Policy brief: Aligning public budgets with wellbeing outcomes

Over two-thirds of OECD countries have introduced national wellbeing measures and/or decision-making frameworks, yet these frameworks often remain disconnected from budgetary decisions. Wellbeing budgeting seeks to close this gap by putting long-term societal outcomes such as people’s wellbeing and environmental health at the heart of public investment and funding decisions. This brief examines how governments can move from measuring wellbeing to using it as a principle for public budgeting and investment decisions. The brief identifies five barriers to the integration of wellbeing objectives into budgeting processes and practices: wellbeing indicators disconnected from allocation decisions; fragmented departmental responsibilities; the systematic undervaluation of prevention and early intervention; rigid annual fiscal rules that ignore second-round effects; and limited administrative capacity to use new tools effectively. To overcome these barriers, the brief recommends to: Link wellbeing priorities directly to budget preparation, spending reviews and investment decisions Introduce real-cost accounting that recognises future and cross-government fiscal effects Create institutional mechanisms and incentives for integrated whole-of-government budgeting Embed practical wellbeing analysis, tagging and evaluation throughout the budget cycle Build capacity, transparency and public participation around wellbeing budgeting These require coordinated action by EU institutions, national governments, regional and local authorities, finance ministries, sectoral departments, researchers and civil society. The objective is not to replace fiscal discipline, but to make it more credible by accounting for the long-term costs of inaction and the fiscal value of improved wellbeing.