The document discusses several topics related to policymaking in the UK, including: 1) The UK achieves mid-level rankings on governance but spends less on public services than comparable countries. Departments also have high levels of budget control. 2) Concerns about issues like crime, the economy, and immigration have changed over time. People also tend to overestimate risks like crime. 3) Non-economic factors like social relationships strongly impact well-being, but these are often not properly measured or valued. Behavioral insights can also influence policy. 4) While economic growth does not always increase happiness, countries like Denmark seem to have found a formula for higher well-being through

1. The Hidden Wealth of Nations: applying to policy David Halpern No10 / Cabinet Office Copenhagen 13 th October 2011 UNCLASSIFIED

2. The UK tends to achieve mid-rankings among OECD nations for governance SGI Management Index UNCLASSIFIED

3. Denmark is consistently among the top UNCLASSIFIED

4. UK spends less... The Bertelsmann status index suggests that some countries – including Canada, New Zealand, Norway and the Netherlands, are able to achieve better social results with similar or lower levels of public spending. Australia combines comparable results with much lower spend. Public Spending (as % of GDP) UNCLASSIFIED

5. UK departments enjoy very high levels of budget freedom This chart shows that UK departments have the greatest levels of control over their budgets in the entire OECD. The index captures procedural flexibility to reallocate budget resources at the ministerial level Source: OECD Government at a Glance UNCLASSIFIED

6. UK departments are among the strongest in the OECD – our silos run deep With above average levels of budget and HRM delegation, UK departments are among the strongest in the developed world. Only Canada and New Zealand have similar levels of devolution, and they both have stronger civil service governance mechanisms. Source: OECD Government at a Glance UNCLASSIFIED

7. About the Institute for Government Research Development Advice UNCLASSIFIED

8. A different cut on collaboration ...with our citizens! UNCLASSIFIED

10. Big Society is one of several new emphases in government thinking Behavioural insights Transparency & payment by results Big Society & decentralisation Well-being UNCLASSIFIED

11. By 2008, Britons had become unusually afraid of other people UNCLASSIFIED 0 5 10 15 20 25 30 35 40 45 Other Defence / foreign affairs Energy related issues Taxation Housing Protecting the environment The education system Pensions Terrorism Healthcare system Economic situation Rising prices Immigration crime Unemployment % concerned UK EU 15

12. More recently, crime concerns overtaken by economic concerns Jan-May 2011 Economy 58% Unemployment 26% Race/immigration 24% NHS 21% Crime 18% UNCLASSIFIED Halpern 2009, data from MORI Most important issues facing Britain in election years (% public see as key issue) Unemployment 82% in 1983 Inflation 82% in 1974 Trade Unions: 65% in 1979 NHS 49% in 1997 Defence & Terrorism 34% in 2005 Crime : 34% in 2009 Education 42% in 1997 Immigration & race 31% in 2005 Pensions 14% in 1997 Issues below 10% not shown Housing : 25% in 1974 Economy : 59% in 2009 %

15. Fear more rooted in social trust than crime per se Correlation = .7. Note the Danes have a burglary rate second only to ours UNCLASSIFIED

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17. Social relationships have hard impacts UNCLASSIFIED LGID: Wellbeing - why bother? Meta analysis: comparative odds of decreased mortality Source: Holt-Lundstad et al 2010

18. We generally fail to measure or value this ‘hidden wealth’ UNCLASSIFIED Sleep Medical, education Sport, shopping, travel Home leisure Shelter, nutrition Professional services Other services Manual We spend on 23% of our waking time in paid work down 1hr 15min from 1960’s – with clear evidence of convergence across class

19. Across the world, most dramatic transformations of public services harness hidden wealth Sweden Patient Hotels UNCLASSIFIED Singapore Yellow Ribbon program London 10% vs 79% recidivism

20. The behavioural angle ...nudging in policy UNCLASSIFIED

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22. UNCLASSIFIED 12.2% 10.9% 9.2% 7.6% 7.4% 3.9% 3.3% 1.8% 0.8% 0.7% WHO, 2000 UNCLASSIFIED Public health: behavioural factors explain the majority of years of healthy life lost

23. You can change behaviour without changing minds...the science of shortcuts ‘ It turns out that the environmental effects on behavior are a lot stronger than most people expect’ Daniel Kahneman, Nobel Laureate UNCLASSIFIED

24. MINDSPACE UNCLASSIFIED

25. MINDSPACE is being widely applied... UNCLASSIFIED M essenger We are heavily influenced by who communicates information I ncentives Our responses to incentives are shaped by predictable mental shortcuts such as strongly avoiding losses N orms We are strongly influenced by what others do D efaults We ‘go with the flow’ of pre-set options S alience Our attention is drawn to what is novel and seems relevant to us P riming Our acts are often influenced by sub-conscious cues A ffect Our emotional associations can powerfully shape our actions C ommitment We seek to be consistent with our public promises, and reciprocate acts E go We act in ways that make us feel better about ourselves

26. UNCLASSIFIED Defaults are the most famous of a growing range of applications

27. The well-being angle Are we making ‘progress’? UNCLASSIFIED

28. ...economic growth is a means to an end. If your goal in politics is to help make a better life for people – which mine is – and if you know, both in your gut and from a huge body of evidence that prosperity alone can’t deliver a better life, then you’ve got to take practical steps to make sure government is properly focused on our quality of life as well as economic growth, and that is what we are trying to do. 25 th November 2010 UNCLASSIFIED UNCLASSIFIED

29. Rich nations are happier... UNCLASSIFIED

30. But in the US and UK, growth doesn’t seem to be making us happier – unlike in Denmark UNCLASSIFIED

31. The Easterlin paradox UNCLASSIFIED

32. Understanding Easterlin draws attention to ‘social interaction ’ UNCLASSIFIED

33. The Danish formula UNCLASSIFIED

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38. Conclusions UNCLASSIFIED