The conceptual framework of the system specifies that societal resources are limited by two basic factors: the amount of available human time, and the stock of wealth inherited from the past. Wealth is defined very broadly to cover not only the conventional tangible capital assets familiar to economists, but also intangible human and other capital assets, stocks of organizational capital reflected by networks of social support systems (the family, the neighbourhood), stocks of environmental assets (the sun and air), and stocks of socio‐political assets (security, freedom of choice). Human time covers market work, household production, leisure, and biological maintenance.Human time and capital stocks are used within households to produce a variety of tangible and intangible outputs, and these outputs in turn are used to produce a variety of satisfactions (utilities) or to augment stocks of capital, or both.The basic sources of well‐being in the system are ultimately of two types: well‐being is produced as a consequence of the intrinsic benefits from all activities engaged in by individuals, which is to say that people have preferences over the way they spend their time; secondly, people derive utilities from the existence of various stocks or states of society, and these satisfactions are independent of the way in which time is used. The satisfactions associated with flows of goods are subsumed by satisfactions derived from activities associated with those goods.The system contains a set of linkages among the various parts:inputs of goods and time are used to produce tangible household output, using the familiar notions of household production functions and constrained optimization; tangible household products, which are intermediate in the system, are used in conjunction with human time to produce direct satisfactions or to augment household capital stocks; both household (micro) and societal (macro) capital stocks are linked directly to psychological well‐being; household activities are linked directly to flows of satisfactions, termed process benefits in the system; household preferences and values relating to policy variables are linked to public policies of various sorts, and policies modify the constraints and opportunities relevant for household decisions.The system also has dynamic linkages. Modifications of household or public stocks produce impacts on future flows of well‐being; satisfactions from activities may adapt to the existence of constraints, hence changes in constraints can modify preferences and subsequently modify activities; and household behavior has a life‐cycle dimension which is inheren