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 meas-ure 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.