Personal Wealth Vs Happiness

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Stevenson and Wolfers argue that countries like these are exceptions to the rule. “Our results suggest that economic growth is a very powerful force for raising well-being,” Wolfers says. “It is not true that only income matters, but on average it looks like economic growth is good for happiness, even in rich countries.”

The new paper galvanizes an important debate about the purpose and effectiveness of economic policy—and about what has been the economic status quo for more than six decades. Governments around the world, including the U.S., have long made maximizing the gross domestic product—a measure of all the goods and services produced in the economy—their overriding economic goal.

The problem, if you buy into the argument of Easterlin and his followers, is that the endless pursuit of higher G.D.P. is largely self-defeating. People in nations with higher G.D.P.’s don’t get continuously happier. As a result, governments might be better advised to concentrate on things that actually do have an impact on happiness, such as maintaining stable families and friendly communities, reducing joblessness, providing adequate health care, and guaranteeing more personal freedom. In his 2005 book, Happiness: Lessons From a New Science, Richard Layard, one of Britain’s leading economists and a member of the House of Lords, advocated just such a policy shift, saying, “We should monitor the development of happiness in our countries as closely as we monitor the development of income.”

I asked Layard if the promotion of happiness is a practical agenda. “Oh, yes,” he replied. “We’re very busy at it here in Britain.” Many British government departments already have well-being divisions, and the Office for National Statistics, which tracks Britain’s G.D.P., is gathering more information about subjective well-being. Last year, the British government, led by Gordon Brown, allocated more taxpayer money for mental health programs, which can have a big impact on reported happiness.

Other European countries are following Britain’s lead. Frustrated with what he called “the growing gap” between official economic statistics and daily reality, French president Nicolas Sarkozy recently appointed a high-level commission to explore ways of quantifying happiness and well-being. The European Commission is also working on new economic indicators that will incorporate nonmonetary factors such as environmental progress into economic decisionmaking.

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