Are quantitative measures of subjective wellbeing reliable enough to provide insights into empirical macroeconomic analysis, and should they influence the objectives of macroeconomic policy? The latest Centre for Macroeconomics and CEPR expert survey finds a reasonable amount of openness to wellbeing measures among European macroeconomists. On balance, though, there remains a strong sense that while these measures merit further research, we are a long way off reaching a point where they are widely accepted and sufficiently reliable for macroeconomic analysis and policymaking.
Wouter den Haan, Martin Ellison, Ethan Ilzetzki, Michael McMahon, Ricardo Reis, 30 March 2017
Andrew Clark, Sarah Fleche, Richard Layard, Nattavudh Powdthavee, George Ward, 12 December 2016
Understanding the key determinants of people’s life satisfaction will suggest policies for how best to reduce misery and promote wellbeing. This column discusses evidence from survey data on Australia, Britain, Germany, and the US which indicate that the things that matter most are people’s social relationships and their mental and physical health; and that the best predictor of an adult’s life satisfaction is their emotional health as a child. The authors call for a new focus for public policy: not ‘wealth creation’ but ‘wellbeing creation’.
Angus Deaton, 09 November 2016
Should the government target aggregate happiness? In this video, Angus Deaton discusses his work on well-being. This video was recorded at the Institute for Fiscal Studies' Annual Lecture in October 2016.
John Helliwell, 06 September 2016
Discussions about inequality tend to focus on the distribution of income and wealth. This column argues for a shift in focus towards another source of inequality – subjective wellbeing. Wellbeing inequality has grown significantly for the world as a whole and in eight of the ten global regions. One way to address this inequality is to increase social trust.
Thomas Hills, Eugenio Proto, Daniel Sgroi, 18 September 2015
With records of subjective wellbeing going back less than half a century, this column asks if we can know the impact of key past events on the happiness of our ancestors. It presents a new historical index that draws on millions of digitised books in the Google Books corpus of words using sentiment analysis. The index – which goes back to the 1776 US Declaration of Independence, 200 years earlier than any other index of happiness – makes it possible to analyse the historical drivers of happiness in France, Germany, Italy, Spain, the UK and the US.
Anne Case, Angus Deaton, 18 July 2015
High suicide rates are often cited as evidence of social failure. Despite this, some countries and regions that do very well in terms of happiness have among the highest suicide rates. This column explores this paradox using global data on suicide and self-reported life satisfaction. Although the paradox is confirmed for Eastern European and wealthy countries, inconsistent patterns emerge when other demographic factors are taken into account. This might reflect the empirical difficulty of explaining suicide, but might also be indicative of the unreliability of self-reports of happiness.
George Ward, 06 May 2015
A solid empirical result is that voters reward governments for recent economic prosperity. This column presents new evidence that the electoral fate of governing parties is also associated with the electorate’s wider ‘subjective well-being’. Policymakers who want to win should focus on more a broad range of factors that matter to the quality of people’s lives.
Daniel Benjamin, Samantha Cunningham, Ori Heffetz, Miles Kimball, Nichole Szembrot, 02 January 2015
There is growing interest in alternative measures of national wellbeing, such as happiness or life satisfaction. This column argues that a small number of survey questions are unlikely to capture all the aspects of wellbeing that matter to people. Using a stated-preference survey, the authors find several aspects of wellbeing to be important that are not commonly included in wellbeing surveys, such as those related to family, values, and security. This approach could be used to provide weights for wellbeing indices.
Claudio Michelacci, Hernán Ruffo, 18 November 2014
Like any insurance mechanism, unemployment benefits involve a trade-off between risk sharing and moral hazard. Whereas previous studies have concluded that unemployment insurance is close to optimal in the US, this column argues that replacement rates should vary over the life cycle. Young people typically have little means to smooth consumption during a spell of unemployment, while the moral hazard problems are minor – regardless of replacement rates, the young want jobs to improve their lifetime career prospects and to build up human capital.
Alex Bryson, John Forth, Lucy Stokes, 17 November 2014
It is generally agreed that firms can improve their employees’ wellbeing through improvements in job quality – but is it in their economic interests to do so? This column reports research showing that satisfied employees and higher productivity go together. Analysis of the British Workplace Employment Relations Survey finds that employee job satisfaction is positively associated with workplace financial performance, labour productivity, and the quality of output and service.
Edward Glaeser, Joshua Gottlieb, Oren Ziv, 15 October 2014
Governments are now measuring happiness, or subjective wellbeing, and some have begun trying to maximise it. This column discusses recent research showing that happiness is not the same thing as utility. The choices people make suggest that they have desires and objectives other than happiness. It is therefore possible to make people worse off while increasing their reported subjective wellbeing.
Alex Edmans, 25 July 2014
Happy workers might well be more productive than unhappy ones, but high worker satisfaction could also be a sign that workers are overpaid or underworked. This column examines the link between worker satisfaction and future stock returns in 14 countries. In most but not all countries, employee satisfaction is associated with higher future stock returns. Abnormal returns to companies with high worker satisfaction are significantly increasing in the flexibility of their countries’ labour markets.
Timothy Bond, Kevin Lang, 04 July 2014
Self-reported measures of happiness are growing in popularity as alternatives to GDP. This column presents a novel statistical critique of the validity of comparing such measures across groups. Since monotonic transformations of individuals’ happiness levels can reverse average happiness rankings between countries, no meaningful comparison can be made without assumptions on the distribution of happiness.
Diane Coyle, 09 June 2014
As a measure of economic activity, GDP is imperfect, but no more so than any single indicator of the whole economy. Yet public policy debate about the economy is often focused on GDP growth to the exclusion of other important considerations. This Vox Talk argues the case for a ‘dashboard’ of alternative indicators that, in addition to measuring economic activity, could also capture social welfare, sustainability and the benefits of innovation.
Angus Deaton, Arthur Stone, 04 March 2014
Study after study has shown that those who live with children are less satisfied with their lives than those who do not. Is there something wrong with these empirical analyses? Or is it that happiness measures are unreliable? This column argues that the results are correct but that comparisons of the wellbeing of parents and non-parents are of no help at all for people trying to decide whether to have children.
Diane Coyle, 17 February 2014
Criticism of Gross Domestic Product (GDP) as an indicator of the health of the economy has grown in recent years, in part because of a new focus on measures of subjective well-being or ‘happiness’. This column argues that the debate needs to distinguish between the different purposes of measurement: economic activity, social welfare, and sustainability are distinct concepts and cannot be captured by a single indicator. There are good arguments for paying less attention to GDP and more to indicators of welfare and sustainability, but it would be a mistake to adjust or replace GDP.
Eugenio Proto, Aldo Rustichini, 11 January 2014
The link between higher national income and higher national life satisfaction is critical to economic policymaking. This column presents new evidence that the connection is hump-shaped. There is a clear, positive relation in the poorer nations and regions, but it flattens out at around $30,000–$35,000, and then turns negative.
Federica Liberini, Eugenio Proto, Michela Redoano, 15 November 2013
Retrospective voting – voting for incumbents if one’s situation has improved under the politician’s watch – is a well-established pattern. This column shows that this pattern also applies when ‘improvement’ is measured by a subjective measure of well-being. Among the stark results discussed is the finding that newly widowed women are 10% less likely to be pro-incumbent than the control group.
Andrew Oswald, 05 December 2012
Humans tend to go through midlife crises regardless of context. So too, it appears, do apes. This column draws on recent research showing apes’ midlives to be, like humans’, dogged by the same pattern of unhappiness.
John Feddersen, Robert Metcalfe, Mark Wooden, 02 November 2012
Hurricane Sandy destroyed an massive amount of US wealth, but the impact on human wellbeing surely goes far beyond any dollar figure. This column argues that the ‘subjective wellbeing’ literature can inform policy choices in the area of emergency response. Since the ‘happiness’ cost of short-term weather changes far exceeds that of long-term changes, prevention policies are likely to yield a higher payoff in terms of life satisfaction than rebuilding policies with equivalent financial payoffs.