Are we all happy now? The impact of housing on well-being considered in new Resolution Foundation report.

The well-being agenda has been growing in policy circles since the turn of the century and a new report by the Resolution Foundation looks at the regional differences in well-being across the UK as well as examining well-being scores across a number of different factors including income, employment and housing tenure. The Office for National Statistics began collecting well-being data on its major surveys in 2011. Subjective well-being measures are based on asking people to rate their own well-being, measuring it from their own perspective. One of the intentions of gathering such data was to inform policy makers in terms of helping to shape policies which could improve well-being.

Additional £1,000 would raise the well-being of a low-income household by more than it would that of a high-income one

The concern with subjective well-being attempts to move away from simply focusing on economic indicators such as increasing income as a measure of how well a household is doing. Although subjective well-being does tend to be higher among higher-income households, the correlation is not a straight-line one, and the data suggests that an additional £1,000 in household income would raise the well-being of a low-income household by more than it would that of a high-income one. One implication of this finding is that policy makers concerned with well-being should favour a redistributive policy for its potential to raise overall average well-being.

Northern Ireland enjoys highest average scores for life satisfaction

As well as focusing on the impact of income, employment and housing, the report looked at regional variations in subjective well-being measures. Northern Ireland had the highest average scores on life satisfaction, happiness and worth, although the report did not look at differences within regions and so these averages can mask a good deal of variation within each region.

These results were somewhat puzzling for the researchers, since NI has recorded the slowest growth in employment in the UK since 2011 and the lowest average household income. However, the report’s authors argue that the lower levels of income inequality in NI compared to that in other UK regions may have an influence on households’ sense of what they should expect. Households in the lowest income bracket in NI have higher life satisfaction scores than similar households in the rest of the UK and so do the highest income households, despite being less prosperous than the highest income households in almost every other UK region. By any measure of economic inequality, NI is less unequal than other parts of the UK. For example, the 90:10 ratio for London is 9 (this compares the income of households in the top 10% of the income distribution to the households in the bottom 10%), whereas for NI the 90:10 ratio is only 3.6. The authors point out that there are many unknown and unmeasured factors which could be at play in affecting well-being between UK regions (including things like social cohesion, family relationships, cultural differences etc.). However, one area which was shown to affect subjective well-being scores was housing.

Housing has been a vital component in the living standards story over the last two decades. Housing costs have accounted for an increasing share of household incomes, thanks in part to a compositional shift whereby more people are renting. With home ownership being increasingly out of reach for many younger households, a growing number have been forced to live in the relatively more expensive private rented sector.

Factors such as quality and security of housing impact on well-being

Housing tenure was associated with increased subjective well-being independently of the different costs of owning versus renting, for example. This suggests that other factors affect well-being such as security of tenure, quality of housing and location. Previous Resolution Foundation work has drawn firm conclusions about the impact of shifting tenure on living standards of different groups, with a particular focus on the impact of economic differences with renters facing higher costs than owners for comparable accommodation for example. The report on subjective well-being shows that while housing costs are still likely to play an important role in explaining differences in well-being scores, there is more going on than simply the cost of housing. Homeowners have the highest level of well-being, even when controlling for income and other characteristics, while social renters have the lowest level. This should reinforce the need for action to improve housing quality in the social rented sector and security in the private rented sector, while also reinforcing the support of policy makers of all parties for home ownership.

Their findings suggest the need for a twin approach to housing policy:

1. Improve access to home ownership, and
2. Improve the reality of living in the private and social rented sectors.

The former is needed to help meet the home owning aspirations of a larger number of families. The latter recognises the reality that renting will continue to be the norm for many but does not deliver the level of satisfaction, happiness or security that would lead to increased subjective well-being.