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Government has vital role in creating a happier society

16 Jan 2012 | Action for Happiness

The Institute of Economic Affairs has today published a new report claiming that it is wrong for governments to measure, and to attempt to improve, people's wellbeing.

The IEA suggests that any attempts to direct policy towards improving wellbeing will fail and that government is better off leaving people to make their own decisions about how to maximise their wellbeing. It also claims that happiness is very strongly related to income and implies that society will benefit from maintaining a focus on increasing income as a priority.

We believe this is misleading and wrong. Although governments cannot make people happy per se, a vital role of government must be to create the conditions for people to lead happy lives. As Thomas Jefferson said in 1809: "The care of human life and happiness is the first and only legitimate object of good government".

An essential role of all democratic government is to support and encourage activities that contribute to the social good, for example in maintaining law and order or providing healthcare. Government policy directly affects people's lives in many areas and so by taking people's wellbeing into account, policy makers should be better able to identify factors that contribute to, or adversely affect, wellbeing - and make decisions that aim to deliver measurable improvements in people's quality of life.

An important point raised by the IEA is the extent to which a focus on wellbeing encourages or inhibits personal freedom. The IEA report says that government should steer well clear of this territory and suggests that a focus on wellbeing leads to inefficient central planning and curtailed freedom. In fact quite the opposite is true. The new subjective wellbeing measures being collected by the Office for National Statistics (ONS) involve asking people about their own lived experience. Whereas most policy making is based on officials assuming they know what's best for people, this new well-being data gives people across society a voice - so it is in fact highly democratic. Importantly, rather than being the sole focus of central government, the ONS data will be statistically significant at the local authority level - thus allowing local councils to, for example, understand much more about the location and causes of unhappiness in their communities and how this compares to other nearby areas. [1]

One point where we agree with the IEA is that individuals have an even more important role than government in affecting their happiness. This of course is the main reason we launched Action for Happiness - to help people apply the new science of wellbeing to the decisions they make in their personal lives, families, workplaces and communities. Our members recognise that, while individual freedom is an important contributor to wellbeing, we are also highly interconnected - so our happiness depends on those around us and we can, and should, contribute to the happiness of others too.

Yet despite the importance of individual action, the role of government nevertheless remains very significant. To give just a few examples, the evidence suggests that a focus on increasing well-being is likely to lead to government placing a much greater emphasis on promoting good mental health, putting economic stability before economic growth, teaching life skills in schools and supporting families in need - particularly young children in their formative years.

The IEA report also reignites the on-going debate about the relationship between money and life satisfaction, both within and across countries. Richard Easterlin's famous "Easterlin paradox" (which showed that wellbeing stagnates as income rises beyond a certain level) has been challenged by various recent studies [2] and, although Easterlin's latest work suggests that the paradox remains [3], debate continues and there is need for further evidence. What we do know is that, in advanced market economies, increases in wealth don't necessarily translate into improvements in life satisfaction. Long-term socio-economic panel studies show that it is relative income that matters more to our happiness than absolute income. [4]

Finally, the IEA report is right to counter those who would argue that all current government policy is guided towards maximising GDP; of course policy makers pursue a wide range of goals. Yet there is undoubtedly a leaning in current policy making towards interventions that encourage long-term economic growth and we know that some policy decisions that are good for growth are bad for wellbeing. What is needed is a more coherent, over-arching focus for government policy and we believe that should be to maximise people's long-term well-being.

Lord Richard Layard, London School of Economics

Geoff Mulgan, Chief Executive, Nesta

Dr Anthony Seldon, Master, Wellington College

Dr Mark Williamson, Director, Action for Happiness

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References

[1] Matheson, J. (2011), Measuring what matters: National Statistician's Reflections on the National Debate on Measuring National Well-being, Office for National Statistics

[2] Sacks, D. W., Stevenson, B., Wolfers, J. (2010), Subjective Well-Being, Income, Economic Development and Growth, IZA DP No. 5230

[3] Easterlin, R. et al (2010), The happiness-income paradox revisited, Proceedings of the National Academy of Sciences of the United States of America 107 (52): 22463-22468

[4] Layard, R., Mayraz, G., Nickell, S. (2010), Does relative income matter: are the critics right?, CEP Discussion Paper, No. 918. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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