Not many would argue against the universal view that maximizing happiness is the essential objective of human existence—everyone wants to be happy. Economics has been concerned with individual welfare (utility) maximization, which is linked with the ultimate pursuit of human happiness. Economics of happiness is slowly becoming embedded in its influence in academic circles. Economists have mainly examined how economic determinants, including income, inequality, inflation and unemployment shape happiness. These figure quite prominently in the realm of public policy.
Before all this rising attention on happiness, conventional discussions about economic and social development have placed more significance on measures of material-living standards: GDP, or individual and household income levels. Economist Simon Kuznets first developed the contemporary concept of GDP in a report for the United States Congress back in 1934 during the Great Depression. As the Second World War ended, GDP was espoused as an instrument for economic restoration and advancement of world peace. Viewed as an adequate and strong indicator for progress, GDP has captured information on economic development to reflect both private and public material requirements, in conjunction with employment/unemployment and inflation statistics.
While GDP has been considered to be a suitable starting point, along with other economic proxies for welfare, social scientists are still highlighting shortcomings of these measures. Since individuals and entire economies tend to contrast their levels of development to others, these recognized indicators fall short in wholly reflecting welfare, and explaining progress across societies. GDP neglects to embody issues of health, pollution, social interactions, economic and individual protection, etc. In short, since GDP does not give an explanation for the vital aspect of psychological well-being, or utility, it is observed to be a deficient metric for welfare.
In the United Kingdom the Beveridge Report had described what to undertake in public policy after World War II: “The object of government in peace and in war is not the glory of rulers or of races, but the happiness of the common man.” In the US, Kuznets had warned Congress in 1962: “Growth for more growth should specify more growth of what and for what.” The 2012 World Happiness Report had mentioned that it is expected that innovative statistics for public progress are being explored, provided that one “can well envisage a parallel system of evaluation taking shape over time where policies are judged by the changes in happiness that they produce per unit of net public expenditure.” These underscore the need for examining aspects of the link between happiness and public policy, with a focus on how public policy interventions may enhance welfare.
As policy-makers aim to implement effective programs, individual citizens aspire to be “happier” and ensure better and more satisfaction. Various governments, international organizations and think tanks have become inclined in doing their “homework” on alternative measures of public progress and their policy implications. There have been specific efforts to make sense of the conundrum on measuring the “good life” and to appreciate whether societies are headed toward better or worse routes.
In 2008 French president Nicolas Sarkozy established a commission (led by Nobel Prize laureates), thus, resulting in the 2009 Sarkozy Report that proposed a shift to evaluating people’s well-being from gauging economic production. Following the lead of Bhutan’s Gross National Happiness, Britain started measuring general well-being in 2010 by asking people about their levels of happiness, anxiety, life satisfaction and perceived task worthwhileness. In the same year, the French Council of Economic Advisers and the German Council of Economic Experts have produced a joint study that highlights the need for quality-of-life (QOL) measures and indicators of economic and environmental sustainability to be included in usual statistical reports. In 2015 AmBisyon Natin 2040 marked the beginning of a “long-term collective visioning process” into the kind of life that Filipinos desire to have 25 years later.
Contemporary research into social indicators for the scrutiny of societal progress has stressed the significance of happiness and well-being criteria at a national level to accompany more long-established economic measures like GDP. Empirical studies have uncovered the significant function of direct democratic decision-making in individuals’ well-being, the effect of compulsory retirement on happiness, the link between work-duration regulation and people’s subjective well-being, the consequences of social work norms on women’s well-being, the influence of mandatory education on happiness and the implications of birth-control rights on women’s well-being.
Results from happiness research ought to aid the public in getting deeper insights on the institutions that are most agreeable to their own well-being. Those factors having real-world impact on happiness could all be nominees for policy intervention. Policy must nurture determinants if these have positive relevance on happiness. Otherwise, if determinants have negative bearing on happiness, then policy should discourage these, correspondingly.
Abigail P. Dumalus is a former faculty member of the Economics Department of Ateneo de Manila University. Ms. Dumalus is studying at the University of Aberdeen in Scotland.