The Economics of Happiness Don't Always Add Up ; Academics Are Now Asking Whether Eight Years of Growth Have Contributed to Human Satisfaction

By Hogg, Sarah | The Independent (London, England), August 7, 2000 | Go to article overview
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The Economics of Happiness Don't Always Add Up ; Academics Are Now Asking Whether Eight Years of Growth Have Contributed to Human Satisfaction


Hogg, Sarah, The Independent (London, England)


IT IS A quarter of a century since Fred Hirsch, a professor at the University of Warwick, wrote a bestseller on the "social limits to growth". Affluence, he argued, bred frustration. We could not all enjoy solitary possession of the world's best beaches.

Hirsch, of course, predated the limitless potential of the virtual world; but now, in August, it's real towel-space we want. Meanwhile, those still slaving over a hot keyboard are more than usually inclined to wonder what it's all for - what, in short, continuous economic growth for eight years have actually contributed to the sum of human happiness. Such qualms, it seems, have even afflicted the economics profession. The latest newsletter of the Royal Economic Society reveals a sudden eruption of interest in the "economics of happiness".

Not, of course, for the first time. Anxiety about the consequences of wealth always increases in economic upswings; in downswings, people are too busy trying to hold on to their jobs. Materialism is most comfortably deprecated with your hand round a large Pimm's. And, along with materialism, the works of economists are blamed for our obsession with income and consumption.

That's hardly fair. The textbooks were not all written by Mr Gradgrind. Economics, from its early days, has provided us with ways of analysing "welfare", and now, for that matter, "negative externalities" - those side-effects of economic transactions, such as pollution, that worry a rich world. What is true is that economists have traditionally preferred objective measurement. They like to analyse what people do - how they make choices - rather than what they say. This particular prejudice has great virtues: it has enabled economists to deflate all sorts of paternalist pretences, by governments and companies, to know what we really want.

So perhaps economists should leave the analysis of such subjective concepts as happiness to psychologists, or the great novelists? Not if you believe, like another Warwick professor, Andrew Oswald, that economics is simply "the search for reliable patterns in economic data". Professor Oswald, one of the leading detectives of the economics of happiness, reported some intriguing patterns to an American conference last week.

His results show unhappiness to be strongly associated with unemployment, as well as with divorce and chronic ill-health. Which is only what one would expect. But the very clarity of these results contrasts with the uncertainty of the relationship between income and happiness. Surveys show that the least well off are the most unhappy. Again, hardly surprising - "Those who say money doesn't buy happiness don't know where to shop", as someone said. So what happens when we get richer overall? The puzzling answer seems to be, not at lot: the balance of happiness and unhappiness remains much the same. Indeed, in the US happiness has, if anything, declined.

There must, one assumes, be limits to this remarkable consistency over time. Civil war and starvation would presumably disrupt these basic patterns, which have mostly been analysed with respect to stable, developed, well- fed countries. And even there, some long- term changes do show up in the surveys: the black community in the United States, notably less happy than the white, has become happier over the postwar period (although economic advancement does not seem to have done as much for women).

But overall, the level of happiness seems remarkably unaffected by affluence. Between the 1940s and the 1990s, real incomes per head trebled in the United States, yet the proportions of Americans reporting themselves to be happy hardly changed. Similar results have been found in the UK, as the second table shows. And Japan doubly proves the point. Not merely has a fivefold increase in real incomes over the past half-century made little impact on happiness levels, but these actually tend to be lower than in some less well- off countries.

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