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.