Good, old-fashioned economic growth is the key to happiness

Newly installed as Prime Minister, a fresh-faced David Cameron declared in November 2010 that “the country would be better off if we thought about wellbeing as well as economic growth,” as he launched a £2bn plan to measure the UK’s happiness.

Measuring wellbeing is no easy task.

Just ask the Happy Planet Index, which in its 2006 rankings hailed the small Pacific island of Vanuatu as the happiest place on earth, despite never having done any actual research there. Researchers chose instead to estimate Vanuatuan happiness levels based on comparable countries, then factored in life expectancy and the island’s low ecological footprint to claim that its citizens enjoyed world-beating levels of wellbeing.

It is not clear that the rest of the world – or indeed Vanuatuans – would agree. For while we know that wealth is not the only indicator of a country’s success, it is both an important and practical metric, as today’s “Happy Now?” report by the Resolution Foundation demonstrates.

The report looks at UK wellbeing, and comes to a conclusion that few should find startling: money matters. Employment and home-ownership are both associated with greater happiness, as are higher incomes – although income rises have a far greater impact at the lower-paid end of the spectrum.

This suggests that old-fashioned policies like ensuring that people have stable jobs, good prospects, and a secure place to live will drive improvements in wellbeing.

But while such an assertion may seem obvious, a nefarious force is growing on the left: anti-growthers. Often associated with radical climate activism, adherents claim that the pursuit of economic growth is undesirable. The reality is the opposite: economic growth is the most effective way to improve security and prosperity.

The average voter may tune out when they hear that growth last year slowed to 1.8 per cent, its lowest since 2012, but a few extra percentage points to this seemingly dull metric have the potential to change lives.

Policies geared at increasing GDP growth, whether tax cuts or initiatives to spur productivity will, over time, increase prosperity and yield tangible results for Cameron’s happiness index.

There may be more to life than GDP, but if policymakers take growth for granted (or even advocate against it), important additional concepts such as environmental and social wellbeing will take a backseat to the more immediate question of financial security.

Unless politicians really believe that Brits would be better off with the standard of living offered in Vanuatu, it is clear where their focus must be.