key concepts in Sen’s work are freedom and opportunity. For Sen freedom is the opportunity to achieve things we value as well as not being forced to behave the way other people want us to. Both are aspects of freedom are valuable in their own right.

Some utilitarians argue that all that matters is pleasure and pain. According to this view, the best society is one that maximises pleasure and minimises pain. But for Sen what really matters is something he calls ‘capability’ — a person’s ability, or real opportunity, to do things he or she has reason to value.

Treasury follows Sen’s approach. The first of the five dimensions of Treasury’s wellbeing framework is the level of opportunity and freedom that people enjoy. The others are the level of consumption possibilities, the distribution of those consumption possibilities, the level of risk that people are required to bear, and the level of complexity that people are required to deal with.

The framework define the level of consumption possibilities in terms of "people’s command over resources to obtain goods and services to satisfy their needs and wants." This might sound materialistic but according to the framework:

As well as traditional market goods and services, the definition considers non-market goods and services such as, amongst others, voluntary and community work, personal and professional relationships, social capital, the quality of the physical environment, health and leisure.

In addition, the needs and wants to be satisfied range from meeting basic material necessities such as food and shelter, through to non-material desires for emotional satisfaction or political participation.

When it comes to problems like entrenched joblessness, this definition allows Treasury to consider the non-financial benefits of moving from welfare to work — something stressed by politicians across the political spectrum. As British Conservative MP Theresa May puts it: "Having a job gives you much more than just a wage. In giving somebody a purpose and a routine it can improve health, self-esteem and social inclusion."

Sen on social inclusion

For Sen the idea of social exclusion is nothing new:

We are not dealing with an upstart concept that somehow has escaped notice: a concept that can only be championed by new researchers … Rather, we are considering the merits of focusing particularly on relational features that would enrich the broad approach of seeing poverty as the lack of freedom to do certain valuable things — an approach the theoretical underpinning of which has been extensively discussed and scrutinized (pdf).

Sen traces the idea back to Adam Smith’s thinking on poverty. For Smith, one of the chief miseries of poverty was being ignored or disapproved of. He argued that some goods were socially necessary. For example, in the Wealth of Nations he wrote: "a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty, which, it is presumed, nobody can well fall into without extreme bad conduct."

The ability to appear in public without shame is what Sen calls a ‘capability’ and is part of what constitutes poverty. Because human beings are social creatures, maintaining relationships is necessary for wellbeing. As a result, social exclusion could be defined as the inability to form and maintain the relationships necessary for wellbeing.

Integrating social inclusion into the wellbeing framework

As Luke Buckmaster and Matthew Thomas write, one of the major criticisms of social inclusion and exclusion is that it focuses almost exclusively on the employment relationship:

This focus on paid work is seen by some to carry with it two main problems. First, if social integration is only really possible through paid employment, then this means that those people who are not currently engaged in work, or who are unable to do so, are regarded as less than full members of society. And, while many of these people may be making valuable contributions to society through their unpaid work, these contributions are ignored and/or devalued. Second, if exclusion and marginality are viewed primarily as exclusion and marginality from paid work, then questions of low pay and poor working conditions are treated as marginal; all that really matters is workforce participation. Thus, inequalities between paid workers are obscured and a form of exclusion as damaging as unemployment, is allowed to continue.

Integrating social inclusion into Treasury’s wellbeing framework could help address both criticisms. It would encourage researchers and policy makers to look at how paid employment contributes to individual wellbeing and what other relationships might serve the same function (eg retirees might rely on voluntary work or ‘serious leisure’). The question of how joblessness negatively impacts on others through the tax system could also be considered.

Taking a wellbeing perspective would also help policy makers distinguish between jobs that improve the level of opportunity and freedom that people enjoy and those that don’t. Research suggests that some jobs have a more negative impact on mental health than unemployment. A conventional social inclusion approach would ignore this effect and count all employed people as ‘included’.

The wellbeing framework’s distributional dimension would also help capture concerns about inequalities between the wellbeing of those in various kinds of work. Within the framework, the enjoyment of beneficial aspects of work such as companionship with coworkers, valued social position and opportunity for using skills could be seen as a form of consumption. The unequal distribution of these consumption opportunities is something policy makers could take into account.

Sen’s concerns about coercion are also relevant and are captured by the framework’s opportunity and freedom dimension. Some workers have more opportunity to escape from negative employment relationships than others. Those whose skills and experience are in demand can change jobs if their relationship with a boss or coworker turn sour. But those whose skills and experience are not in high demand may find themselves trapped in a damaging employment relationship when things go bad. They have less freedom and opportunity.

This has relevance for income support policy. Typically unemployment payments are only available to jobless workers who have not left employment voluntarily. Eligibility rules can compound the lack of freedom and opportunity by effectively coercing workers to enter or remain in damaging employment relationships.

Integrating social inclusion into the wellbeing framework might encourage policy makers to look at how workplace relations policies affect workers’ level of freedom and opportunity and not just on the their impact of those policies on the number of jobs available in the economy. These could then be balanced against the freedom and opportunity of employers.

A whole of government approach?

Currently the government’s social inclusion agenda and Treasury’s wellbeing framework operate almost independently. Perhaps it’s time for a more whole of government approach to normative issues.

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21 Responses to Sen, social inclusion & Treasury’s wellbeing framework

  1. Patrick says:

    Great piece Don, at least a unified approach might give the social inclusion people a place to start and something to build on rather than have them scratching around like chickens in the dirt to find something to justify their existence.

    Speaking of which, couldn’t we just outsource this to your mob?

  2. paul walter says:

    I think it was a marvellous attempt by Don. Goes to the core of a civil society ethos.

  3. Judith Sloan says:

    Get rid of the wellbeing framework – complete guff and David Gruen’s paper is incomprehsible.

    Just gives imperialist ambitions to Treasury. Their bureaucrats need to focus on economics and maximizing per capita incomes. Everything else follows from that. They don’t know anything about homelessness and are just treading on the toes of other bureaucrats.

    And the idea that there are good jobs and bad jobs is a very dangerous one. Look at the longitudinal data to find out that people move from bad jobs (judged by the educated inner city elites0 to good ones to an overwhelmingly greate extent than people move from unemployment.

    Ditch social inclusion too. The UK has.

  4. derrida derider says:

    Judith, I think the longitudinal data simply does not say what you say it does. Deadend jobs are the norm for people entering the labour market with few skills, and once you address the selection issues properly (a crucial thing – the raw transition results tell you almost nothing) that’s what the international panel studies tend to find. The doctrine that “get ’em a job – any job – and they’ll lead happy and wealthy lives ever after and never darken our welfare system’s door again” is a very convenient one for those pushing the arbeit macht frei approach to social policy. It happens to be largely untrue though.

    And are you saying that measured market income is the only workable measure of income? Even the most Gradgrindian economist must be familiar with the concept of full income. Are you saying that the distribution of that income doesn’t matter too? That too defies both common sense and neoclassical orthodoxy.

    Having said all that, as a bureaucrat in another department I am well aware that Treasury has imperialist ambitions. Of course it always has had – possibly rightly. A decent objective function for it to maximise may at least make the imperialism more benevolent for the natives.

  5. JB Cairns says:

    David Gruen’s paper would be incomprehensible to someone who can’t even read an MYEFO!

  6. Russell says:

    “focus on economics and maximizing per capita incomes. Everything else follows from that”

    Particlularly, maintaining the environment. Economics and maximising per capita incomes has done really well there.

  7. Peter Patton says:

    I can’t believe grown-ups take this swami guff seriously.

    Two key concepts in Sen’s work are freedom and opportunity. For Sen freedom is the opportunity to achieve things we value as well as not being forced to behave the way other people want us to.

    For Sen, freedom is being married to Emma de Rothschild!

  8. Peter Patton says:

    Oh god it gets worse.

    For Sen the idea of social exclusion is nothing new

    Indeed. Born into a family of rich aristocratic Brahmins, before marrying into…What a fraud.

  9. Dan says:

    And you know what else: Marx wasn’t even working class!

  10. Dehne Taylor says:

    Nice to see in comment 3 an example supporting Peter Shergold’s view that “….there remains a chasm between research and influence and between the policy intellectual and the policy practitioner. The potential of academics to act as knowledge brokers in the development of public policy remains largely unfulfilled.”

  11. Peter Patton says:

    Dan

    Indeed. Though somehow I think you have missed that you are just reinforcing my point.

  12. Dan says:

    No, it’s not lost on me ;)

  13. Peter Patton says:

    Oh, OK Dan, I give up now, it’s all doing my head in! :) I love Marx, but I think Sen is a fraud.

  14. Peter Whiteford says:

    Peter Patton

    If you believe that Sen is a fraud, it might be more convincing if you gave some arguments based on what he has written rather than your observations about his social background and marriage.

  15. Judith Sloan says:

    I think the most telling part of David Gruen’s paper – which has clearly been written by some sort of committee as it jerks from one point to another – is in the conclusion: “The Australian Treasury has found having a wellbeing framework a postive experience. Not because it tells us to forget our economic frameworks, but because it reminds us that they are richer and broader than is often assumed.”

    Mmmm, so the economic frameworks win. Now ditch this wellbeing guff.

    DD, see Mark Wooden and Roger Wilkins’ careful work on what happens to people in low paid jobs. Sure some low paid jobs are ‘dead end'(to use a very middle class phrase) and some people like it that way, but low paid jobs are a route to better paid jobs for many and a much superior route than from unemployment. Also the data on life satisfaction shows that the unemployment are much unhappier than the employed – even in ‘bad’ jobs.

    Yes, I believe in full income and that it is why the obsession with a PR target is a bit strange.

    Inequality matters only up to a point – if the high returns are because of anti-competitive arrangements or regulatory failure. If they are the result of risk taking and entrepreneurship, then they are good. Redistribution is all very well but don’t forget the efficiency losses – no free lunches out there.

  16. Don Arthur says:

    Judith – Is it really clear that a policy of inisting that unemployed people to take the first available job will maximise life satisfaction or other measures of wellbeing? I’ve seen a number of Australian studies that suggest work is not always better than unemployment. For example, in a study using HILDA data Mike Dockery reports:

    Differences in mental health between those in ‘good’ and ‘bad’ jobs are … larger than the average differences observed between the employed and unemployed. Working non-standard hours and job insecurity are found to reduce mental health. No evidence is found of under-employment impacting upon the mental health of parttime workers, but problems of ‘overwork’ are readily identifiable.

    As DD says, it’s convenient for policy makers to assume that work is always better than joblessness and that people on income support are not able to judge what’s in their own interest. It allows policy makers to avoid taking responsibility for tradeoffs.

  17. Don Arthur says:

    If policy makers are serious about wanting to improve the psychological wellbeing of unemployed people, it might be worth considering direct job creation. A recent study of German ‘activation’ program shows that participation:

    … is connected to a level of life satisfaction that is significantly higher than the one of respective unemployed welfare benefit recipients. This effect is especially strong if participants perceive the measure to match their personal skills and to increase their future employment chances, but vanishes if participants perceive it as degrading.

    Given the high cost of these kinds of programs an important question is whether a work-first approach is a more cost effective way to improve wellbeing. But if you assume that any job is a good job and all jobs increase the probability of future employment, then you’d never ask the question.

  18. Julie Thomas says:

    I wonder if it is the term ‘wellbeing’ that bothers Judith and others who react emotionally to words or terms that they percieve as wanky leftie luvvie. Perhaps we could call the wellbeing index something like an index of ‘ability to work hard’; because for sure, there is a positive correlation between one’s wellbeing and one’s ability and desire to work ‘hard’.

    It is clear to me, from my personal experience as an Asperger parent who has had the very difficult task of guiding 3 high IQ, Aspergers children through the requirements of the current complex and confusing job market, that the individual’s emotional wellbeing is very important to their ability to cope with, and avoid making wrong choices early on.

    I am seeing right now, how the type of jobs that Don refers to, non-standard and unpredicatable hours, antagonistic attitudes on the part of management, lack of any explanation for short term changes in hours – like being notified the night before that one has to work less or more the next day – etc, affect the more ‘vulnerable’ of us; but note that vulnerable does not mean stupid or useless.

    I also have had professional experience as a psychologist working with young people who are ‘in care’, and again, it is quite clear to me that these kids lack wellbeing and lifeskills, that they will certainly only be able to get a bad first job and this negative experience will reinforce their belief that working is not for them, that they are not part of this society.

    A first bad job will certainly not give these kids the idea that they just have to try harder, work harder and they will find a better job; there is nothing in their lives that has ever provided them with this insight.

    It is their belief, reinforced by almost every thing that has happened to them throughout their lives, that they are useless and the only thing that they can do to survive in this world, is to look for a subculture that accepts them and doesn’t call them stupid and lazy.

    The waste and inefficiency that comes from failing to invest in these lives and ensure that all lives are productive, is really shameful. Are we not all financially wealthy enough in australia that we can start to grow our emotional wellbeing?

  19. Peter Patton says:

    Julie Thomas

    Even though I naturally feel for the unusually loaded hand you’ve been dealt, by having to manage a home with 4 Aspergers under the same roof, I don’t think you’ve able to use these challenges to bolster the preposterous claims made in the OP for expanding the Treasury bureaucracy by giving it more direct power over such opaque letters to Santa Claus as:

    (i) the level of opportunity and freedom that people enjoy; (ii) the level of consumption possibilities; (iii) the distribution of those consumption possibilities; (iv) the level of risk that people are required to bear; and (v) the level of complexity that people are required to deal with.

    Are you sure it would be looking out for your children, via a group of public servants, overwhelmingly trained in mathematical economics, which combined with temperament, are likely to be autistic themselves? OTOH, your post suggests that what you would like Treasury to do is ‘increase the self-esteem’ of your children. I don’t know how much training in economics you been exposed to, but academic economics is the last place you should be looking, and especially at that subgroup, who chose Treasury over academia.

    I’ve now got this nightmare vision of Treasury boffins taking Gillard, Swan, Nanny Roxon, and the relevant “Social Inclusion” players through some policy initiatives regarding say, aged-care funding, or revisiting negative gearing, which ‘deprivileges the racist utilitarian obsessions of 18th/19th century white bourgeois Englishmen’. Good riddance to dreary spreadsheets calculating the impact these policies will have on government coffers over the next 20 year. In fact, it been written into Treasury official’s contract of employment that aggressive derailing of meetings with constant reference to growth and per capita income could create toxic and ‘unsafe’ work environment, which was, of course, a sacking offence.

    “Thank god for the ABS’s massive recruitment drive for graduates of Social Inclusionmetrics”, they trilled. ” As we can show mathematically that the loss of $150 billion in GDP, has given people more freedom to reflect on which freedoms and human rights are most important to them. Further, with the significant slump in everyone’s income and wealth, Australia became more egalitarian, so the previously excluded have started explaining to entrepreneurs, that this new more equal consumption possibilities frontier means everybody will be able to volunteer for charities.’ Apparently, a Treasury boffin was fired moments before the Ministerial briefing for suggesting they remove the ‘more time for volunteering’ slide, there will be far fewer people who have such a surplus that can risk giving stuff away!

  20. Julie Thomas says:

    Peter first up, I wasn’t complaining about the hand I’ve been dealt – I’m over that. For sure it’s the anti-depressants talking, but I’m quite happy to be one of the ‘losers’, in Australia anyway, it ain’t that bad; well not out here in the bush where we have more freedom from both Government intervention and the capitalist imperative to consume and accumulate more stuff.

    Actually, it’s only my youngest child who is still having to deal with lousy jobs and stupid employers; the two oldest have successfully integrated and are paying lots of tax; is that the definition of success in your opinion? Have I paid back the taxpayer for some of my single parent benefit, do you think?

    The farm conditions aren’t that bad, if there is support for those of us who lack resilience, lacked a functional family to provide us with the appropriate social conditioning and require more initial support to feel included.

    I am not looking for Treasury to do anything for my children; Governments over the years have done a lot for me and for my children and I’m quite sure that we wouldn’t be as well integrated as we are now, without this help.

    I am not ashamed – but perhaps you think I should be – to say that I am economically illiterate. I did do economics at some stage during high school. back then, in the early 60’s, the message I heard – but possibly it was not the message that was being presented – was that it is human nature that stuffs up the economic theories. So that has been my focus; to understand people.

    Your focus is different to mine, your ‘reality’ is politics and economics; mine is psychology and how ‘the vibe’ affects people and their behaviour.

    I think we would all benefit if the vibe from the economists and the politicians was that all people are worth something, are worth rescuing from the conditions that do render them stupid and lazy. We people at the bottom do respond to vibes, more than you economic types do, and we don’t respond well to sticks; carrots are much more effective.

    I have to agree that there are a great many autistic types in government; Kevin Rudd is so obviously Aspergers.

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