Happiness is a basic aspiration of humankind. However, the concept is often related to economic growth and the goal of having as much as you can. Governments, economists and, policy-makers, argue that the ultimate goal of development and economic growth is the welfare of people, yet, the increase of well-being is defined in terms of gross domestic product (GDP). Nonetheless, the relationship between economic growth and human well-being has been criticized because there is no hard evidence supporting the positive correlation between income and individual welfare and happiness; on the contrary, “as western societies have got richer, their people become no happier (…) It is a fact proven by many pieces of scientific research” (Layard in Victor, 2008, p. 124).
In that sense, we could state that societies do not get happier as they get richer. Moreover, one of the outcomes of the capitalist society and modernity is the increase in the supply of products, treatments and different types of therapies to control and reduce the level of stress, preoccupation and, unhappiness. So, why government´s priorities are still concentrated mainly in economic growth when the end goal of development should be the welfare and happiness of the people?
A brief history of happiness and its relation with economic growth:
The concept of happiness can be classified as subjective or vague because it can be interpreted differently according to the context and believes of different persons. However, its origin is related to Aristotle’s idea of Eudaimonia, or living a good life, but his understanding of happiness was in terms of virtuous actions not as is most commonly understood, in the hedonism way of material pleasure, where the main objective is to earn money and accumulate wealth. As in the general premise of the capitalistic system, where people need to work to earn money and, to earn money to consume and be happy.
In general terms, the concept is a shorthand for joy, satisfaction with life, or general well-being, but often related to personal income and economic factors. This is evident in the economic theory of utilitarism, which was made famous by Jeremy Bentham, in which one of the main premises is that people make their choices with the main objective of maximize their happiness, or, as they called, utility. In simple terms, if a person decides to consume a good X rather than a good Y, this means that the good X give him more utility or happiness than the good Y. Nevertheless, this a simplistic way to understand happiness because is related only to the propensity of people to choose between competing goods.
While the holistic concept of happiness includes several dimensions, as Layard1 proposed: family and relationships, financial situation, work, community and friends, health, personal freedom and personal values. The mainstream understood of happiness is to considered it only as a consequence of the increase of income and its measure is related to the measure of progress and economic growth through the lens of GDP2, which is considered the most relevant indicator of economy.
As a consequence, many authors have examined the relation between economic growth and happiness and alternatives ways to measure development. One of them is Richard Easterlin, an economist who coined, in the middle 70´s, the term “Easterlin paradox”, stating that “average happiness levels did not increase over time as countries grew wealthier, nor was there a clear relationship between average per capita GDP and average happiness levels across countries” (Easterlin in Graham, 2013, p. 6). Moreover, development process shows us that rapid economic growth has not caused an increase of well-being but, inequality and poverty, environmental damages, exploitation of natural resources, among others. While economic growth led to improve the live conditions of a minority, most individuals ended up being worse off because the gains have not been even.
GDP is far from being more than a merely economic measure because it does not take into account the measures of societal welfare. As U.S senator Robert Kennedy stated: “Our GNP counts air pollution and cigarette advertising. … Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. … It measures everything in short, except that which makes life worthwhile.” (Kennedy in Robbins, 2010)
In that context, the insufficiency of GDP to increase the level of quality of life and, in general, welfare of the citizens, has led to countries, as the Himalayan kingdom of Bhutan, to reject this measure and replaced it for the Gross National Happiness (GNH)3, which measures aspects as environmental, spiritual and physical health. This country has changed the public policy goals, not to increase GDP, but GNH. As Thakur Singh Powdyel, Bhutan’s ex-minister of education said: “We believe you cannot have a prosperous nation in the long run that does not conserve its natural environment or take care of the well-being of its people, which is being borne out by what is happening to the outside world” (Kelly, 2012).
Similarly, in 2008, Nicholas Sarkozy, former President of the French Republic, established “The Commission on the Measurement of Economic Performance and Social Progress”. He asked, Joseph Stiglitz, Amartya Sen and, Jean Paul Fitoussi, to identify the limitations of GDP, and to give guidelines for the production of more relevant indicators of social progress. After that, the OECD, established a High-Level Expert Group on the Measurement of Economic Performance and Social Progress (HLEG), with the purpose to follow-up on the recommendations of the Commission and regarding: income and wealth inequality, global Inequalities, subjective well-being, and sustainability.
Above all, the Easterlin paradox remains valid, as we can see in figure 1, which presents that people in Egypt, Ukraine, United States and United Kingdom, have been rating their lives worse since 2013, even when the GDP per capita has increased.
Figure 1. Comparison of GDP and life evaluation in Egypt, Ukraine, United States and United Kingdom
Source: (Gallup, 2017)
In this point, it is important to take into account that the main focus of GDP is the rational side of the economic behaviour, but as the behavioural economic theory argue, people behave not only in a rational way, but emotions have an important role in decision making. Consequently, GDP lacks of scope in giving guidelines for integral public policies for well-being. Yet, there is a growing interest in develop better metrics of human progress and life satisfaction, as the World Happiness Report, which is an annual publication which central objective is to measure and understand subjective well-being, though 6 variables, some of them classical measures like GDP, healthy life expectancy and perceptions of corruption; but also includes indicators as social support, freedom to make choices and generosity of the people.
Figure 2 shows the results of last year report. As we can see, while the GDP indicator is important, the rest of the variables, in relative terms, have a bigger impact on the total results. Besides, countries like United States, United Kingdom, Germany, or Luxembourg, which economies are considered as strong, are not in the first 10 places of the ranking, situation that give us evidence that beyond the economic conditions and the fact that economic growth may be a signal of improvement of economic well-being; the opportunities, quality of life and satisfaction with it, is more important for the citizens.
Figure 2. Ranking of Happiness 2016
Source: (Helliwell et al., 2017, p. 22)
Critics of the use of happiness as an indicator for development:
In the 90´s an important contribution to the discussion about growth was made by Amartya Sen, who questioned the relevance of economic growth and proposed it as only a means and not an end in itself for development, placing people at the centre and as the most important actor. Furthermore, Sen’s theory was the starting point for the human development approach, which change the focus from economic growth to the need to remove the sources of unfreedom, so development was seen as an expansion of capabilities and not an expansion of economic growth: “the purpose of development is to improve human lives by expanding the range of things that a person can be and do, such as to be healthy and well nourished, to be knowledgeable, and to participate in community life” (Sen in Fukuda-Parr, 2003, p. 303).
However, Sen is not a defender of using happiness as a measure of human progress because it does not take into account the standard of living and the basic conditions and capabilities of the people. For instance, a worker in precarious conditions or a person addicted to drugs, could report to be happy but live in deprivation. So, beyond the sense of happiness, Sen argues that the living conditions are important too because while “a grumbling rich man may well be less happy than a contented peasant, he does have a higher standard of living than that peasant” (Sen in Hall and Helliwell, 2014, p. 8)
Sen´s arguments are validated with the “paradox of happy peasants and frustrated achievers”, which stated that usually the richer people are more frustrated and unhappy than poor people, even when they have better conditions, opportunities and, accessibility to services. The results of a study made by Stefano Pettinato and Carol Graham, shows that the majority of poor people report high levels of well-being perceptions, yet their living conditions and opportunities were unequal. (Graham, 2013)
Beyond the critic of leaving behind the conditions of life, and the need to include elements of distribution; the other obstacle that happiness face to become a progress indicator, is the fact that is a deeply subjective concept which relies mainly on personal assumptions. In that sense, its measurement is difficult and is made mainly through surveys, and it does not take into account the difference in context and cultures. For instance, the meaning of the questions can be different according to the language, translation and, perception about the concepts; the relation of people and places.
Happiness as an end goal for development:
As we saw, happiness is a complex concept which relies on social, political and economic determinants. In that sense, human well-being is not reducible to a single dimension but is the product of many facets of society. It is true that happiness, as a measure, have important limitations because of its complex definition and measure. However, happiness could serve as a complement to broaden the scope of policy arena and to go beyond economic growth. It is time to change the perspective and understand that development process has complex consequences that cannot be explained by a single story or a single measure system. We need a more comprehensive view of the welfare and a greater focus on well-being in order to create better policies.
We cannot deny that income and economic growth matters, but we need to recognize that social conditions, health, nature, environment and, values are more important to progress. In that sense, we need to move away from the economic growth, otherwise, happiness is going to become an utopic dream.
“As long as economic growth remains so important to global policymakers, humanity is hopelessly constrained: the environmental policies we need face the unreasonable political hurdle that they must also be shown to promote economic growth. This must change. At grass-roots level, many people in the developed world are already directing their energies towards enhanced well-being, in part by turning to local producers for their food, clothing and other needs. Institutions of all kinds — financial, political, legal, educational, religious and social — that have evolved to thrive in a fast-growing economy will have to adapt.” (Victor, 2010, p. 371)
Along these, “there is a string critique of the homogenization of cultures because of the adoption of production models experienced in the Global North. The western development model is a mental construct adopted by (read imposed upon) the rest of the world that need to be deconstructed” (Kothari et al., 2014, p. 366). Nowadays, people are more aware of the failure of economic growth and is trying to find alternatives to live their life far from the western impositions, as the Buen Vivir in Ecuador and Bolivia; and the Ubuntu in Africa. The main challenge now is to increase human well-being, but also guarantee environmental sustainability, and respect for cultural differences.
As the Human development approach stated, people are active agents of change, so the transformation needs to start in our personal arena. We need to become less dependent on pleasure for happiness, leave behind the material wealth and learn to give and to love more; otherwise, the result will be more inequality, unhappiness and unsustainability and, probably more economic growth instead of well-being and happiness
1 Layard (2005) coined the term the big seven factors of happiness. (Ulluwishewa, 2014)
2 GDP as a welfare measure was adopted in the Bretton Woods Conference, when the majority of the nations agreed that economic growth was the path to development and economic well-being.
3 The term was coined by the king of Bhutan, Jigme Singye Wangchuck, in the 1970s but it was officially included in the Constitution in 2008.
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