Happiness: the silver lining of economic stagnation?

A study suggests that national wellbeing peaks at £22k average income. But that doesn't mean there's no point in pushing for wealth

• 
• • Julian Baggini
  • theguardian.com, Thursday 28 November 2013 16.56 GMT

More money, more problems? Photograph: Roger Tooth for the Guardian

It's time to rewrite the story of the financial crisis. Far from being a disaster movie, it was in fact a tale of salvation. As for the green shoots of recovery we are now seeing, they are virulent weeds to be stamped out.

That would seem to be the conclusion to draw from a new study that suggests ever-rising national wealth is the source of decreased life satisfaction. Looking at data from around the world, Warwick University's Eugenio Proto and Aldo Rustichini of University of Minnesota conclude that average wellbeing rises with average income only up to around £22k per head per annum. After that, it slips back again. Britain is more or less at that sweet spot, which suggests economic stagnation may be an excellent way of avoiding the problems of poverty without acquiring the problems of wealth.

You may well be sceptical. Even the authors acknowledge that many people "still prefer to live in richer countries, even if this would result in a decreased level of life satisfaction". In other words, people are overall more satisfied by less life satisfaction, which suggests we should take the whole concept of "life satisfaction" with a pinch of salt.

Any attempt to measure wellbeing in a robust way is fraught with problems. One of the most obvious is that people naturally rank their contentment relative to what appears to be a reasonable expectation, and that varies with time and place. That's why, when offered to rank their life satisfaction a scale of one to 10, most choose around seven or eight, irrespective of era or nation.

Even setting aside these doubts, there are more important reasons to be cautious about how we interpret the data. What it does appear to show, and which almost all studies support, is that having a low income is more of a problem that having a high one is a benefit. From a public policy point of view, that suggests the priority should continue to be raising the life chances of the worst off, not those of the better off, or even the "squeezed middle".

If we achieved that, is it really the case that there would be no point in then increasing wealth even more? Not so fast. We have to ask what explains the levelling-off in perceived quality of life. Proto and Rustichini suggest that the key is "higher GDP leads to higher aspirations … driven by the existence of more opportunities or by comparison with the Joneses". But this "sets up a race between aspiration and realisation; when realisation is lower than aspiration, the psychological cost paid is disappointment". Worse, this creates a feedback loop, as the let-down further widens the aspiration-realisation gap.

What should be clear is that this is not an inevitable consequence of greater wealth. Some individuals learn to treat their material comfort as a blessing and are not concerned by the prospect that they could have yet more, or that others already do. The materialist treadmill is not one we are obliged to get on once we reach a certain level of income.

In short, the problem is explained by the familiar idea that money is not valuable in itself, but only for what it can do. The failure of western societies to convert greater wealth into greater wellbeing is in essence a failure to use our wealth wisely. This should not surprise us. The majority of people alive today and throughout history have not been accustomed to plenty. Humanity is on a steep learning curve and many of the lessons we need to learn go against our natural tendency to acquire first and ask questions later.

That's why the debate about the relative merits of increased GDP and "gross domestic happiness" are misguided. They are not mutually exclusive options. The optimal strategy would be one in which we grew wealth but harnessed it better to enable people to really flourish, rather than just have more stuff. What we should be afraid of is the pointless march of a narrow materialism, not the resumption of economic growth in itself. A richer world in which the money was well spent is something with which we should all be well satisfied.

The power to say no

Pritish Nandy
02 January 2012, 09:18 PM IST

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4

My worst failing is my inability to say No. This year I intend to correct that. I will clearly and unequivocally say No when I want to. Not a Maybe or a Perhaps; a straight, categorical No.




For people like me it’s not easy. We were brought up being told that No is impolite, rude, and politically incorrect. There are nicer ways to turn down a request. You can gently fob it off. Or procrastinate. Or do what my friend Husain, the painter, always did. He said Yes to everything and promptly disappeared. Poof! People have waited for him to inaugurate an event in London while he went off to New York for a party. No, Husain never allowed a commitment, any commitment to burden him. He happily failed each, knowing fully that he will be forgiven for his indiscretions. He blamed it on his poor memory. But memory had nothing to do with it. Insouciance did.


My friend Mario was identical. He did hundreds of cartoons for me when I was editor, but never on time. Give Mario a deadline and you could be sure he will miss it. He completed every assignment but in his own time. I remember he once came to me with a cartoon so late that I had forgotten what it was for. But no, he never said No. He was always polite, always proper and agreed to any deadline I set him because he knew he would not have to keep to it. We decided to do a book together, of naughty limericks, largely based on Indian politics. I waited three years for him to complete the drawings. By the time they were ready, I had lost the manuscript. (We didn’t have computers in those days and typescripts were easy to lose.)


I smoked my first cigarette at 7 because I couldn’t say No. I downed my first whisky at 9, smoked grass at 11, all because I couldn’t say No. Luckily I found it all quite boring and so, by the time I was 16, it was all over and I was ready to take on life on my own terms. Minor addictions have never distracted me since. I listen to Vivaldi, read Dylan Thomas, try to figure out why Damien Hirst is such a vastly over rated artist. I can spend all day listening to Mallikarjun Mansur and marvelling at his genius if only I can say No to a million silly, irrelevant commitments I pick up, for people I barely know.


My father died because he couldn’t say No to a doctor, a family friend in Jabalpur who convinced him that prostrate surgery was the easiest thing on earth, and he could do it in his own nursing home. By the time I heard of it and rushed there, he was already in a coma from which he never recovered. We finally pulled the plug on him. My mother lost our family home in Kolkata because she couldn’t say No to her landlord, who requested her to give up her decades old tenancy because his family had grown, needed more space. Even before she packed up her meagre belongings and came to me here, the landlord had sold off the house. Yes. Life makes suckers of us all. Especially those prone to saying Yes.


I was reading the cover story in a news magazine recently which argued that the most important thing you can tell your doctor is No. Most people suffer because they say Yes and get lumped with medication they don’t need, tests that are not necessary, and surgeries they could have done without. This is true at the dinner table as well, or in a restaurant. The more often you say No to the lip smacking food there, the better your health will be. The day we can say No to all the candidates when voting, the quality of our politicians will improve.


Life is a honey trap. Everyone’s waiting for you to say Yes. The moment you do, you are entrapped by absolute, arrant nonsense, breathtakingly packaged, aggressively promoted, seductively laid out in front of you, and completely irrelevant to your life or well being. The wise man says No. The fool succumbs. 2012 is my year to say No. An emphatic, easy No. Like Eric Bana told his handler in the last scene of Spielberg’s masterpiece, Munich. If a patriot who risked his life hunting down terrorists can say that, so can you and I.

Criticism of Schumacher - if you curtail growth, living standards drop

Schumacher was no radical – if you curtail growth, living standards drop

By suggesting it's better to be economically poorer and spiritually richer, Schumacher ignores links between growth and wellbeing

• 
• • Daniel Ben-Ami
  • guardian.co.uk, Wednesday 16 November 2011 11.30 GMT
  • larger | smaller

Consumer revolution … a customer inspects washing machines at a supermarket in Wuhan, China. Photograph: Darley Shen/Reuters

EF Schumacher's Small is Beautiful is widely viewed as a humanistic and radical tract. Nothing could be further from the truth. Viewed in its proper context it is both profoundly anti-human and deeply conservative.
The central idea in Schumacher's text is that there is a natural limit to economic growth. As he put it: "Economic growth, which viewed from the point of view of economics, physics, chemistry and technology, has no discernible limit, must necessarily run into decisive bottlenecks when viewed from the point of view of the environmental sciences."

Schumacher objected to organising the economy on a large scale precisely because he believed that more prosperity would damage the environment. He correctly understood that small-scale communities cannot produce nearly as much as those operating on a regional or global scale. A modern car, for example, typically relies on components, raw materials and know-how from around the globe. From the perspective of Schumacher's "Buddhist economics", it is better for people to be poorer in economic terms if they can be spiritually richer.

This argument flies against a huge weight of evidence showing that material advance is closely bound up with progress more generally. The past two centuries of modern economic growth have seen huge advances in human welfare along with technological innovation and social advance. Perhaps the most striking single indicator of this improvement is the increase in human life expectancy from about 30 in 1800 to nearly 70 today. Note that this is a global average, so it includes the billions of people who live in poor countries as well as the minority who live in rich ones.

Almost every other measure of wellbeing has increased hugely over the long term, including infant mortality, food consumption and level of education. Most of humanity, even in the developing world, has access to services our ancestors could only have dreamt of, including electricity, clean water, sanitation and mobile phones.

None of the arguments used by Schumacher's followers to counter this narrative of progress are convincing. Greens often side-step the broader case for growth by deriding the accumulation of consumer goods and services. Environmentalist arguments have more than a tinge of elitism, with comfortably middle-class greens scoffing at the masses for wanting flat-screen televisions and foreign holidays. It should also be remembered that some consumer goods, such as washing machines, have directly led to huge improvements in human welfare.

Anti-consumerism reveals more about the narrowness of the green vision than it does about economic growth. Viewing rising prosperity simply in terms of consumer goods is incredibly blinkered. Growth provides the resources for much else including airports, art galleries, hospitals, museums, power stations, railways, roads, schools and universities. Popular prosperity provides the bedrock for much that we value in contemporary society.

Another common green rebuttal to the benefits of growth is to point to the existence of inequality. Of course it is true that there are huge disparities both within countries as well as between the developed and developing world. The key question, however, is how best to tackle the problem. From Schumacher's perspective it is desirable to reduce the living standards of everyone except the poorest of the poor. His is a narrative of shared sacrifice and lower living standards for almost all. The alternative vision, the traditional position of the left, was to argue for plenty for everyone.

Finally, there is the argument about the environment itself. The most popular variant of the idea of a natural limit nowadays is that growth inevitably means runaway climate change. However, there is plenty of evidence to the contrary. There are many forms of energy, including nuclear, that do not emit greenhouse gases. There are also ways to adapt to global warming such as building higher sea walls. Since such measures are expensive it will take more resources to pay for them; which means more economic growth rather than less. If anything the green drive to curb prosperity is likely to undermine our capacity to tackle climate change.
Schumacher's fundamentally conservative argument chimes well with those who want to reconcile us to austerity. It suits those in power for the mass of the population to accept the need to make do with less. Under such circumstances it is no surprise that David Cameron, like his international peers, is keen for us to focus on individual contentment rather than material prosperity.

It is hard to imagine a more anti-human outlook than one advocating a sharp fall in living standards for the bulk of the world's population.

The DEVELOPMENT Deception

By Brendan P O'Reilly

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

"At present, we are stealing the future, selling it in the present, and calling it GDP."
- Paul Hawken

There is a dangerous lie that permeates the media, government and general discourse of nearly every single nation on Earth.

That lie is the Development Deception. This myth is based on three concepts. First is the distinction between the developed nations (North America, Western Europe, Australia, New Zealand, South Korea, and Japan), and the Developing Nations (everywhere else).

The second idea is that "developing" countries can become "developed" through improved education, stable governance, and opening their markets to trade and investment. The third leg of this Deception is that such a transformation is not only possible, but also desirable.

The metric used to distinguish "developed" nations from "developing" nations is gross domestic product (GDP) per capita. Poor nations aspire to reach a certain economic level to become so-called "developed nations". The Myth of Development has four fundamental inter-related flaws. The first one is the problem of the Gray Area.

The gap between "developed" and "developing" countries is presented as a simple black-and-white dichotomy. I often hear from my Chinese students say, "China is a developing country. America is a developed country. We want to become a developed country."

Fair enough. But which country has high-speed trains? Which country has a higher unemployment rate? How can the government of a "developed" country owe trillions of dollars to a "developing" country?

Obviously many nations in Asia and Africa, and Latin America have very serious structural problems, which could be alleviated through stable government and educational reform. Very poor countries should aspire to create social and economic institutions that allow their people to live with dignity. Nevertheless the rise of new economic powers such as Brazil, India, and (especially) China, coupled with the massive financial difficulties faced by Europe, Japan, and the United States, call into question the utility of the developed/developing dichotomy.

The second problem with the Myth of Development is philosophical. The very term "development" implies a steady linear progression from poverty and ignorance to wealth, literacy, and general happiness. This viewpoint is Western in origin, and alien to many of the world’s cultures.

The idea of the inexorable march of progress has roots in the Judeo-Christian worldview of time (God creates the world, the world exists, the world ends), and has been largely co-opted by modern science. We are told to believe that progress is inevitable, that the quality of life for each new generation will be better than the life of their parents. Never mind the fact that humanity has created weapons that empower a handful of political leaders to destroy civilization itself.

Never mind obesity is now challenging starvation as a cause of premature death. Of course, the advances made in the last century in curing diseases, increasing literacy rates, and fighting hunger must be lauded. However, to blindly value "progress" above all else threatens our very survival as a species.

The third problem with the Development Deception stems from definitions. As mentioned previously, GDP per capita is the standard the yardstick for measuring development. This assessment ignores serious social difficulties faced by the so-called developed nations.

For example, a third of the adult population of the United States of America, the archetype "developed" nation, suffer from obesity, with another third classified as overweight. The United States of America also has the dubious distinction of having the highest incarceration rate of any nation on Earth.

Meanwhile Japan, the paragon of "development" in Asia, has one of the lowest fertility rates in the world, leading to a rapidly aging population. This trend, unless dramatically reversed, will exacerbate Japan’s social, economic, and political crisis, as more retirees put enormous strain on the working population. Japan’s population is set to shrink by roughly thirty million over the next four decades (Citation here). Are these worthy goals for the so-called "developing" nations to aspire to?

The fourth and final problem with the Myth of Development is a terminal defect. Citizens in countries such as China and India are encouraged to join the middle class and live "Western" lifestyles. As benign as it sounds, this goal is completely impossible. Simply put, there are not enough natural resources on this planet to sustain such an increase in consumption.

According to World Bank figures, in 2008 Americans, on average, used 87,216 kilowatt hours of electricity. The average Chinese used 18,608 kilowatt hours, and the average Indian 6,280. All three countries depend primarily on coal for electricity. To bridge the gap between these levels of resource utilization of would entail environmental catastrophe and global shortages on an unimaginable scale. Coal is just one example - one could also look at oil, lumber, or meat consumption. Indeed, many of the fundamental challenges facing the world economic system - such as rising food and fuel costs - are directly related to economic development.

The Development Deception is perpetuated by international corporations and national governments. Resource mining, production, and overconsumption are the basis for the current globalized economic system. Human beings are classified as "consumers", because overconsumption entails short-term profit.

Rich nations leverage their "developed" status to influence poorer nations, while the governments of these poor nations use the promise of development to maintain political power. None of this propaganda changes the fact that it is grossly misleading for the nations who over-consume the Earth’s finite resources to be considered developed.

Advocates of The Development Myth may point to science as a savior. We are constantly told that new inventions will allow for more efficient use of resources, or allow for sustainable consumption patterns. This argument provides only false hope. We cannot speculate our way out of environmental pollution and a collapsing natural resource base. Unless and until new "green" technology actually exists and is utilized, science is actually exacerbating ecological disaster.

Recently, the Human Development Index (HDI) has been promoted as a more "human-centered" alternative to GDP as a metric for measuring development. HDI uses data on life expectancy, literacy, number of years in school, and GDP to determine the development status of a country. Although this presents a useful alterative, the continued use of GDP as a basis for measuring development is HDI’s fundamental flaw. Unsustainable consumption of finite resources cannot reasonably be classified as "development".

What is the viable alternative to the Development Myth? Bhutan has advocated Gross National Happiness as an alternative goal to increasing GDP per capita. Citizens are asked about their Subjective Well Being in order to establish Gross National Happiness. Obviously this measurement is difficult to define and numerate, and ignores problems such as illiteracy and extreme poverty. However, it does point in the right direction.

Development needs to be redefined in order to account for human physical and emotional well-being as well as environmental sustainability. Otherwise it is only a lie, and a dangerous one at that. To seek economic advance at the expense of human interests and future generations is a recipe for global disaster.

When extreme wealth is challenging extreme poverty as the bane of human existence, a revolution of values is needed. We as a species must advance values of conservation, and teach people to live within the means of the productive capacity of our planet. No longer can the scramble for nonrenewable resources be viewed as a zero-sum game. Human beings need to develop solidarity on a global scale. Citizens of wealthy nations must learn to live with less.

The most important development is that of the individual. Social and spiritual harmony is the antidote to the Development Deception, for all traditions encourage compassion and warn of the destructive power of greed. To quote LaoZi (as translated by D C Lau):

There is no crime greater than having too many desires;
There is no disaster greater than not being content;
There is no misfortune greater than being covetous.
Hence in being content, one will always have enough.

Brendan P O'Reilly is a China-based writer and educator from Seattle. He is author of The Transcendent Harmony.