The OECD better life index : a guide for well-being based economic diplomacy

Well-being has a multidimensional nature as it depends on multifaceted factors such as material conditions and quality of life. In this chapter, we present the Better Life Index (BLI) developed by the Organization for Economic Co-operation and Development (OECD) as part of the OECD Better Life initiative to facilitate the better understanding of what drives well-being of people and aid governments to place welfare at the center of policy-making. The BLI is a three-level hierarchical composite index that covers several socio-economic aspects and can be employed for measuring the well-being in international and national level. We discuss the applications of the index in the literature and we present a hierarchical (bottom-up) evaluation methodology developed by (Koronakos et al., Socio-Economic Planning Sciences, 2019) that is based on Multiple Objective Programming. In this approach, the aggregation weighting schemes for the calculation of the values of the next level of BLI are obtained through optimization process. Also, we discuss the key role that public opinion should play on measuring the well-being. Based on this, the public opinion, as captured from the worldwide responses in the web platform of OECD BLI, is incorporated into the assessment. We examine different concepts by applying different modeling approaches to the data of 38 countries (35 OECD and 3 non-OECD economies) for the year 2017. As the BLI provides measures for several well-being aspects, it can reveal the real needs of people and serve as a tool for the economic diplomacy to pursue international goals for economy and sustainability.