Economics of Happiness
The full transcript of the Economics of Happiness Roundtable.
Goal: To determine if the concept of Genuine Wealth can be integrated into national accounts.
Time: 12 pm–2 pm, Jan. 10, 2008
Location: Centre for Social Innovation, Toronto
Participants: MA—Mark Anielski, Anielski Management Inc. and author of The
Economics of Happiness: Building Genuine Wealth; TS—Toby Sanger, Chief Economist, Canadian Union of Public Employees; DP—Doug Porter, Senior Economist, BMO Nesbitt Burns.
Moderator: TH—Toby Heaps, Editor, Corporate Knights
MA: What does happiness have to do with natural capital? I wanted to start with what I believe is the whole argument for economics of well-being and happiness and then segue into natural capital accounting, and why it is practical and why people should be doing it. Statistics Canada has been doing this quietly for several years. We need to think like a finance ministry with our biology hats on.
Robert Kennedy was the only politician to identify the shortcomings of national accounts and to realize that national accounts do not measure “what makes life worthwhile”. Could we develop new ways of accounting for well-being that measures the things that contribute to quality of life in addition to measuring consumption?
The ideal GDP hero is the guy who does regrettable things, and the villain is the guy who just walks to places. When Jefferson wrote the declaration of independence, life liberty and the pursuit of happiness, if that was the goal, then we have not seen an increase in happy people in the US. In fact we’re seeing since Kennedy’s death a rising level of income inequality, which some people are saying is a key indicator of an unhappy nation.
In Alberta, I did the Genuine Progress Index which is a 51-indicator composite index going back to 1960 – it asks the question, are Albertans better off given the enormous GDP run we’ve had? It doesn’t appear so.
If happiness is being optimized along this curve, $15,000 GDP per capita, but other countries like Bhutan have lower GDPs per capita but higher levels of happiness compared to the US. The Danes and the Swiss seem to be pretty happy. So the question as an economist is if we were to design an economy of enduring happiness, where might we establish some type of policy that would say $20,000 GDP is probably sufficient for a lifestyle that would emphasize happiness and yet is one that is sustainable too. Because sustainability to me is living off the interest of your life capital.
Simon Kuznets is the architect of the national accounts and the Kuznets curve. The question is what are we growing for? If many in society have achieved these levels of happiness and self-sufficiency, what are the values and goals that we base our society on? Oftentimes I don’t see those values, often I don’t see any underlying argument when I’m at the treasury table. These are the virtues of society, these are the values that society holds us to. Kuznets back in the 60s said ultimately he believed we would move to a place where we would be measuring the quality of life, like the quality of a sandwich. Up until then it was a post-war economy and there was interest in measuring monetary production. So he left us long-lasting challenges.
How much time worked for money buys a life of enough? There’s not many Canadians in survival mode. Time is our most limited resource and how we invest time and how we trade time for money becomes a critical issue. Making an argument for frugality and moderation is really hard to stand up and say I think a life of simplicity, or slow is beautiful is a compelling argument. For most of us we’re so busy just making ends meet. Sometimes it’s hard to say – in my life I’ve changed my personal business model to have sufficiency of revenue to meet the household needs, and then think about the discretionary stuff that you do, do you need to make more money? Because if you have everything you need then your life becomes one of maintenance.
People with more relationships and more friends tend to live 7 years longer. It’s interesting when you look at time saved how much time we have in our lives to build meaningful relationships.