On Happiness

The financial crisis and global warming have reinforced an age-old criticism of our traditional ways of measuring wealth, and a number of alternative indexes have been proposed that would instead measure people’s well-being and environmental sustainability.

There are problems with using GDP. It involves an incredible amount of guesswork; and even if it were perfect, it would be bizarre to use production of goods and services as the only yardstick to evaluate our societies. But finding problems is one thing; it is something completely different to find an alternative that is better. Any sort of well-being index would require agreement on what well-being is, and there is a risk that governments would be tempted to find a one-size-fits-all standard and try to make us all wear it.

In a new paper I examine some of the proposed alternatives and they all beg the question about well-being by defining it as the result of the particular kinds of policies that they happen to prefer. Bhutan’s famous National Happiness Index, for example, defines it partly as a strong, traditional culture, and has used it to oppress minorities. And the Commission on the Measurement of Economic Performance and Social Progress, created by French president Nicolas Sarkozy and led by economist Joseph Stiglitz, selectively chooses measures to show that France is richer in relation to the United States than it would otherwise be.

The advantage of GDP is precisely what it has often been criticized for – that it is a narrow and value-free measure. It does not even try to define well-being, and so fits liberal, pluralistic societies in which people have different interests, preferences and attitudes toward well-being. It tells us what we can do, but not what we should do; and since it measures what we can do, it also correlates with most of the things most people want from life: better health, longer lives, less poverty and even happiness. The latest research shows not only that people in rich countries are happier but also that countries grow happier as they become richer.

Read the paper here. Read Will Wilkinson’s Policy Analysis on happiness research here.