Download Mark Evetts, Cheltenham College

Should developed nations
pursue happiness rather than
the pace of economic growth?
Mark Evetts, Cheltenham College
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The economic problem
• C The fundamental economic problem is that human wants vastly exceed what can be
provided by the planet’s finite resources.
• C Why do humans continue to demand more and more? Perhaps greed, population
growth or globalisation is to blame?
• C Do those residing in developed nations have to re-evaluate their goals?
• C Do they need to consider the pursuit of happiness rather
than the pace of economic growth?
• C If the choice were between being poor but very
happy, or wealthy but very unhappy, which would
you choose?
The pioneers of
studying happiness 1
• C “It is the greatest happiness of the greatest number that is the measure of
right and wrong.”
Jeremy Bentham, A fragment on government, 1776
• C In the present century most would accept that maximising happiness has to be a
goal of every society – but what is happiness?
• C Some will say money, but a few may cite equality between men and women.
• C Or is it a clean environment, low crime, a good education, health or social
mobility?
• C Unfortunately, we don’t know how to accurately measure human happiness.
The pioneers of
studying happiness 2
• C In the last decade of the 20th century there was an explosion of interest in the
relationship between economics and the concept to happiness.
• C A paper by Richard Easterlin in 1974 claimed that despite the fact that income per
head in the USA had doubled between 1946 and 1970 average happiness had
remained much the same.
• C However, David Cameron in October 2010 said:” From April next year we will start
measuring our progress as a country not just by how our economy is growing, but
by how our lives are improving; not just by our standard of living, but by our quality
of life.”
• C Cameron said that a new measure of national well-being could give us a general
picture of whether life is improving and could lead to government policy more
focused not just on the bottom line, but on all those things that make life
worthwhile.
National well-being
• C Is national well-being not just another word for happiness?
• C But the government is not researching happiness, it is gathering data on well-being.
Is well-being the same as happiness?
• C What if we were to refer to well-being as provision of a suitable environment in
which happiness can flourish.
• C No-one can force someone to be happy, but they could create the right
environment.
• C Is this why leaders of developed nations refer to well-being rather than
happiness?
• C It is not hard to find government policy aimed at providing an environment in
which happiness could reveal itself.
Is the case closed for
economic growth
as an objective? 1
• C According to economists Stevenson and Wolfers, money can buy happiness.
• C Their research indicates that the relationship between income and happiness hardly
changes as incomes rise.
• C We never really grow tired of earning more.
• C Stevenson and Wolfers say that: “If there is a satiation point, we are yet to reach it.”
Is the case closed for
economic growth
as an objective? 2
• C There is little doubt that wealthier nations are more pleasant places to live.
• C The pursuit of economic growth has been the objective of most developed
economies for the last hundred years.
• C But according to Andrew Oswald of Warwick University: “Economic performance
is ... a means to an end .... Economic things matter only in so far as they make
people happier.”
• C GDP is a measure of the economic value of goods and services exchanged on
the market.
• C Increasing GDP per capita is often taken as a reasonable proxy for rising
prosperity.
• C The problem is that GDP is a very blunt and crude measurement.
Is the case closed for
economic growth
as an objective? 3
• C For those living in developed countries, economic growth has been undeniably
successful in raising well-being.
• C For developing economies economic growth remains a key objective as a means of
raising the 1 billion people who live on less than $1 a day out of poverty.
• C However, one can question whether economic growth is the catalyst for
unleashing the less attractive side of human nature – greed, competitiveness and
selfishness.
• C In the 21st century can we expect economists and others to realistically consider
the idea that happiness is the new economic growth?
• C Are developed economies ready to entertain the idea that they have enough –
enough cars, enough Panini toasters, enough mobile technology?
Is the case closed for
economic growth
as an objective? 4
• C Governments of developed countries are perhaps unwilling to shelve the objective of
economic growth because it is the measurement by which they are judged
accountable.
• C Rising GDP growth provides the ammunition for elected governments to sing their
own praises.
• C But GDP is an inadequate measure of well-being as we have already seen.
• C For example, a study by Frey and Stutzer in 2004
showed that those who commuted an hour to work did
not find that higher earnings compensated them for the
time lost.
• C The pursuit of money at the expense
of time can be a false economy in
respect of happiness.
Are happiness and
economic growth
mutually exclusive.
• C The answer to this question is surely “No”.
• C However, the unwavering ambition to seek simply economic growth is unsustainable
given the finite nature of the earth’s resources.
• C With a global population set to hit 9 billion in just over 30 years, and 20% of the
current population earning 74% of the world’s income, should developed nations
re-evaluate the goals which society strives to achieve?
• C As to which country is the happiest, this depends on the methodology employed.
• C According to the OECD Better Life Index in May 2013, Australia took the top spot
followed by Sweden and Canada. The UK comes in at number 10.