Her Majesty’s (HM) Treasury sets out the recommended methods of public sector appraisal in the Green Book, with the most recent edition of this being from 2003. However, a revision was recently made to recognise the possibility of using subjective well-being in the valuation of non-market goods.
The added text is below, which in turn is based on a HM Treasury Discussion Paper reviewing valuation techniques for social cost-benefit analysis including stated preference, revealed preference and subjective well-being approaches.
“At the moment, subjective well-being measurement remains an evolving methodology and existing valuations are not sufficiently accepted as robust enough for direct use in Social Cost Benefit Analysis. The technique is under development, however, and may soon be developed to the point where it can provide a reliable and accepted complement to the market based approaches outlined above. In the meantime, the technique will be important in ensuring that the full range of impacts of proposed policies are considered, and may provide added information about the relative value of non-market goods compared with each other, if not yet with market goods.”