Over the last decades, economies in the Western hemisphere grew enormously. Many, many people seem to forget why we keep on striving for more economic growth. The goal of all our efforts should be more happiness, of course. Nevertheless, research after happiness levels show us that the average citizen in a Western country doesn’t feel more confident with life than during the 70s. Recently, French president Nicolas Sarkozy invited economists Armatya Sen and Joseph Stiglitz to come up with a new procedure to measure welfare levels. In the future, this ‘Gross Domestic Happiness’ index should become a serious alternative to the standard Gross Domestic Product. English professor Richard Layard is an important advocate of the concept of happiness as the most important policy goal.
The so-called ‘Easterlin Paradox’ plays a central role in happiness economics. It is named for economist Richard Easterlin who discussed the factors contributing to happiness. He found that, within a given country, people with higher incomes are more likely to report being happy. However, in international comparisons, the average reported level of happiness does not vary much with national income per person, at least for countries with income sufficient to meet basic needs. The degree of levelling is what really determines the happiness standard. As the gap between the richest and the poorest grows, sadness grows too. People get sadder when a neighbour buys himself a bigger car. Also important: the flexibility of labour. Workers aim to strive for security and stability and therefore don’t like to change jobs every two years.
The recession and all of its sadness should learn us a lesson. Hopefully a happiness index will be taken seriously in the future.