It may feel like the world is falling apart, with rising income inequality, climate change, and an increasingly negative bias in the media. Yet not everyone feels this way. In the book Enlightenment Now, Steven Pinker presents overwhelming evidence across more than 70 figures that our lives are better today. But what do you think? Are we better off? How do you know?
I argue the answer depends largely on how well-being has changed over time. According to the United Nations, the objective of development is greater well-being (1990 UN Human Development Report). More recently, 25 social scientists, including six Nobel laureates in economics, were commissioned to assess the measurement of economic performance and social progress. They recommended “shifting emphasis from measuring economic production to measuring people’s wellbeing (Stiglitz et al., 2009, p. 12).”
Well-being sounds good, but what does it actually mean? There are a lot of measures. Economists and governments increasingly support survey responses to questions such as, “All things considered, how satisfied are you with your life as a whole these days?” When collected from nationally-representative surveys, the answers are considered to be psychometrically reliable and valid, that is, they consistently measure well-being in the way in which we would expect. We refer to the answers as measures of subjective well-being, or more simply, happiness.
Happiness has some advantages over other measures of well-being, including so-called objective, or hard, measures like income or life expectancy, for instance. When people evaluate their own lives, they decide for themselves what is important, the degree of importance, and then summarize everything into one single measure. Each response is also worth the same whether you are rich or poor. Ultimately, happiness is the most non-paternalistic, holistic, and representative measure of well-being that we have.
How then can we increase happiness, that is, how can societies progress? The answer is not national income (GDP) growth alone. In 1974, Richard Easterlin first documented how happiness did not increase in correspondence with GDP growth. This still holds today. For example, while GDP per capita (adjusted for inflation) has more than doubled in the United States since the early 1970s, happiness has declined. China serves as another example. From 1990 to 2015, GDP per capita increased by a factor of five, yet again, happiness, if anything, declined.
This surprising result has since been tested and retested countless times. Recently, I published an updated study with Professor Easterlin that demonstrates there is no relation between long-run GDP per capita growth rates and changes in happiness across 123 countries. We produced multiple estimates, including one for the less developed countries. Even there, greater GDP-growth trends do not necessarily contribute to lasting improvements in happiness.
There are two psychological explanations. First, the very real desire to ‘keep up with the Jones’. If you are richer than others are, you feel happy, while being poorer feels bad. That means that if your income goes up at the same rate as your neighbor’s, due to, for instance, national GDP growth, then you experience no relative gain or loss in income and no associated change in happiness. We also tend to habituate to increasing income and many of the associated improvements in material living conditions. Another potential explanation is that economic development is often mismanaged and associated with trends that contribute negatively to life, e.g., declining social trust, feelings of unfairness, and environmental degradation. According to this theory, any benefits of GDP growth are offset by costs.
What is the answer then? Are countries doomed to stagnate? In Richard Easterlin’s words, “Full employment and safety net policies do increase happiness. (Easterlin 2013, pg. 8)” This was a surprise to me, as an American steeped in neoliberalism and trained in neoclassical economics, but I now find the evidence convincing.
First, countries that spend more on social benefits, such as health, sickness, pension, and unemployment benefits are happier, and not by a small amount either. My research, over more than 100 countries, shows that social benefits are more beneficial for happiness than the quality of government. This study is particularly informative when it comes to the world-wide country coverage, but still has its limitations, as all studies do. In part for this reason, my colleagues and I conducted three more studies using different methodologies.
Recall that some countries fared better than others during the Global Financial Crisis of 2008. We show that in Europe, the decline in happiness was smaller in countries with more generous unemployment insurance.
In another paper, we focused on Japan, which shifted from a period of rapidly increasing GDP and stagnating happiness to a period of stagnating GDP and increasing happiness. In the 1990s Japan implemented family policies, increased support for the elderly, generally expanded the social safety net, and greater happiness followed.
In our most recent study, we compared the influence of GDP per capita, air pollution (particulate matter), social capital (trust in others), unemployment, and the social safety net on happiness in 10 European countries. From the early 1980s to the late 2010s, Spain, Italy, and France experienced substantial improvements in happiness, while Denmark and Sweden experienced similarly large declines. As you may have guessed, Spain, Italy, and France expanded their safety nets, while Denmark and Sweden reduced theirs. In contrast, the other variables did not contribute to happiness in a statistically meaningful way.
It is possible for societies to progress, and many have, even in recent years. Certainly not all countries have gotten happier, however. The singular focus on GDP growth need not lead to better lives and may even contribute to significant social and environmental challenges. On the other hand, expanding social safety nets is associated with lasting increases in happiness. The granted sense of security frees people to focus on their health, relationships, and more generally, anything that brings them meaning.