Beyond GDP: happiness is about more than just individuals

Don’t confuse happy individuals with happy societies. Minerva Studio

Many readers of this piece will be aware that economists are rethinking the role of happiness and GDP. They question facile assumptions about economic growth alone being good for us. What’s the good of being better off if it doesn’t make people any happier? There has also been a vast literature in psychology looking at individual well-being and its determinants. If money doesn’t make us happy, what does?

Both these groups focus on individual well-being. While this is important it does tend to feed into the neo-liberal agenda by putting less emphasis on collective happiness. It also supports the burgeoning self-help industry. It implies that if you are not happy you should do something about it. Happiness is an individual problem.

Happiness is a fleeting and ephemeral emotion that is difficult to capture in statistical analysis. For this reason, social scientists have tended to focus on various measures of well-being in addition to emotional states, such as life satisfaction, freedom to flourish and also negative states – the absence of well-being. Again the emphasis is on the individual and their immediate environment.

Society on the agenda

But what sort of society allows people to live well? The focus on economy tends to look at money -– is it enough? The focus on individual well-being asks, what can I do to make my life happier? But both these approaches neglect the social context, even though it is tremendously important for explaining well-being and could also be an important focus for policy developers. What aspects of society can foster well-being?

There has been a long tradition of quality-of-life research in Europe measured through social indicators. The University of Mannheim in Germany collates and analyses them across various categories: work, family, housing, health, and so forth. This research has influenced the EU policy agenda as well as that of particular nations such as Italy, Austria and Germany.

The European Foundation for the Improvement of Living and Working Conditions has been carrying out surveys and publishing reports to help our understanding of well-being across Europe since 2003 including both the EU and accession countries.

In the UK, a question on well-being has been added to standard national surveys, which should help us understand what affects it in future. The Scottish parliament this week held a meeting and exhibition to present well-being measures to look at how they could be incorporated into the country’s national performance framework.

More policy bodies are starting to pay attention to all this research. The OECD, for example, has launched a “Better Life” initiative and the EU is launching a set of measures for measuring life quality through Eurostat.

Component parts

We know well-being can be influenced by public services and social policies. It is clear for example that in Turkey, the recent strides in improving public policies and services have had an impact on well-being. Even really poor countries such as Rwanda have been able to improve their quality of life by focusing on policies to improve societal well-being.

Improving public services helps across the world. Igor Slevonavic

On the other hand, societies where social safety nets have been removed and where people are subject to sudden and bewildering change have plummeting well-being. This is noticeable in the former Soviet Union and other ex-communist countries in eastern Europe. Yet equally those that joined the EU and have enjoyed improved social services have seen their well-being improve once more.

Based on these kinds of insights, my research team uses a framework called “social quality” to analyse the happiness of a society. This involves combining objective assessments of well-being – are basic needs such as shelter, social security, health fulfilled? – with subjective measures such as how people assess their economic well-being, health and housing. You may have a good house or a bad house – but is it what you want?

We look at four main aspects: socio-economic security, social cohesion, social inclusion and social empowerment. In looking at socio-economic security we have found that a person’s actual income plays only a part in explaining life satisfaction.

More important is how adequately people view their income and the extent to which their life is secured over the longer term. This depends on the social security environment in which they live, which forms part of what researchers sometimes call the “social wage”. This helps support a decent living standard across the age groups and in reducing differences between rich and poor (up to a point).

Social cohesion has long been studied by sociologists. It is a slippery concept, perhaps more so than life satisfaction, but we know it is closely linked to happiness. A recent study identified three main elements of social cohesion: deep social ties and networks, a sense of belonging to a nation or community and a focus on the common good. Trust is an important indicator of the first and second of these elements –- including trust in other people and trust in public institutions.

In testing these perceptions across the world, Scandinavia came top – small, wealthy, well managed societies seem to have an advantage here. Yet some larger and more diversified countries scored next-highest, including Australia and Canada (along with New Zealand). The UK and most of the remainder of Europe appear one group further down the rankings.

Social cohesion affects happiness when it goes down, too. Rangizzzz

The same writers have also shown that social cohesion can change. Greece for example has lost social cohesion on account of the economic crisis since 2009, while Slovakia and Romania have gained it. Rising inequality can disrupt social cohesion leading to less trust and less connectedness. And inequality is not just bad for the worst off, since it has a negative impact on social cohesion as a whole. Civil strife and conflict also undermine cohesion.

Inclusion and empowerment

If social cohesion refers to the glue holding society together, social inclusion involves the extent to which individuals feel part of it and the mechanisms for including them. This can be through being part of the workforce, membership of clubs and associations and also families – those in such partnerships are generally happier. Being involved in a local community or through voluntary activity can play an important part too, while fear of crime and violence might isolate people.

Finally, social empowerment refers to the extent to which people have control over their lives and feel enabled to live as they would like. This requires a reasonable standard of health and education as a condition for participation, for example. Feeling disempowered is one of the most important elements for explaining lack of happiness.

These different elements are important for describing the decent society, which is also the happy society. They can help to explain how we can build better societies, too. Any approach to measure or increase happiness that ignores this side of the equation is insufficient.


This article is part of an ongoing series, Beyond GDP, which looks at the dominance of GDP in economic thinking and how that might change. Read more here

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