Green Calgary

Happiness – the New Measure of Economic Success?

Filed in: Banking & Investments

Reader Question

I listen to the CBC on a daily basis and I’ve noticed that between great journalistic reporting on such issues as melting sea ice in the north, increasing personal debt among Canadians, and the worsening time crunch most people are experiencing, lies the daily financial news with the numbers on the TSX, Dow Jones, gold, and loonie. The general tone is always growth good, shrinkage (of the economy) bad. Yet I wonder how it is that these numbers are never in the context of the stories that surround them. What good is growth when with it comes more pollution, maxed out credit cards and an increasingly stressed out population?

Curious,

Jacquelyn

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Ashley's Answer

Dear Jacquelyn,

We have been led to believe that happiness and, indeed, our self worth is determined by what we contribute to the gross domestic product (GDP) – the amount of goods and services produced in a year, in a country. The message GROWTH IS GOOD is repeated daily – in the media, by our employers, and by our elected officials. The economy is deemed “healthy” if the GDP grows year after year. This, apparently, is a given. Yet, the notion that economic growth can be infinitely sustained is preposterous because, if you haven’t already noticed, we live on a sphere called Earth. And it, by all accounts, is finite.

As Nobel Prize winning economist Joseph Stiglitz suggests, “If GDP is what we think is success, people will strive for GDP.” Hear this message enough and you begin to believe it. But Stiglitz notes that GDP is incapable of capturing the whole story, and it fails to differentiate between the things we want and the things we don’t. As Robert F. Kennedy so eloquently said:

The Gross National Product measures everything except that which makes life worthwhile… [It] includes air pollution and advertising for cigarettes, and ambulances to clear our highway carnage. It counts special locks for our doors, and jails for the people who break them. The gross national product includes the destruction of the redwoods, and the death of Lake Superior. It grows with the production of napalm and missiles and nuclear warheads.

Perhaps, as Thomas Berry once said, next to the stock market report should run the “State of the Earth” report: “The market was up five points today; the Earth was down sixteen points.”

Sure, GDP growth in poor countries still increases welfare (if distributed equitably), but it has been revealed that once people reach a certain level of material comfort, further income does little to promote happiness. Economist Rafael Di Tella, a happiness researcher from the Harvard Business School admits:

This idea that income is so important to happiness is not correct. All the evidence seems to be pointing in the direction that we are working too much. In fact, we’re happy if we work less. We are spending too much time on work and too little time with friends and family. So there’s a mistake in the economic models that suggest happiness will come from more income.1

This may explain why a tripling or quadrupling of our wealth since 1970 has not made us noticeably happier, despite vast increases in purchasing power and consumer goods.2 So how then do we measure success?

In Canada, Roy Romano, a former premier of Saskatchewan, is working to advance the Canadian Index of Wellbeing, which endeavors to provide insights into the quality of life of Canadians by measuring standard of living, health, environmental quality, education levels, use of time, community vitality, participation in the democratic process, and the state of leisure and culture. It will provide a “new way of measuring wellbeing that goes beyond narrow economic measures like GDP.”

Others like Nic Marks, lead author of the Happy Planet Index at the New Centre for Economics, and Mark Anieliski - University of Alberta professor and author of The Economics of Happiness – suggest we base success on how happy we are, focusing our efforts not on perpetual growth but, rather, enduring happiness.

Looking out at the horizon, it appears we are headed for a different, and by the looks of it, a better accounting system. But whatever path we take, we must challenge the notion that we can have infinite growth on a finite planet. According to the past senior World Bank economist Herman Daly, a Steady State Economy (SSE) is perhaps our most desirable outcome because “the earth as a whole is approximately a steady state… The macro-economy becomes an absurdity if its scale is structurally required to grow beyond the biophysical limits of the Earth.” “We must”, to paraphrase the late Thomas Berry, “develop a human economy that sits well with the earth economy; otherwise we’ll progressively extinguish our only hope.”

We need to reinvent the way we think and, ultimately, how we behave. If we want this to work we must, as Wendell Berry says, “Waste less, spend less, use less, want less and need less.” The good news is that stuff is not what makes us happy, despite all the time we spend amassing it. Real happiness, according to the research of Nic Marks, flows from: 1) connecting with others, 2) being more physically active, 3) being mindful and taking notice of what’s around you, 4) continuing to learn throughout life, and 5) giving. Put less of your personal energy into accumulating stuff and more into these five areas and, in all likelihood, the economy will improve, the planet will heal, and you will be happier.

Steadily,

Ashley

1,2 Green, Tom (2008) The Economics of Happiness - http://www.adbusters.org/magazine/77/economics_of_happiness.html

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