As the UK is said to be the twenty-third happiest nation on earth, is happiness economics a waste of time?
Tim Worstall, senior fellow of the Adam Smith Institute, says Yes.
All too many of its practitioners chafe at the restriction that economics is a positive subject (describing what is) rather than a normative one (what ought to be). This is the explanation for the World Happiness report, where two distinguished, elderly and shockingly right-on economists, Jeffrey Sachs and Richard Layard, get to tell us how it ought to be. Layard, let us not forget, is on record as deciding that earning over £12,000 a year is a form of pollution and those that do so should be subject to a stinging 30 per cent supplementary tax rate. Because of equality, or something. There is somewhere between very little and nothing of objectivity in this report. It is announced that less happiness inequality makes a place happier. Really? There’s an entire chapter on how we need to have a new non-religious religion for all. Having children makes us unhappy: one wonders why we’ve bothered all these generations. We might well all be happier if we left the elderly to their delusions that all is going to the dogs, and simply went off and did what makes us happy.
Selin Kesebir, assistant professor of organisational behaviour at London Business School, says No.
Happier people are also more productive people, so happiness economics really matters, even if we take economic growth as our sole objective. When growing wealth is more evenly distributed across income brackets, we often observe an increase in life satisfaction. For example, in Scandinavia, where income inequality is low, happiness increases with increasing GDP. In contrast, in many developing Latin American countries, where wealth is still very much concentrated among a small portion of elites, increasing wealth does not come with more happiness, and happiness levels sometimes even go down as the economy grows. Even wealth distribution should create a virtuous cycle. This has important implications for economic policy, at a time when inequality is growing globally. Ignoring the effect of GDP on happiness and consequent productivity can lead to a myopic economic policy, narrowly focused on raising GDP without sufficient attention to wealth redistribution.