Composite indices and preference-based measures of wellbeing

Wellbeing is a multidimensional concept that yields measurement challenges, such as how to aggregate different dimensions and which relative weights to give them. Composite indices are widely used to measure different aspects of wellbeing. While they are relatively easy to understand and construct, they often contain underlying trade-offs between dimensions that are difficult to discern. Preference-based measures are rooted in economic theory and derived from the trade-offs people make between different dimensions of wellbeing. However, they are data-intensive and pose measurement challenges. Investments to better measure outcomes and preferences at the individual level could yield a more nuanced view of well-being across the EU.