The Economics of Happiness: Exploring the Connection Between GDP and Well-being
The Economics of Happiness
Andrew Oswald
University of Warwick
The background
The background
Is modern society going in a
sensible direction?
To be able to know, we have to decide
what should be measured
.
Yet in 1934
Yet in 1934
•
“...
the welfare of a nation [can]
scarcely be inferred from a measure
of national income...”
Hug a tree today
Hug a tree today
Mr Oswald
at age 80
Prof. Simon Kuznets
•
The originator of the concept of GDP
•
“...
the welfare of a nation [can] scarcely
be inferred from a measure of national
income...”
The difficulty for economists:
Human beings have
feelings
.
Humans have feelings, and feelings
matter.
Governments around the world
are
starting to change what they
measure.
The Stiglitz Commission
Report, Paris 2009
•
This is now an official part of government
statistical information -- gathered by the Office of
National Statistics (ONS).
The UK’s ONS survey questions
The UK’s ONS survey questions
•
Overall, how satisfied are you with your life
nowadays?
The UK’s ONS survey questions
•
Overall, how satisfied are you with your life
nowadays?
• How happy did you feel yesterday?
The UK’s ONS survey questions
•
Overall, how satisfied are you with your life
nowadays?
• How happy did you feel yesterday?
• How anxious yesterday?
The UK’s ONS survey questions
•
Overall, how satisfied are you with your life
nowadays?
• How happy did you feel yesterday?
• How anxious yesterday?
• Do you feel the things you do in your life are
worthwhile?
It is natural to wonder whether humans are
able to answer such questions in a truly
revealing way.
One reason to think so
One reason to think so
…is their remarkable predictive
power
•
I will take you through 4 reported feelings
(and 4 observed actions).
The scientific value of numerical measures of human feelings.
Proceedings of the National Academy of Sciences of the USA.
Caspar Kaiser and Andrew J. Oswald October 3, 2022
119 (42) e2210412119
https://doi.org/10.1073/pnas.221041211
You will see graphs showing inverse
relationships.
Feelings numbers predict actions next period:
UK data
with about 100,000 observations
and
Typical GHQ mental-strain questions
H
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…
…
…
.
.
One backdrop
One backdrop
•
The intriguing, and worrying,
‘Easterlin Paradox’
•
Economic growth may not make us
happier.
Declining US happiness since 1972
[Blanchflower-Oswald results]
Rising Mental Despair Over Time in the USA:
% of Americans saying ‘every day of my life is a bad day
’
How has the modern work on the
economics and social science of
happiness proceeded?
Regression equations
Regression equations
Y = f(X)
Y is a measure of mental wellbeing
X is a vector of influences
Regression equations
Mental well-being = f(Age, gender, education
level, income, marital status, friendship
networks, region, year…)
A flavour of the key findings in this
research field:
Large effects from:
Unemployment
Income
Marriage
Bereavement
Friendship networks
Health
[No effects from children]
Large effects from:
Unemployment
-
Income
+
Marriage (formal or informal)
+
Bereavement
-
Friendship networks
+
Health
+
[No effects from children]
zero
The pattern of a typical person
’
s happiness
through life
U-shaped happiness in apes
(published in the
Proceedings of the National Academy of Sciences of the USA
)
and environmental effects
and environmental effects
•
Air quality (positive)
•
Green environments (positive)
•
Noise pollution (negative)
Luechinger
.
EJ
2009, Levinson
JPublicEconomics
2012, White et al.
Psychological Science
2013
… and diet also matters:
Obviously life is a mixture of ups and
downs
Much of the recent research follows
people through time.
eg. Andrew Clark’s work
The unhappiness from bereavement
Human beings also bounce back from,
say, disability.
Work with N. Powdthavee,
Journal of Public Economics
, 2008
Life-Satisfaction Path of Those Who Entered Disability at Time
T
and Remained Disabled in
T+1
and
T+2
BHPS data 1996-2005
However, there is a downside to
that adaptability (eg. marriage)
However, there is a downside to
that adaptability (eg. marriage)
We think there
is
adaptation to income
Drawing to a close:
#1
I believe it is sensible to study
‘feelings data’.
#2
Policy in the coming century may
need to concentrate on non-
materialistic goals.
#2
Policy in the coming century may
need to concentrate on non-
materialistic goals.
GNH not GDP.
The Economics of Happiness
Andrew Oswald
University of Warwick
Delve into the intricate relationship between a nation's economic growth, as measured by GDP, and the well-being of its citizens. The quest for understanding happiness beyond material prosperity takes us on a journey through history and modern society, challenging conventional economic indicators. Through the lens of human emotions and societal progress, we question the validity of traditional metrics in capturing the true essence of a nation's welfare.
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Presentation Transcript
The Economics of Happiness Andrew Oswald University of Warwick
The background Is modern society going in a sensible direction? Pound_20050329142207 radioactive-happiness-face
To be able to know, we have to decide what should be measured.
Yet in 1934 ...the welfare of a nation [can] scarcely be inferred from a measure of national income...
Prof. Simon Kuznets The originator of the concept of GDP
...the welfare of a nation [can] scarcely be inferred from a measure of national income...
Governments around the world are starting to change what they measure.
The Stiglitz Commission Report, Paris 2009
This is now an official part of government statistical information -- gathered by the Office of National Statistics (ONS).
The UKs ONS survey questions Overall, how satisfied are you with your life nowadays?
The UKs ONS survey questions Overall, how satisfied are you with your life nowadays? How happy did you feel yesterday?
The UKs ONS survey questions Overall, how satisfied are you with your life nowadays? How happy did you feel yesterday? How anxious yesterday?
The UKs ONS survey questions Overall, how satisfied are you with your life nowadays? How happy did you feel yesterday? How anxious yesterday? Do you feel the things you do in your life are worthwhile?
It is natural to wonder whether humans are able to answer such questions in a truly revealing way.
One reason to think so is their remarkable predictive power
I will take you through 4 reported feelings (and 4 observed actions). The scientific value of numerical measures of human feelings. Proceedings of the National Academy of Sciences of the USA. Caspar Kaiser and Andrew J. Oswald October 3, 2022 119 (42) e2210412119 https://doi.org/10.1073/pnas.221041211
You will see graphs showing inverse relationships.
Feelings numbers predict actions next period: UK data with about 100,000 observations
Typical GHQ mental-strain questions Have you recently: Lost much sleep over worry? Felt constantly under strain? Felt you could not overcome your difficulties? ..
One backdrop The intriguing, and worrying, Easterlin Paradox
Economic growth may not make us happier.
Declining US happiness since 1972 [Blanchflower-Oswald results]
Rising Mental Despair Over Time in the USA: % of Americans saying every day of my life is a bad day
How has the modern work on the economics and social science of happiness proceeded? happiness_400
Regression equations scatter
Regression equations Y = f(X) Y is a measure of mental wellbeing X is a vector of influences scatter
Regression equations Mental well-being = f(Age, gender, education level, income, marital status, friendship networks, region, year ) scatter
A flavour of the key findings in this research field:
Large effects from: Unemployment Income Marriage Bereavement Friendship networks Health [No effects from children]
Large effects from: Unemployment - Income + Marriage (formal or informal) + Bereavement - Friendship networks + Health + [No effects from children] zero
