Siobhan McAndrewInstitute for Social Change, U.

Manchester30 April 2009

The economics of well-being and the well-being policy

debate

Measuring well-beingEurobarometer survey question:

‘Taking all things together… Would you say you are very happy, fairly happy or not too happy?’

British Social Attitudes survey question:

‘All things considered, how satisfied are you with your life as a whole nowadays?

Answer using this scale where 1 means extremely dissatisfied and 10 means extremely satisfied’.

Surely a stupid question? What happens when you report life satisfaction of 10/10

and then get even happier? Psychological tests show that 9 tends to be the upper limit….

Don’t most people just say 5 without thinking? Yes, there is some ‘anchoring’…

What about different age groups and cultures? ‘Stiff upper lip’ for the WWII generation. East Asian norm of restraint.

Don’t people think of different things when they think of happiness?

Yes – some people tend to think back to their ‘best’ experiences (birth of a child) rather than day-to-day life…

Is pleasure the same as fulfilment? Is the absence of unhappiness the same as happiness?

But the results are still useful!People don’t refuse to answer because 12 isn’t

available. The French-speaking Swiss are happier on

average than the French.How people say they feel matches observables:

memory of positive and negative life-events how friends and family say they feel authentic smiles physiological responses to stress ECG measures of prefrontal brain activity.People who are ‘happy’ tend to be satisfied

with life too – there isn’t a great divide between pleasure and fulfilment. But unhappiness does seem to be a different thing entirely.

How does Britain do?Nordic Europe is

at the top, Eastern Europe at the bottom

People in Britain seem to be happier than France, Germany or Italy

But some way off Denmark and Sweden.

These differences matter and need explaining.

The good news….

‘How satisfied are you with life as a whole?’

…30% say 8!

Some anchoring at 5?

Hard core of seriously unhappy…

‘Job is interesting most or all of the time’

‘I have somebody to talk to’This gives a rough illustration of ‘social capital’, though we might more properly try to examine social networks more broadly.

The sad news…

‘Never meet socially with family, friends or co-workers’

‘At times I feel like a failure’

Is the UK more like America –

Too much self reliance?

Internalising blame?

Why so different from France and Germany?

‘Depressed all or most of the time’

7% for UK

BUT

Survey is face-to-face

How has happiness changed over time?

It hasn’t, really:

Income per head has doubled from 1973 to 2006

But life satisfaction has shown a very weak upwards trend

The famous Easterlin paradox

The income- happiness relationship across countries

… after a certain point, higher income seems to make little difference.

Why doesn’t richer make us happier?We just get used to having more.

‘Hedonic treadmill’: mp3 player, iPod, iPhone… Friends Reunited, MySpace, Facebook,

Twitter…Lottery-winners and quadriplegics

Paralysed by choice – pensions, mobile phone contracts

Poor choices – failure to save, diet control. Status Races: ‘if everyone stands up to get

a better view, they can’t see any better than before’.

Maybe it isn’t us… If you’re poor, richer definitely does make you happier.

And also cuts unhappiness.Lottery winners and quadriplegics do not adapt. It’s an unequal society. Some things are truly in short supply – not just ‘relative’:

o Good-quality housingo Not enough amenities – e.g. schools, public transport

links, green spaceo Congestion.

Other things are going on too:o Changing family forms: relationship breakdown is

stressfulo Flexible labour markets: wealth for some, lack of

security for manyo Obesity epidemic; alcohol licensing

Is it really possible to opt out?

Women tend to be happierHaving many friends Being young or old Having a partner Having an education Being healthy – exercising - having low blood pressureEarning good money Being self-employed Having sex once a week with the same partner Being religious or a volunteerLiving in the WestHaving time to adapt to change

What matters for individuals…

…. and how much?Imagine that your household income went UP by

50%, and how much happier that would make you. Say this is 100 units. Compared with that:

A household income CUT of 33%: cuts WB by 100Being unemployed not employed: cut by 300Insecure rather than secure job: cut by 150Divorced not married: cut by 250Separated not married: cut by 450Widowed not married: cut by 200‘God is important to me’: rises by 200Trusting other people: rises by 100Secular morality: rises by 100

Evidence shows that unemployment causes unhappiness, not the other way round.

The longer unemployment lasts, the less the person feels a sense of control over their lives.

Social capital (more friends or ‘getting involved’) doesn’t appear to reduce the pain of unemployment. But the results are probably ‘spoiled’ because those who have more friends tend to be re-employed more quickly.

Some evidence that unemployment hurts less if the unemployment rate in the local area is higher.

More on unemployment

In general, do you think that most people can be trusted, or that you can’t be too careful?Bowling Alone: where there is high trust,o higher incomeso better health outcomeso lower suicide rates.1979 study: relationships and health.

If have partner, close relatives and friends, church membership, or other types of membership, reduced mortality in that order of importance.

2000 study: one-third of the variation in traffic fatalities in the West due to differences in trust.

Not all social capital is ‘good’ social capital…Not Coronation Street… relationships take time.Residents’ Committees and pavement cafes not enough.

More on social capital

More on healthSelf-reported health: strong association

with life satisfaction. May be more important for well-being than

employment or marital status, but for most cases, can adapt to condition.

However, those in chronic pain and the mentally ill do not adapt.

Accident victim in TV interview: ‘You probably think I am unhappy but you are wrong. And I used to think that I knew what suffering was but I was wrong’.

Policy to improve well-being Examples: care for the elderly, support for heritage, education for its own

sake, parental leave entitlement, National Parks. Do we have an NHS because:

o a healthy society is more productive? Happier? Because people fought for it? Because it’s an efficient mode of provision?

Good example: tax on cigarettes helped smokers give up and their well-being increased.

Bad example: ‘the environment improves our wellbeing’. ‘We can adapt to doing without’. Underestimates challenge of climate change, and fundamental importance of environmental quality.

Subsidise marriage – or reduce child poverty? Subsidise religions, if they make people happy? Would any government tax cheap fatty food? Minimum alcohol prices

backlash… Maximum working week? Politicians and trust.

ConclusionsWe don’t know enough to say whether society has

reached a ‘happiness limit’.But we do need economic stability, to prevent

unemployment and the shock of losing a standard of living.

Processes matter as well as outcome – interventions to improve well-being have to be fair.

Evidence points to particular priorities: - alleviation of chronic illness, including mental illness

- reducing unemployment & finding macroeconomic stability

- strengthening relationships and social capital.

siobhan.mcandrew@manchester.ac.uk

Thank you for listening!