Happiness: the new GDP
By Richard Harman (author)
This week has seen two major planks of the Government’s quite radical reconstruction of the New Zealand economy slip quietly into place.
State Services Minister Chris Hipkins has unveiled his state sector reforms which essentially return the sector to something looking more like a traditional public service.
And yesterday Grant Robertson opened an international conference with a more detailed glimpse of his proposal for a “wellbeing” budget.
Though it is easy to dismiss the well-being concept as simply an attempt to put a price on happiness, it is more profound than that.
“I believe that this work on wellbeing is likely to be the most significant legacy this Government can leave for future generations, said Robertson opening the Third International Conference on Wellbeing and Public Policy yesterday at the Beehive.
“In politics, we tend to get caught up in, at best, three-year cycles or, at worst, 24-hour media cycles.
“We must break out of that.
“Because, if we can change the way we think about success, if we find our north star in the wellbeing of all our people, now and in future generations, and if we value all that people are capable of, then we will be a better place.
“We will be a country that is prosperous, but cares about who shares in that prosperity, how we look after our land and our water, how we make our people healthier, more secure, more skilled and more reflective, and where we connect our communities.”
A staggering 48 breakout sessions at the conference yesterday covered topics like Maori wellbeing, diversity in New Zealand, housing quality, ageing in New Zealand and children’s wellbeing.
The conference keynote speaker, Edward Diener, is Professor of Psychology at the University of Virginia, the University of Utah, and Senior Scientist for the Gallup Organization is something of a godfather to the whole science of wellbeing.
Diener told the conference that by itself GDP was not a sufficient measure of whether someone was satisfied with their life.
Measures of psychosocial wellbeing needed to be taken into account alongside traditional economic indicators, he said.
Psychosocial indicators included positive feelings, life satisfaction, infrequent negative feelings, meaning and purpose and supportive social relationships.
“In a democracy we want people to feel their lives are going well, not just what the politicians say we should have, but that people themselves think their lives are going well,” he said.
“these indicators also serve as an indication of what’s going wrong’ who is thriving in society, who is flourishing and who is suffering.
“So they can pull together a lot of different influences; whether it is the environment, whether it is equality whether it is diversity or respect and so forth.”
Diener said there was another reason to measure wellbeing.
“Psychosocial well being is good for other outcomes.
“Happy people do better in almost every respect in life.
But he said simply raising GDP did not guarantee happiness.
"If you look at the US over the past 50 years, income has gone up four times, and yet life satisfaction has been flat.
“It has not gone up at all.
“So that tells you that GDP is not enough to necessarily make a better life.”
He said that there was now a preponderance of data which showed that wellbeing was an influencer of a whole lot of other economic indicators even including life expectancy.
Diener quoted a famous Robert Kennedy speech who said “Our Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage…. Yet the gross national product does not allow for the health of our children, the quality of marriages, the intelligence of our public debate or the integrity of our public officials."
That was a theme picked up by British Conservative Prime Minister David Cameron in 2010 when he introduced his so-called “happiness index”.
“We've had something of a cheap booze free-for-all - again, supposed to be good for growth, but were we really thinking about the impact of that on law and order and on well-being?” he said.
“We've had something of an irresponsible media and marketing free-for-all - again; this was meant to be good for growth, but what about the impact on childhood?
“It’s because of this fundamentally flawed approach that for decades Western societies have seen the line of GDP rising steadily upwards, but at the same time, levels of contentment have remained static or have even fallen. “
Ironically, Diener produced data to show that New Zealanders were relatively happy and content.
In a survey which included the United States, Australia and Denmark, New Zealand had the highest percentage of people who said they enjoyed their lives.
New Zealand’s other positives were the higher was low (4%), people felt respected(93%), they had others they could count on (95%) and job satisfaction was pretty high (88%)
But only 57% thought the economy was doing well; 33% thought there was no gender equality at work; 35% did not feel safe walking alone, and 32% thought we were doing worse at preserving the environment.
Diener argues that these are the really important figures; that they show politicians where action needs to be taken.
And Robertson is determined to do that.
He is proposing to introduce wellbeing measures (currently being developed by Treasury and Statistics) into the preparation of next year’s Budget.
“This will see the Budget look different in form and in substance. I will have more to say about the detail of this in December when I release the Budget Policy Statement, but I can say that we are well advanced in our planning for this.
“In order to achieve lasting impact of a wellbeing approach, we need to ensure that the framework in which the public sector operates reflects this approach.
“Our Government’s aim is a public sector that operates as one joined-up system capable of tackling the complex challenges of our time.
“We want it to be centred around the needs of citizens, delivering convenient and connected public services.
“We want it to be marked by joint ventures, one-stop shops and high levels of integrity and innovation.
It is also our intention to amend the Public Finance Act to ensure that our Budget process also embeds wellbeing.
“I will shortly be releasing a companion discussion document about how we do this, but it is my clear expectation that the public service and governments alike will have responsibility for reporting on wellbeing as part of our core financial processes.”
Robertson’s embrace of wellbeing could end up being as important as Roger Douglas's embrace of monetarism which led to the Reserve Bank Act and Ruth Richardson's embrace of fiscal responsibility which led to the Fiscal Responsibility Act.