According to the authors of the report, three-quarters of the variation between happy and less happy nations can be explained by six variables. These are income (GDP per capita), healthy years of life expectancy, having people to turn to, trust in others (roughly equated to lack of corruption), perceived freedom to make life decisions (what is sometimes called agency), and generosity (the propensity to donate to charity).
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Layard’s work focuses less on cross-country comparisons and more on what dictates levels of happiness within countries. Using data from the World Values Survey, which has been carried out since 1981, he singles out seven main determinants of happiness.13 These are: family relationships, financial situation, work, friends, health, personal freedom, and personal values. He lists these in a table, showing the negative impact of various events on total happiness as measured on a scale of 10 to 100, with 100 being perfect happiness:14
Figure 5
The table highlights a number of patterns. Finding a stable partner to live with brings happiness, but being married is better still. When married couples break up, levels of happiness plummet. Once they are divorced, presumably after some time has elapsed since separation, happiness levels recover somewhat, though not fully. Family breakup has become more prevalent. In 1950 divorce was still uncommon in the US, but today only one-half of American fifteen-year-olds live with their biological father. Divorce has been identified as the biggest reason behind rising youth suicide in the US.15
Unemployment is a double blow because it affects not only income but, more important, also self-esteem and sense of purpose. Even the unemployment of others has a negative impact, presumably because it makes everyone feel less secure in their own job and impinges on social harmony. A fall in income by a third has a negative impact on happiness (minus 2), but not nearly as much as other factors, such as family breakup (minus 8). Religious belief also seems to be a source of happiness, a more comforting finding in the US than in more secular Europe. People who answer no to the statement “God is important in my life” are 3.5 points less happy on average than those who answer yes.
Finally, health is important. People do adapt to some health problems, but chronic pain and mental illness are both big and—according to Layard—largely preventable sources of misery. For people with mental health problems, he advocates cognitive therapy, which he argues produces better self-healing results than Freudian rummaging around in one’s childhood. In some circumstances he also recommends the use of drugs such as Prozac, and urges more research into better medicines with fewer side effects. Layard is certainly not the only promoter of medication to relieve mental suffering. Carrie Fisher, the actress who played Princess Leia in the Star Wars films and who was an outspoken advocate for mental health patients, had her ashes interred in an urn shaped like a Prozac pill.16
Layard is so convinced the data are robust, he thinks government policy should be aimed at happiness maximization, not growth maximization. “We know that the really big factors that influence happiness are mental health, which is hugely important, and the quality of relationships in the family, at work, and in the community,” Layard says.
“We should put much more effort into teaching parents how to be good parents, how to stop them breaking up if they didn’t want to break up, help them with problems of child behavior and so on. All of these things would be top priorities for public expenditure. And getting from London to Liverpool faster would just be not quite so important. You’ll never see any difference in national happiness because of how long it takes to get from London to Liverpool.”17
Several other interesting, sometimes surprising, policy recommendations emerge from our discussion. All stem from Layard’s conviction that happiness is as important as income.18 Some of Layard’s ideas are deeply unfashionable because they put less emphasis on individualism and more on the collective, such as teaching ethics at school. He is aware he can come across as an old fuddy-duddy harking back to a supposedly kinder, pre-television age. His ideas are also counterintuitive because, instead of pandering to what makes us happy, he often argues for public policies that counteract what he sees as our self-destructive urges. Layard’s state sometimes knows best.
One counteractable human foible, he argues, is the search for status, something that research tells us is wired into our genes. Status makes us happy. But the problem, says Layard, is that there is only so much status to go around. So if I am top dog, then you cannot be. If you are promoted, then I must necessarily lose my former status. He compares the phenomenon to people in a seated football stadium who stand up to get a better view. Once I stand up, you have to stand up, and soon everyone is standing up. Then everyone’s view is exactly the same as it was before, only we have the inconvenience of having to stand on our feet to obtain it. This zero-sum status game fails the Benthamite test of a society’s maximum happiness. Left unattended, it condemns us to a status-seeking rat race and an erosion of overall happiness.
How could public policy address so inherent a human desire? Layard would use tax. One of the ways in which people seek status, he argues, is through salary. Happiness research shows that higher salaries for the already wealthy confer little extra happiness on the beneficiaries, but they do bring more unhappiness for those whose salaries become smaller by comparison. Layard’s solution is to tax higher incomes more heavily, not only for the usual reasons of redistribution, but also because this acts as a disincentive against what he sees as the addictive but ultimately futile pursuit of higher earnings. We quickly get used to a higher income—and hence are no happier—yet we make everybody else more miserable in the process. The seeking of status through salary means we work harder than we otherwise would. In the process, we neglect something that research shows us is important for happiness: time spent with friends and family. Addictively seeking status and income is like smoking. “We usually deal with addictive expenditures by taxing them. We tax cigarettes heavily and rightly so…We should not hesitate to tax other unhealthy addictive expenditures as well.”19
He would tax or regulate anything that reduced overall levels of happiness, like smoking or pollution. He would, for example, follow Sweden’s example of banning advertising directed at under-twelve-year-olds on the grounds that it inculcates consumerist—and ultimately fruitless—desires in the young and impressionable. The French right-to-disconnect-from-the-Internet policy, which stipulates that companies can no longer expect out-of-office employees to respond to after-hours emails, fits roughly into the same philosophy of legislation to promote happiness.
Won’t all this taxing of hard work affect growth? So what, says Layard. The object of life is happiness, not some abstract notion of the size of a national economy. He favors redistribution even if it shrinks the economic pie, until such a point that aggregate happiness itself is damaged.
Layard argues that stability is more important to humans than economists think. He cites research showing that people hate loss more than they like potential gain by roughly two to one. If you ask someone how much, on the toss of a coin, they would require in winnings to compensate for the potential loss of £100, a typical answer is around £200. Whereas an economist might put this down to irrational risk aversion, Layard believes that humans don’t like loss and abrupt change. He would fashion public policy accordingly.
“Happiness not dynamism should be the goal of public policy,” he says. Continual reorganizations of the public sector in a supposed search for efficiency tend to bring more misery than productivity gains. Economists are too enamored of supposedly efficiency-enhancing labor mobility and blind to the invisible costs of social disruption, alienation and higher crime in areas with large transient populations. “A good predictor of low crime rates is how many friends people have within fifteen minutes’ walk.”20 Mobility, like pollution, has hidden costs. Governments should take all this into account either through tax or i
ncentivising local jobs.
Despite its tendency toward redistributive or socialist policies, happiness economics can push in less predictable directions. Because health, particularly mental health, plays such an important role in people’s happiness, Layard argues that trying to fix that is more important than seeking to end poverty. He cites research suggesting that it would be sixteen times cheaper for a government to increase happiness by investing in better mental health services than it would to produce the same impact through relieving poverty. “To say mental health is a bigger issue than poverty makes some people very angry. But the evidence is so glaring, you have to say it.”
Much of what Layard describes has a familiar ring. Higher taxes, an emphasis on social trust, and a state that is not afraid to intervene. You might call it a nanny state. You might call it Scandinavia. Layard does not blush at either suggestion. Indeed, he says, Scandinavia has done a much better job of promoting what he sees as healthier, happiness-enhancing values. These are not founded excessively on Darwin’s survival of the fittest or on Smith’s invisible hand, what Layard calls the two doctrines underpinning Anglo-Saxon societies. Rather they are based on a feeling of common purpose and shared endeavor.
He cites a study in which 77 percent of Swedish children aged eleven to fifteen supported the assertion “Most of the students in my class are kind and helpful.” In the US only 53 percent agreed with the statement, and in the UK that view was shared by only 43 percent. Britain, it seems, is good at teaching children how to get ahead. Sweden is better at teaching them how to get along.
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Who could be against happiness? If measuring it helps the government design better policies, then surely we should embrace it. A happiness index could even become a standard complement to our standard growth measure, if not an outright replacement. Yet before we hug happiness economics too closely, we should consider some reasons for skepticism.
One problem about the way happiness is measured is that it is on a finite scale. In one of the commonly used survey methods participants are asked to rate their happiness between “not happy at all” for zero points and “very happy” for three points. Income, however, is measured on an open-ended scale, as in theory it can rise indefinitely. So comparing one against the other makes little sense. “In the United States people are no happier, although living standards have more than doubled,” writes Layard of the period since 1950. But happiness levels could not have doubled because of the way it is measured.
It makes sense to measure happiness this way. Happiness is likely to be a finite thing, not something you can add to indefinitely. But that fact may limit its usefulness as a policy tool. In the US happiness surveys following the three-category method typically yield a result of about 2.2. For that to improve substantially, tens of millions of people would suddenly need to move from “not very happy” to “happy” or from “happy” to “very happy,” something that is hardly likely. That makes it hard to correlate happiness with anything, not just income. Public spending in the US, for example, almost doubled between 1973 and 2004 even allowing for inflation. In Britain, it rose 60 percent over the same period. “Yet in both countries, recorded happiness increased by a mere 2 percent,” writes Paul Ormerod, a happiness skeptic.21 “If we were to rely on happiness data as a basis for policy, what is the point, one might reasonably ask, of all those schools and hospitals?” Only data that can be easily interpreted are worth collecting. A data set that doesn’t budge in forty years would not seem to fit the bill. “It is one thing to value happiness; quite another to expect the happiness of society as a whole to be measurable or to respond to policy intervention in understandable ways.”
Layard counters that this is too simplistic. Break down the data and you’ll see a more subtle picture: higher incomes and social spending have improved happiness to some extent, but these have been offset by other phenomena, including declining social trust, the stress of the rat race, and increased crime. Happiness may be an imperfect measure. But then simply abandoning it in favor of measuring growth—also far from perfect—is to take the easy, but illogical, option, “like looking for the keys under the lamp post because it is easier to look there.” Instead, “We should be looking for what we want, wherever it is to be found.”22
Second, an element of social engineering can quickly creep into happiness economics. The virtue of income is that you can do with it what you like. But once we start trying to figure out what makes people happy, you don’t have to stretch things too far to imagine a “brave new world” in which governments continually probe into people’s minds and ply them with drugs to make sure they are happy—and docile. Indeed, Layard writes that, while Aldous Huxley’s novel was meant to make his modern dystopia seem “revolting and threatening,” drugs that make people feel better are not bad in themselves. “If someone finds a happiness drug without side effects, I have no doubt that most of us will sometimes use it.”
But do we really want the state openly leading us all in the direction of inner bliss? Almost worse than that, do we want it nudging us through invisible incentives—a ban on advertising here, a tax on moving to a new city to find work there—toward “happier” or “more sensible” behavior? You don’t need to be a libertarian to see in this more than a tinge of Big Brother.
Moreover, happiness research—though often promoted by left-leaning economists—sometimes points to a rather paternalistic, conservative view of the world. Stable married relationships and religious faith are two important contributors to well-being. Should we tax divorce and subsidize church attendance? One can even read the literature as encouraging people to be satisfied with their lot, including their social position, since continually striving for a better standard of living is seen as a happiness-destroying fool’s errand. That sounds both paternalistic and blunting of ambition. As Donald Trump might say, “Happiness? Sad.”
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You could even regard the pursuit of happiness as an argument against modernization or economic development altogether. This is where Bhutan, a tiny country of just 800,000 people wedged between India and China, comes in. In 1972 the fourth king of Bhutan, Jigme Singye Wangchuck, still a teenage monarch, made his country the first in the world to declare gross national happiness and not gross domestic product the prime orientation of policy. His decree, hailed as enlightened by many development economists, drew on a long national tradition of emphasizing happiness. Bhutan’s legal code, dating from unification in 1729, states, “If the government cannot create happiness (dekid) for its people, there is no purpose for the government to exist.”23
Gross national happiness (GNH) is different from the type of happiness studied by most Western academics. Unlike the sort of work Layard does, GNH is not focused primarily on subjective well-being or self-reported happiness. Instead, it conceives of an “objective” view of happiness with Buddhist overtones, categorized in the nine domains that form the basis of the GNH index (listed below). It is also different from Bentham’s version of happiness, a phenomenon that can be detected primarily through an individual’s sense of pleasure and pain.
In 2008 Jigme Thinley, Bhutan’s first elected prime minister, put it thus. “We have now clearly distinguished the happiness…in GNH from the fleeting pleasurable feel-good moods so often associated with that term. We know that true abiding happiness cannot exist while others suffer, and comes only from serving others, living in harmony with nature, and realising our innate wisdom and the true and brilliant nature of our own minds.”
The Bhutanese government’s “National Human Development Report” describes the goal in these terms: “Bhutan seeks to establish a happy society, where people are safe, where everyone is guaranteed a decent livelihood, and where people enjoy universal access to good education and health care. It is a society where there is no pollution or violation of the environment, where there is no aggression
and war, where inequalities do not exist, and where cultural values get strengthened every day.”
Too good to be true? The components of the index are as follows:
1. Psychological well-being
2. Health
3. Time use
4. Education
5. Cultural diversity and resilience
6. Good governance
7. Community vitality
8. Ecological diversity and resilience
9. Living standards
The idea of grounding Bhutan’s priorities in these domains is to avoid the fate of poor countries that have lunged headlong into development. While rapid development has sometimes brought higher growth and bigger economies, too often the side effects have included urban slums, social alienation, rampant inequality, destruction of forests and rivers, and pollution of the air, as well as loss of cultural heritage and even identity. GNH is supposed to provide a different compass, pointing toward a kinder, gentler form of development. Planning policies—including building dams or developing the capital, Thimphu—must pass a sort of GNH-impact review, much as proposals elsewhere are subjected to environmental-impact studies.
Development is indeed a messy business. Until 1999 Bhutan banned television. After it was legalized, the Bhutanese became exposed to what Layard calls the “usual mix of football, violence, sexual betrayal, consumer advertising, wrestling and the like.” Next thing you know, the poor defenseless Bhutanese will be getting the Internet! The results of getting television are predictable: family breakup, crime, drug-taking, and violence in school playgrounds. Yet it is hard to know what to do with this information. It is undoubtedly true that exposure to the modern world, with all its temptations, is not always a recipe for contentment. Even if we too often idealize the pre-modern world—playing down the downsides of illiteracy, male domination, and ill health—we must at least acknowledge the possibility that ignorance can sometimes mean bliss. But elevated to public policy, there are real dangers of paternalism or outright authoritarianism.
The Growth Delusion Page 19
