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Did life get better for Australians last year?

A burst of consumer spending before Christmas helped the economy finish 2015 on a surprisingly strong note, official figures revealed this week. But did life really get better for Australians last year?

The answer is yes, according to the Fairfax-Lateral Economics Wellbeing index, which provides a much fuller measure of our collective welfare than gross domestic product.

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The index found the value of Australia's wellbeing grew by 4 per cent in 2015, faster than the 3 per cent growth in GDP published by the Bureau of Statistics on Wednesday.

Despite some major drags, including the prevalence of obesity and mental illness,  the index showed our collective wellbeing totalled $1.455 billion in 2015 - the second highest on record.

The index uses six broad indicators to gauge national wellbeing: income, -how, health outcomes, inequality, environmental changes, and job satisfaction. Here's how Australia fared in each one of those areas in 2015:


Money isn't everything but it's still an important factor in our welfare. The wellbeing index takes account of this with a broad measure of living standards called real net national income. This has been under pressure since the mining boom because of deterioration in our terms of trade (the prices we receive for exports relative to the prices we pay for imports). Real net national disposable income shrank by 1.1 per cent during the year weighing on our collective wellbeing.



Improvement in our collective know-how – called "human capital" by economists - was the main reason our wellbeing improved in 2015. The value of human capital, as measured by the index, jumped by 12 per cent in the year thanks largely to an increase in the proportion of adults with university degrees and technical training. A higher rate of students finishing year 12 has also helped.

The index's author, Dr Nicholas Gruen, said these trends were an unambiguous positive for the future. "It's worth remembering that investments in our human capital hit the tax reforms now being debated out of the park in terms of the impact on our future wellbeing," he said.


Improvements in life expectancy and preventable hospitalisations added to Australia's wellbeing in 2015. But those positives were more than offset by the rising rate of obesity and the effects of mental illnesses. The wellbeing cost of obesity last year was than $120.3 billion and its negative effects are set to grow. The index put the cost of mental illness to collective wellbeing in 2015 at a massive $197.5 billion. Overall, health has been a persistent drag on the wellbeing index over the past decade.


The distribution of income has a bearing on national well-being. It's estimated that each additional dollar of income received by the poorest fifth of households adds five times more to collective wellbeing than each additional dollar earned in the wealthiest fifth of households. The most recent income distribution data show the richest fifth of households gained a bigger slice of national income at the expense of middle 60 per cent of income earners. As a result, inequality was a $218 billion drag on national wellbeing in 2015.

Environmental change

The depletion of Australia's natural assets and the effects of climate change have been a small but consistent drag on wellbeing since it began in 2005. This trend continued in 2015.

Work satisfaction

The index takes into account the non-economic affects of unemployment, underemployment and overwork. It calculated this was a $43 billion drag on national wellbeing in 2015.