The Institute of Economic Affairs (IEA), has today released a report containing research which, they claim, shows that the leading indicator of happiness is wealth. The conclusion that the IEA, the free market think-tank, draws is that the government should forget their investment in, and promotion of, ‘general wellbeing’ and concentrate on boosting growing the UK economy.
At the heart of the argument is a disagreement with the so-called ‘Easterlin’ school of thought which holds that after a certain point our wealth no longer drives our happiness. Amongst other things, the new report contends that 20% more wealth has the same affect whether you earn $500 a year or $50,000 a year.
As a psychologist it’s not my place to enter into an argument about the economics that sit behind the assertions made by the two sides in this debate. I’m sure that it’s possible to use the data to construct arguments to support both positions. However, what concerns me about the new research is the implication that focusing on happiness, well-being and mental health is a waste of time…and that we should just get back to making money!
Research of this kind is based on pulling together macroscopic financial data from many countries and connecting it with very general ‘life satisfaction’ scores. It has its place, but it doesn’t necessarily tell the story about what is happening on the ground. Money is important to all of us – of course – but it is only one of the many things that influence how we feel and how happy we are with our lives. The data in any given year may nudge us in one direction or the other, but how can we forget recent examples of footballers grappling with depression and mental illness? Or the many stories of lottery winners who fail to find happiness? Or our own experiences of what really makes us happy on a day-to-day basis? How much evidence do we need before we accept that money alone is never enough to bring true happiness? For the vast majority of people it’s about finding the right blend of relationships, health, social support, achievement, community, family, love, work, money and a whole host of other things. In short, it’s about living a balanced life.
I don’t think this new finding should in any way put off David Cameron and the government in their attempts to measure and develop the happiness of the nation. The current effort is partly about encouraging those who have enough money, or are within touching distance of that ‘saturation point’, to consider more deeply what they want; to think about whether they need more money or whether it would benefit them and their community if they knew how to live a happy life, whatever their financial status.
Yes, in our economy wealthy people at the top need to continue to create wealth so there is a trickle-down effect – but if we leave it at that we are setting a dangerous precedent for the aspiring middle classes who will assume (as many do now) that the goal is to get rich, rather than to live a good life and contribute to the happiness of others. The current government’s efforts are as much a response to massive increases in mental ill-health, as they are to the sense that we are focusing on the wrong things. In this sense, I agree with the assertion that we can no longer afford to focus on growth at all costs and to the detriment of our health.
I do think, though, that the government is in for a tough fight in the face of challenges such as those issued by the IEA report. On the one hand the coalition is promoting happiness as an ultimate goal that will bring us a sustainable economy and better lives – ones that don’t rely unrealistically on credit and spending on things we don’t need. Yet, right now we are trapped inside an economy that is based on, and demands, growth. Every headline bemoans the lack of it and over Christmas we were again encouraged to get out there and spend to help the ailing high street. All that talk of ‘make do and mend’ that we heard a few years back has faded and we’ve been encouraged to revert to our former spending patterns. So the government has a dilemma: does it want us to genuinely change the goal of the whole enterprise to be about achieving happiness or does it want us to focus on growth? If the only way to get happy is growth then we are, as the new research would have it, back to square one!
In reality, this points to an awkward transition period where we need old levels of growth to support the nation’s economy (which will, in turn, support our old habits!) while we try to make a shift to a new way of living and working based on different values. Maybe we need some signposts for how this will be achieved – this could be about moderating our growth targets slightly in favour of changing the way we do business – taking the hit now for the long-term strategic benefits this will bring. It will be a massive challenge, but no one ever said this would be easy and we now need to decide whether we’re up for it or not!
Posted by Cary Cooper 
