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The economics of happiness
Friday, March 29, 2013
From Print Edition
The writer is a graduate of Columbia University.
The world celebrated the first International Day of Happiness on March 20. The fact that the UN General Assembly declared an International Day of Happiness signals a significant departure from traditional thinking about human development and well-being. Happiness as such is now a goal worth pursuing. This means that public policies have to change in focus. These policies should emphasise economic growth and development for all so that they can contribute to the happiness of people at large.
It was Bhutan that pioneered the idea to declare March 20 as the International Day of Happiness. Bhutan has, in fact, championed a different approach to gauge the growth and progress of a nation. Instead of gross domestic product (GDP), Bhutan has turned the world’s attention towards gross national happiness (GNH) as a measure of a nation’s development. The Gross National Happiness Index rejects the idea of material wealth as the sole indicator of development. Instead, it broadens the base for measurement of development and includes in it several other aspects of human life like culture, mental health, community cohesion and environment etc. Succinctly put, it calls for a balanced and broad-based approach to defining development.
What are the factors that bring happiness? Certainly, income matters. You have to have some income to meet your needs and support your family. An empty stomach does not make a happy person. If you are unable to feed your baby or buy medicine to treat your child’s ailments, you cannot be a happy person. It is necessary that the public policies that are made ensure that the people’s basic needs are met. For instance, people must get health care, clean water, a clean environment and education – which are some of the building blocks of happiness.
According to the World Happiness Report of the Earth Institute of Columbia University, unemployment is a major killer of happiness. “A bad job is better than no job”, the report says. Employment provides income. It also helps people realise their social needs through networking. It is, therefore, essential that the state puts employment generation at the top of its public policy agenda.
This does not mean that income and financial well-being can guarantee happiness. Happiness calls for a judicious environment on which financial well-being works. A level playing field for everyone, equality of opportunity and effective and speedy judicial remedies against unfairness are the basic requirements of such a judicious environment. Societies that are riddled with corruption, and which disregard rule of law in governance fail to bring happiness to their people. Lack of meritocracy and deep socio-economic inequities among people do not make a happy society.
The creation of a happy society needs the gulf between the rich and the poor to be bridged. “Happiness is equality”, says Prof Robert Skidelsky of Warwick University. High level of inequality among people diminishes their happiness. A big palatial house standing out among many small houses scattered around undermines the happiness of those who live in the small houses. Ostentatious living, display of wealth (often made through rent-seeking and corruption) and the perverted values that employ such behaviour as a measure of status and prestige further deteriorate the happiness of the people in a society.
If legally earned, wealth is not bad in itself. What kills happiness is its undue and ostentatious display. Extravagant spending on weddings, building palatial houses, buying big cars, and protocol systems are some of the demonstrations of ostentatious display of wealth in our society. In this context, two things need to be done. One, ostentatious display of wealth should be discouraged as a public policy measure. Palatial and big farm houses and big cars etc should be highly taxed. Second, media and opinion makers should build public opinion that values austerity and castigates display of wealth and wastefulness.
The literature on happiness emphasises that once people achieve a certain level of income that is sufficient to meet their basic needs, any increase in income does not significantly contribute to achieving further happiness. The notion that money and happiness are positively correlated all along the way is based on an incorrect assumption. Professor Richard A Easterlin (known for the Easterlin paradox) also affirms this idea.
In his paper ‘The economics of happiness’, Prof Easterlin writes that: “...evidence indicates that over the life cycle, family and health circumstances typically have lasting effects on happiness, but that more money does not. Each of us has only a fixed amount of time available for family life, health activities, and work. Do we distribute our time that maximises our happiness? The answer, I believe, is no. We decide how to use our time based on the false belief that more money will make us happier. Because of this money illusion, we allocate an excessive amount of time to monetary goals, and short-change non-pecuniary ends such as family life and health”.
In a country like Pakistan it may be argued that given the situation of terrorism, bomb blasts, hunger and poverty it is rather too optimistic to talk of happiness. People first need security of life and freedom from violence. Those surrounded in misery need to pursue happiness rather more vigorously as a conscious goal than giving up the idea of it altogether. Pursuit of happiness is the highest ideal, which carries the potential to mitigate the severity of miseries facing the people of Pakistan.
Both public and private mechanisms reinforce each other in bringing happiness to the people in a society. Public mechanism incorporates all the public policies aimed at providing better health and education facilities, speedy justice, reduced corruption and narrowing the gap between the rich and the poor. Such public policies will bring happiness by minimising inequality and unfairness, the two major causes of unhappiness.
Private mechanism entails a personal belief system and an attitude to the situation that surrounds a person. Instead of counting one’s deprivations and building one’s unhappiness inside, one can also consider those blessings which at least everybody enjoys. An undesirable situation does not cause as much unhappiness as our chosen response to it. One response may be to fight the situation and change it for the better. Another response is to give in to the situation and accept the unhappiness it causes.
Similarly, our chosen behaviour to deal with people may bring us happiness or unhappiness. Diverting the focus from self to others, valuing happiness for self as much as for others does not reduce happiness. Almost every religion in the world has advocated unselfishness and sacrifice. Neurophysiological research has also affirmed that such altruistic attitude brings happiness. We also need to understand that craving for receiving antagonises happiness whereas yearning for giving augments it.
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