GDP CAN'T MAKE YOU HAPPY 15

firfonnmcc, London Unemployment matters more to people than economic growth

School offionomics

-~ ~ ~- -~~ ~~ ~-

conomic performance is not lntrinsi- cally interesting. No one is genuinely E concerned about the level of &ross na-

tional product last year or about next year's exchange rate. Economic things matter only

gross domestic product and idation, happi- ness is not something govemments try to track But they could, and possibly should.

Most politicians who pronounce on the economicmatters of the day do sousing a set of assumptions about human enjoyment that

is the belief that by raising ik output and p w

in so far as they make people happier. unlike

areusuallynotarticulatdl.chiefamongthese

ductivity a society betters it- self. Real income has h r i s - ing in the western countries for a long time. Like most other industrialised nations, Britain is about twice as rich as it was as recently as 1960. So has this new real income -

social problems. Society has to decide where to spend most heavily and a social scientist might help policy makers if he or she could point to patterns in data on happmess and satisfaction

Happiness and income in the US Individuals' responses to questions about well-being have been recorded for many years. Studied intensively by psychologists and a little by sociologists, these respanses have been ignored by economists. Some economistsmaywishtoemphasisetheunre- liability of such data, but most probably do

I not h o w they exist and have

I "Happiness is tihe sublime moment when

you get out of your corsets at night."

Joyce Grenfell

an enormous improvement by the standards of the past few centuries - bought extra hap piness?

Deciding how much well-being is bought by economic progress is difficult; but it seems necessaryifeconomicandsocialpolicyistobe designed in a rational way. Taxpayers' pounds could be devoted to raising innova- tim and economic growth, or for combating

not thought of how such em- pirical measures might be used in their discipline.

Richard Easterlin was one of the first economists to study statistics over time on the reported level of happi-

ness. His (1974) pa&s main objectives w&, first, to suggest that individual happiness ap- pears t o b e t h e s a m e a c r o ~ p c o ~ ~ ~ ~ d rich comtries, and, second, to argue that em- nomic growth does not raise well-being. He suggested that people get utility from a com- parison of themselves with others close to them; m other words, happiness is relative. The modem stress on the benefits of higher

1070-3535196/010015 + 05 5012.00/0

16 NEW ECONOMY

totalnational inmme is then shown tobe mis- placed, because individuals all move up tu- gether.

Easterlin looked at whether Feported hap piness m the united states rose as naticmal income did Heconcluded “In the ane time- series studied, that fatheunitEd states since 1946’ higher income was not systematically accompaniedbygreaterhappiness”.Thisrp sult would mean that economic growth does not buy wd-being. Unfortunately8 it is not obviousthatEasterWsdataactuallysuppcnt histxmdusia The US General Social Surveys (-have

for many yeas beeninbwiewing about 1#500 r a n d ~ s e ) s c t e d p e a p b e ~ a b a u t t h e i r

most years from 1972 to 1990. First jnciications

pwthleadstogrea6erwell~.Thepmpolc

happf Was alwnd orehirdMintheearly 1m and m the late 1980s over the period,

to say that they are ‘mt too W’ and more stateathatthqrwerp’prettyha~.Iiowever,

tiam m the statistics make CaUtiOn necgsary,

levels of happiness Cssdataareavailablefm

fmm this s o u ~ e do not support the idea that

tion of xespandents saying they were ‘very

however,adediningnumberofpeopkseaned

theeffedisnotdmna~acomparativelysmall numberofyearshasbeenstudied,thefluctua-

and these are raw data that may be being moulded by a populatim that is chmging its

B l a n ~ h f l ~ ~ ~ ~ Oswald and WZUS (1993) ex- plored the matter more sys- tematically. They examined whether there is an upward

trolling for demographic and

mtheUSeconomy. Theircon- clusion was that there was a positive time trend’ but that it

to be evidence of a cycle m happiness (especially for men). Blanchflower et a1 showed that the rise in happi-

trend in well-being after COII-

other compositional changes

wasveryslight.Thercseemed

ness was not spread evenly. It seems that

women experhaxi little growth m subjec tive well-being. Happiness levels in the

American men got happier while American

united states were greatest among warnen, whit€!s’maniedpeople,thehi~educated’

low among the unemployed. and those with high income. It was espedally

These d k am not consistent with Eas-

ofever-hcreashgaspiratiomandcollcemfor rrlativities’ the human lot does not improve over time!. Neve~lhks’ Easberlin may have been on the right tracl~ It may be corred to suggest that little national happiness is bought by rising national income.

berlin’s 1974 C o n d u S h that8 perhaps becaw

Europe since 1973 There is similar information for 12 European cmtries. Although no econodts seem to have used the data8 the Eurobarometer Sur- vey series asks: ”on the Whole‘ are you very satisfied, fairly satisfied‘ not very satisfied8 or not at all satisfied with the life you lead?” Answers are available for random samples, from 1973 to the present’ of about 1,oOO peo- ple a year per country. (Surveys have been held twice a year in each European Commu-

EC, there is no full run of data for Spain’ Portugal and Greece.)

The Table below reports some of the data. There are large differences across ~tim,

nitycountry.Because0ftheirlateentrytothe

39.5 51.7 I 24 18.8 38.8 9.0 34.6 41.3 31.7

24.7 62.8 13.7 23.4 31.1 13.2 39. I 41.8 30.9

GDP CAN'T M A K E Y O U HAPPY 17

whichprobablyreflectculturalandlinguistic differences - the difficulty of translating

faction. But it is not all variation m language. As Inglehart (1990) points out, German-

words likehappiness, contentment and satis-

speaking swiss, Fren&+peaking swiss, and 1- gSwissallexp-K&ersat-

FrenchandItalianS.Thereissametfiingintrin- sically nicer about Switzerland.

isfaction levels than do native Germans,

A second thing that is noticeable is that well-beingisnotmovinguniformlyupwards.

ple, on average 39.7 per cent of people inter viewed said they were very satisfied with their lives. Over the ensuing decade, this fig- uxe dropped dramatically. For 1982-90, We proportion of re- spondents saying

isfied was 24.7 per cent.Thisevidence

time of the sort to

kcome growth raises well-being. However, Belgium is not typical. Den- mark, France, West Germany, Italy, Luxembourg and Netherlands all re- cord increases in the numbers of in- dividuals saying they felt very satis- fied with life. Ireland posted a large drop, the UK a slight fall.

There is only slight evidence here that p t e r economic prosperify leads to more well-beinginanation.

In the period 1973-1981 in B~@UIII, for e~am-

they were very sat-

sh0WsM)gainover

beexpeckiifreal

Diagnosis Another way to measure well-being is to study psychiatric measures of mental dis- tress. The new British Household Panel

Study gives mental well-being scorn from a fonn of psychiatric evaluation h w n as the General HeaIth ' (GHQ).The first sweep of the British Hausehold Panel Study provides informaticm, for the year 1991, about a random sample of about 6,000 working Britons. In its simplest form this

such as: "Have you recently lost much sleep over worry ... felt that you are playing a

and depressed?" People's answers to 12 such questions are coded on a four-pomt scale running from 'disagree strangly' to 'agree strongly'. These 12 are thm combined into a total GHQ level of mental distress in whit31 high numbers correspond to low feelings of

well-being. The data provide a mental stress or, less accurately, un- happiness level for each individual in the sample. Argyle (1989) argues that a GfIQ assessment is one of the most reli- able indicators of

tress or 'disutility'. One way to work

with GHQ re-

lateso-cauedcase- ness scores. These are produced by summing the num-

ber of times a person places themselves in either the fairly stressed or highly stressed category. Thelowestpsiblelevelof we.ll-be- ing conresponds to a Caseness level of 12, meaning that the mdividual felt stressed on every question. The highest level of well-be- ing corresponds to zero, meaning that the m- dividual felt stressed on none of the 12 ques- tions. Individuals with high Casenew levels are viewed by psychologists as people who

assessmentweightstheanswerstoquestions

usefulpartinthings...beenfeelingunhappy

psychological dis-

spansesistocalcu-

18 NEW ECONOMY

would benefit from psychiatxic treatment. The Household Panel Survey data show

that income has no stmng role to play, but that joblessness does. Clark and Oswald (1994) failed to find any statktically sigruficant effect from income. The sharp impact of unemploy- ment, however, is inushated by the Chart (left). This uses data on 6,000 British workers in 1991. Mental distress is twice as high among the unemployed as among those who have work Eurobarometer data also show that the unemployed feel unhappy. h g i t u - dinal studies by psychologists have demon- strated that this is not merely because un- happy peoplehave trouble finding jobs.

Suicide and attempted suicide Getting information on high levels of happi- ness is likely to be impossible because there is no need for such statistics to be recorded. There is, however, a method of studying the other extreme.

In Denmark, suicide accounts for about me in every 3,000 deaths; m Britain the figure is approximately one in every 12,OMl deaths; in the United States about one in every 7,000 deaths are the result of suicide. Large numbers of people, therefore, take the decision that life is not worth living. Yet suicide statistics probably under report the true numbers. Moreover, the number of individuals attempt- ing suicide is much larger than of those who

Selves. succeed in killing them-

cans have attempted suicide at some time in their lives. Data on Edinburgh males suggest that, among unemployed men in the lowest social class, one in 20 try to kill themselves in a given year.

Is this topic best left to doctors? Although analysis has a long history, most social scien- tists are not used to working with suicide sta-

this area as far from their usual concerns, and of little relevance to them.

This attitude may not be right. Suicide data offer rich information that would be impossi- ble to glean in any other way: suicides repre- sent choices m response to (un)happiness that are intrinsically more compelling than replies made to happiness survey questions, and data that, by their nature, cannot be generated in a laboratory experiment.

Socialscientistmightarguethatsuiadede- cisions are not rational; perhaps they are sim- ply a sign of mental illness, and therefore do not contain reliable information. However, thex is evidence that suicides occu more fre- quently both among those who, in an objec-

tistics. Economists, espedally, are likely to see

L The long temn u ~ p l o y e d most Wdy to attempt suicide PcraarMarderbydvotknof c m m p l q m a n ~ ~ n n d e s , 1982

Lessthan4wsek 1012 8.8 5-26 vvsdu 615 5.4 27-52 W I I93 10.4 ovar52weaks 2164 18.9

I345 11.8 I I4 I .o

N-40-d Newk9-d

b u r r R = - l d ~ ( l ~ . p r r S J d d . d ~ ~ m a l ~ h W 1 9 6 8 8 2 & h h & d k & h e

tive sense, have the least to live for, and after un- pleasant events in a per- son’s life. The latter in- clude unpleasant eco- nomic events.

In 1911, 2,600 men committed suicide in England and Wales. In 1990,2,800 did so. The population over that pe- riod nearly doubled. In this sense, extreme un- happiness might be said

cal statistics also reveal to be dropping. Histori-

In Britain, one-fifth of all emergency ad- missions to hospital are due to parasuicide (the medical term for attempted suicide). We know from the United States that parasuicide is between eight and 20 times more common than successful suicide. Five million Ameri-

that total suicide deaths reached their maxi- mum in the Great Depression, which again is consistent with the idea that economics may have some role to play in this area.

To explore the idea that money buys hap- piness, we might look at data on suicide and

19 GDP C A N T TLlAKE YOU HAPPY

low incame This canbe done m an indirect

cidedeathrateislargelymdependentofsocial

pmspemuspeopledonottake W o w n l i v a any less than the poor.

I h e is m e stark exception. Those men unemployed and seeking work at census wereattwetothmfoldpaterriskofkilling tkmselves than the average (Charlton et al, 1992). In ad- the Table (oppik) shows that being without work is associated with a 12 times pater-tbn-average chance of at- tempted suicide, and that the long term un- employed are especially at risk

There is some evidence that timeaeries movemenk m unemployment are accompa- Ned by movemenk m rmicide. Among men, suicide has been- m almostallweslem countries since the early 1970s. This period coincides with the mushroomtng of unem- ployment

way. chatltoar et al(1992) show that the sui-

class m-8 nrughly -& 9

Conclusions

the world, journalists and politicians give out the message that better economic perform- ance means more happiness for a nation. We allbelieve we would feelmore cheerful if our boss raised our pay, and we assume that countries must be roughly the same. Yet in a developed nation, economiC p m

gress buys only a small amount of extra h a p pmess.Threemainpiecesofevidencesupport thisclaim:

Every day, m every industrialised country of

0 Reported happiness in the united states has gone up only fractionally over the

0 Reported levels of satisfaction with life m Europe are only slightly higher than they were 20 yeam ago. Some countries show

Although the suicide rate in Britain has fallenbyaboutone-thirdoverthepast 100 years, the rate among men has risen, m almostallwesternnaticms,fromthe197Os tothepresent

post-war period.

hP.

The gains in national well-being appear to be so slight that a case could be made, as by EasterlirLthatecanamicgrowthisworthless. Easterlin is m g - but onlyjust.

It might be argued that interview re- SpoarseStohappinesSqu~onsareunreliable and that using suicide data as an indicator of a society's happiness caxmot be taken seri-

they d e c t mental illness and not any objec- tively low quality of life. Them is no wholly Convincing xebuttal to such objections. But

ones available to us if we wish to measure well-being, and, at the very least, they ques- tion comma beliefs. Moreover, mter-ar- guments to the methodological criticisms have been produced many times. It is known mpsychologicalandmedicalwritingthatob- jective ecanomic events are correlatd with happiness scores and with suicide (and para- suicide).

Anotherpossiblelineofattackonourcanclu- ~un,thatgvlnomicgmwthdoesnotbringhap pines, is to appealto cxnnmonsense How can it be that money buys little WelEbeing and yet we see individuals arcnmdusam&mtly striv-

what ma- to sameme who lives m a rich cuuntryishisOrherIelativeincame.l'hismight explain why intuition is capable of misleading

fananoe. Su& mtuition has been built up by ObSeMnghow each of us feels as olrrincome

coc~stant Henm c n m m m s e may not be a good guide to what happens when a whole

We should not conclude that economic forces have little impact on people's lives. Hu- manbeingsarevulnerabletojoblmess.If,as appears to be the case, unemployment is the primary economic source of unhappiness, eccmomic growth should not be a govem- ment's primary concern 0

d y # Or that such data a ltnhelpfulbecause

these kinds of statistics are probably the only

ing tomake mom ofit?Thearrswermaybe that

u s s a b a u t n a ~ ~ o f e c r m o n i c p e r

~ Y ~ ~ ~ t l y , t h a t h o i d s o t h a s ' i n c o n e s

societygetsrimer.