Yesterday, I referenced the OECD’s publication “How Was Life? Global Well-Being since 1820“. While it is still early days, it is encouraging that the OECD has started to treat GDP and well-being separately as seen in the OECD chart below (click for larger image):
This is progress: for many year happiness studies and subjective well-being were viewed as being the domain of eccentrics and cranks, and certainly no subject for such a serious organisation as the OECD. One person who has done more than any other to help create the shift in perspective is Ruut Veenhoven of Erasmus University in Rotterdam.
Veenhoven is a vocal advocate of a rigorous evidence-based approach to happiness studies. Further, to encourage and help nurture the discipline, he founded the World Database of Happiness, which acts as a clearing house and repository for happiness data and its associated literature. For example, type in “Happiness in Greece” and you can find a time series like this (click for larger image):
Veenhoven is the first to admit that his discipline is still young, and there are numerous blanks to be filled. Yet he feels that politicians can already find tentative answers as to what would make their electorates more happy–if they could be bothered to ask the right questions.
With this in mind, the rise of new non-mainstream parties across Europe can be seen as a reaction to the falling levels of happiness experienced by large sections of the population. And this, in turn, is not just a reflection of economic hardship. Rather, it also mirrors the loss of agency, or the ability to shape one’s life, felt by an increasing share of both the working and middle classes.
Alexis Tsipras of Syriza in Greece and Pablo Iglesias of Podemos in Spain have been tapping into this angst. My hope is that they then forge policies that underpin happiness. For example, insecurity is a happiness killer. The burgeoning precariat, created by 21st century technology coupled with 21st century capitalism, should have some predictability given back to their lives. Nonetheless, Veenhoven points out that hard left ideas produced some of the worst regimes possible in the 20th century happiness-wise. High happiness requires personal choice and control, not things necessarily fostered by interventionist states.
I wish an ideology would emerge that harnesses technology and markets to promote genuine human flourishing. Such an ideology would take a very nuanced approach to economic growth, but would not necessarily be labelled ‘left’. I find it extraordinary that post the Great Recession, most western democracies are still run by centre or centre-right neoliberal elites. Secular stagnation and falling medium wages would suggest that the present socio-economic model isn’t working very well.
Given these facts, I would have hoped that a vibrant ideological alternative would have emerged (or at least old parties would have started wearing new clothes). In the UK, the early coalition government, with its green agenda and community-based concept of the Big Society, looked like it was evolving (at least partly) to reflect the new economic and social realities. Unfortunately, such fresh thinking has been progressively dropped, leaving a party closer to a Thatcher-style political ideal more than anything else.
Meanwhile, in southern Europe, my fear is that what Tsipras and Iglesias end up offering is recycled 20th century socialism. As I see it, that ideology is no longer fit for purpose in tackling our challenges either.
Going back to Veenhoven, if you want to hear a state of play on what determines life satisfaction, watch a lecture given by him here:
Risk and Well-Being 
Hello, I’m curious to hear your perspective on developing a measure of GDP that does account for well-being, draw down of natural resources, and biodiversity. As John Lanchester wrote about GDP in LRB “.. an apparently hard-edged piece of information whose components are contentious, whose utility is debated, and whose initial inaccuracy is more or less guaranteed..”
Why can’t GDP’s relevance be improved?
Newton. I think you can’t really increase the relevance of GDP. As I see it, GDP is an intermediate target, albeit an important one, on the way toward the final goal, which is well-being or happiness. Natural resources/biodiversity is a different, but very, important question. This is a question of discounting future GDP to present GDP correctly. Or more broadly, how do we discount future happiness with respect to current happiness. Both these topics deserve multiple posts. I’ll try to come back to them.
Ok sounds good. When I read around on “no growth/post growth” it always seems to be quite abstract. We live in a “my spending is your income, and your spending is my income” society, where each transaction contributes to GDP, we all need to spend cash to all ‘make a living’, which in turn makes a big contribution to feeling satisfied with life.
The OECD is forecasting by 2050 per capita consumption will treble, global GDP will quadruple and we’ll need 80% more energy. I believe the latest Stern report said we can make the necessary cuts in C02 now, and we could reach the 2050 GDP ‘target’ in 2052, only two years later, without a change in lifestyle. This sounds optimistic but I’ve nothing to counter it with other than a sense of disbelief.
What is the “post growth” perspective on this? Are post growth-ers saying, cap the current global GDP of $77tn, innovate through green chemistry, develop water saving technologies, (and green energy, and food, and transport…) and keep the current level of economic activity? What’s the apples to apples comparison?
Are the OECD assuming some technological breakthrough[s] because I don’t undertand the predicted growth in the context of finite resources. For example, lets just take water, if the average US citizen uses 100 gallons of fresh water per day, in a world where the Chinese middle class has jumped from 175m to nearly 900m, it’s obvious there isn’t enough fresh water to supply an “American lifestyle”, globally, assuming that’s what everyone wants. Appreciate this might all sound simplistic but I’m trying to develop a clearer understanding of what daily life in a postcapitalist world will be like.
Newton. There are a lot of big questions here. First, I wouldn’t call this a post capitalist world but a constrained capitalist world. Markets are powerful and innovative things, and they would still be at the centre of any modified system.
Capital, however, can be approached a bit differently, or rather the monetary system can. Ironically, quantitative easing can help in this respect. QE is basically the creation of demand (a key element as you point out). Indeed, it is an extreme form of demand creation; we have never seen anything quite like it in the modern era. It is also normative. That is, the central bank is choosing to inject demand into certain sectors of the economy, which benefits certain parts of society. In the UK, when the Bank of England buys financial assets it increases the price of financial assets. The owners of financial assets happen to be wealthy.
I’ll give an example of a different approach. You could envisage a government that directs the central bank to create demand by printing money to finance solar panels on every suitable roof in England. The UK government bonds that the Bank of England currently buys yield 1.38%. So the bank could lend at 1.5% and the government would pass legislation that any building with a suitable roof that doesn’t install solar panels will see its rate bill increased by 10%. The market would immediately create a mechanism to facilitate the installation.
There are numerous benefits. The obvious ones are new employment opportunities, UK energy independence and lower carbon emissions. But there are others. If people have greater energy independence in their own home (or renters), this will give them happiness through agency. When times are bad, say they lose their job, this is one less bill to worry about. It is an enhancement of security.
Overall, this proposal would raise GDP. But whether GDP rises, falls or flat lines could be irrelevant to welfare. It depends on the constituents of GDP.
Again you have raised 10 post’s worth of issues 🙂