Wellbeing: more please

Health and Wellbeing, Resilience EngineThe well-being or ‘happiness’ push has been rolling for more than a decade now. Though there were plenty of other voices like Bruno Frey, I date its take-off from around the turn of the 21st century when Richard Layard started cranking up the issue and invoking the ghost of Bentham. 1 This new development shared with many other new departures in economics the rediscovery of things that were relatively commonsensical but nevertheless had been eclipsed by neoclassical formalism. 2

I recall reading Layard at the time and thinking that I’d been saying the same kind of thing for a long time3 – that money was an input with the output being some notion of wellbeing, that like all other commodities there were diminishing marginal returns to money 4 Still, as I argued in a presentation on the subject of wellbeing and the HALE last Friday (slides here at least for a while) at a conference commemorating Paul Frijters contributions to Australian economics (and UQ hounding him out of the place for his trouble – File under “never let a good deed go unpunished”), it’s surprising how little the new focus has yielded in strong new policy insights and priorities.

What’s typically happened, as happened with the other disciplinary departures I mentioned above, is that the new lenses that these new sub-disciplines generated were then trained on all the same old chestnuts. So new trade and development economics were trained on the old ‘free markets versus government intervention’ debate. Likewise, Layard used a wellbeing framework to address questions like the relation between income and happiness (the so-called Easterlin Paradox) and the wellbeing impact of inequality. Of course, that’s all fine and dandy, but you’d think that a new focus might produce new things to think about, not just slightly new ways to think about old things.

As an aside, by coincidence, the period during which wellbeing has risen to prominence in the academy also coincides with Australia sliding down the league ladder from preeminent neoliberal reformer to also-ran. Since our last successful major economic reform – in 2001 – I can think of at least three areas in which the UK has forged a path well ahead of our own. The first is information policy where the UK has opened up a big lead in open data policy know-how and is moving to second generation issues like personal information management. The second is social innovation where David Cameron put a lot of money into Big Society Capital and lots of things have been happening – though very little that I know of has been really done on a national scale.

And the UK government now explicitly targets well-being as an outcome of policy. This wasn’t just nice words. It was championed by the former most senior bureaucrat – Gus O’Donnell (or GOD as he’s known) both towards the end of his tenure as Cabinet Secretary and in his life after that appointment. The UK has also set up a ‘what works’ centre on wellbeing – which I think was initially chaired by GOD who is now the Patron. 5

Still, progress has been slow.

At least on a quick perusal, the What Works Wellbeing website shows fairly slim pickings with the recent item on their blog being the wellbeing effects of singing. So the wellbeing push has generated a huge literature for academics. 6You’d think there’d be lots of low hanging fruit to pick by now. But it doesn’t seem to be so. You’d think the aim would be to produce a body of knowledge that could contribute to cost curves a little like the one below – on greenhouse gas abatement.7Image result for greenhouse gas abatement cost curves

Alas, that’s not how the academic literature works or how policy makers do policy – even, it seems, when governments mandate that wellbeing be made an important theme of policy. To begin work on such a cost curve, one might begin by trawling through the cohorts of people we know have low self-reported wellbeing. We know that’s true of carers and people with mental illness. One could then ask where the low hanging fruit was – where we’re most confident of highly cost-effective initiatives. I have little doubt that properly considered, there are a host of ‘no-regrets’ measures here – i.e. measures that would pay for themselves economically as well as directly boosting well-being.

A good candidate would be the old Home and Community Care (HACC) scheme which was a world leading Australian policy innovation that sought to delay people’s admission to nursing homes by giving them help in their homes. It reduced net outlays by reducing the burden on nursing homes and it increased wellbeing markedly (It certainly did for my late Mum). I expect initiatives like Weavers will do the same – at even lower cost than HACC. Could one do the same in mental illness? I suspect in those areas most susceptible to drug treatments the answers is ‘yes’, but there would be other low hanging fruit – as well, no doubt as difficult cases.

There’s also multi-generational disadvantage. Something like a half of all people who have their children removed for abuse or neglect were removed from their own parents for the same reason. It seems we have moderately successful means of intervening to stop the intergenerational cycle 8and while they’re not that cheap, the wellbeing benefits would be substantial in addition to the economic benefits which, if accounted for over any substantial period should greatly exceed the economic costs of such programs.

Here are some other areas off the top of my head. As I understand it, around 10% of the student population has some degree of dyslexia. Some of those people, particularly the milder cases can be helped very substantially just by schools paying more attention to teaching for different cognitive styles (and I suspect a peer-to-peer mentoring program could also be devised to great effect). Loneliness is another area which has gained prominence in the UK as a policy issue – particularly, but not exclusively regarding the elderly – and it’s easy to imagine one could make substantial inroads into the problem at very modest cost – together with lots of positive social and economic spinoffs.

But in the literature – either at the heights of the academy or even the ‘grey literature’ of policy discussion – this kind of thing is pretty thin on the ground. Indeed, though I presume there are others, this is the only article of its kind I can find, and even here it’s notable that the focus is on developing frameworks for generating lists of interventions rather than just getting going listing high-quality projects to which frameworks can be applied in due course when one finds the need and the time to prioritise. It’s been over a decade of full on wellbeing studies now guys, and we’ve got surprisingly little to show for it both within the academy and in policy.


  1. Google identifies 2,590 articles containing the expression “happiness economics” of which around 100 were published before 2000 with the number growing strongly in each five year interval I’ve checked.
  2. Thus, just as new or ‘strategic’ trade theory and ‘new’ development theory rediscovered things about the economy that had been well known and thought about until their eclipse by the modelling orthodoxies of the 1960s on, so the new focus on wellbeing rediscovered some propositions that had been commonplace foundations of economics at the turn of the previous century.
  3. As had he.
  4. An extra dollar in the hands of a poor person meets more urgent needs (and so contributes more to net wellbeing whatever that means) than an extra dollar in the hands of a wealthy person.
  5. What works’ centres are British institutions which seek to translate the state of the art in various fields into actionable conclusions for practitioners. You’d think that such services might be provided by academia, but you’d be wrong.
  6. Google Scholar had the number of articles with ‘happiness economics” in the literature growing from 24 in the last five years of the 1990s, to 170 the next five years, around 650 the next five years and 1,700 in the five years to 2015.
  7. Of course such cost curves themselves are a huge simplification, and improving wellbeing is a more ccontext-dependent undertaking than reducing carbon emissions, but you get the idea.
  8. Programs like Family by Family and Newpin both look pretty successful.
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10 Responses to Wellbeing: more please

  1. conrad says:

    There might be limited amounts of stuff on this in the economics literature, but there is a mega-ton of it in the psychology literature. But a lot of it either boils down to (a) stuff we can’t really do much about (genetics); (b) stuff so broadly defined there is no obvious solution (a bit like using GDP in economics — it’s a good measure but if you want to make it higher or lower, there isn’t a single easy solution); (c) stuff like you are talking about, which is probably most of it — i.e., the targeting of small contextually specific groups with contextually specific solutions. Do this times 1,000 and you will get some inroads; and (d) politically impossible stuff for larger groups. For example, being unemployed leads to poor well being because we don’t give people enough money. This no doubt leads to more expensive services so there is clearly a trade-off (mental health, crime, long term dependency because of mental health and crime etc.). But no politician wants to increase the rate to a level where these problems are at least reduced.

    • paul frijters says:

      I am, perhaps predictably, more optimistic about the future of wellbeing policy. One can argue that the focus on GDP as a headline brought the economists into policy land, permeating through many state sectors where context determined the implication of basic economic thinking. The same can happen to wellbeing. So like economics, the low hanging fruit is in making what is obvious but that goes against entrenched habits and beliefs mainstream.

  2. derrida derider says:

    money was an input with the output being some notion of wellbeing, that like all other commodities there were diminishing marginal returns to money

    You’re absolutely right that happiness economics (along with a surprising amount of other “modern” economics, including much of behavioural economics) is a REdiscovery of old stuff.

    I’m less sure that it is “neoclassical formalism” that has obscured it though. The proposition about diminishing marginal utility in income above, for example, is a mathematically explicit foundation of neoclassical welfare economics and hence of optimal tax theory. And the idea of rank-dependent utility is anything but new (Veblen, anyone?) and has been formalised for a good century. Yet all of these are intensely formalist areas.

    I think much of the happiness literature is empirical rather than theoretic – it measures just how sharply marginal utility falls, and just how much heavier weighting in decisions rank effects have rather than absolute position, and how risk-averse people are (very, usually). IOW it mostly puts more realistic parameters into those formalist models, rather than changing the structure of the models.

  3. Hi All.
    Thaanks for the article Nick. I havent touched into this literature in the longest time – and it is a bit sad to hear it hasn’t progressed much.

    It does seem though, that this is a space where the scope for cross disciplinary borrowing would be really valuable. My understanding is that other disciplines have got pretty clear answers to what contributes to well being.

    The biggies
    1. Social relationships
    2. Time in nature
    3. Exercise
    4. Spirituality/ meaning systems

    On the downside
    Being low status, lonely, and financial stress make people miserable and significantly damage their health.

    I think the key policy implication is that we should be seeking to reduce work hours, and to ensure all people have access to an equal mix of ‘paid work’ and ‘love work’. Paid work being work for which you are repaid with money, and love work being the work for which you are repaid with love. Love work includes care of kids, elderly parents and family. It should also encompass community work, whether it is coaching the footy, running the local community garden, organizing choirs or whatever.

    The key insight of love work, is that not everyone will make a millions of dollars, but in love work, everyone can be somebody’s hero.

    Too many men are forced to do long hours of paid work, and are deprived of the opportunity to do love work.

    Women feel hammered by the crunch of having career, kids and elderly parents hit at the same time.

    As a community we are having crisis ofno one having the time to do community work anymore.

    It would make so much more sense to spread paid work more evenly over the life cycle. Instead of being smashed from 30-50, and then redunant and lonely for the 20 years from 60-80, lets work 4 hours a day for twice as long. And have the time for the love work, and the time for Australian homes to have gardens again, and the time to do some exercise and team sports until much later in life.

    Imagine a world where the average homeloan was for 50 years, paying little or nothing off while the kids are little and there are other demands on money and time. But then actually pay the house off in the years from 60-80 when kid related demands had eased.

    Ah, my utopia!


    • paul frijters says:

      there is a lot to be said for all of this, Lindy. The key issues in response:

      – there is lots of community work done by the elderly. Inside families and outside, but we surely can make it easier as a society for the grandparents to watch the grandkids. Indeed, getting kids too late is a huge problem in this regard (the grandparents are then too old to be useful).
      – forced leisure and reduced materialism is easy to do (more compulsory holidays; taxes on mobility), but one then comes up against the issue that it is often not really about wellbeing for the powers that be: bigger and more powerful is what they strive for, not happier populations. That is pretty much true in any political system: those at the top benefit in a status and personal sense from their country being bigger and more powerful (and more unequal!), which is not commensurate with a wellbeing lense. Which means one must truly push for wellbeing against those other interests.
      – community cohesion (the things you love!) ultimately comes from those groups having a true economic function. Our economy is increasingly atomistic and hence naturally moving away from communities, effectively destroying them. More fleeting communities of consumers take their place, but they do not have the same power. Only the group as a whole (the country) sees increased power. To swim against that tide is like swimming against history.

      I agree with your basic point though that more community orientation and spreading of loads throughout life would probably increase wellbeing.

  4. Paul,
    I agree with your point on ‘bigger is better’ being in the interests of the powers that be.

    However, in these matters I think it is always useful to remember that political stability is the very first interest of elites. The reason we have a minimum wage and a welfare state was because there was a time when elites decided that political stability rested on making concessions on those things.

    As we face the prospect of ‘jobless prosperity’ in the future that stability is potentially again at risk. We face the prospect of having some people working and competing incredibly hard over a small number of very demanding jobs, and then large alienated and redundant population, whose anger becomes socially dangerous.

    Trumpism seems to me to be a huge opportunity for change – if this disenchantment can be directed towards a positive vision. The new era of soical reformism is upon us.

    Also, when you describe community cohesion as having an economic function, how are you defining economic function? Broadly I assume? It seems to me that most community is built on caring work or fostering other passions. ie it is about sharing the tears of babyhood, school pick ups, assisting those that are ill or need help, or it is about fostering passions – whether they are music, hotted up cars, gardening or adrenaline sports, or spirituality. These seem to me to be things that are crowded out by lack of time, and lack of incidental contact, but not by economic relations per se. They are about meeting emotional needs rather than material ones.

    Would you define these as economic functions?


  5. Nicholas Gruen says:

    Thanks Lindy,

    I broadly agree with what you’ve said, but the thing I’m also appealing to is something a little more micro. As I wrote in this post, policy types have a penchant for ‘big thinking’. So when we ask a ‘wellbeing’ question, we have to have generic “how to improve wellbeing in the world” answers. Of course there’s nothing wrong with that.

    But what I mean by ‘micro’ is that one could have a much more deliberate focus on wellbeing in a lot of the programs we run. But we don’t do that. Why not? A bunch of reasons. Here are some.

    The first and best reason of course is that the big picture can be a very useful application of the approach – it may on its own be THE most useful application of the approach.

    All the other reasons are bad ones.

    It’s more flattering to us to discuss the ‘big picture’.

    Big picture thinking is higher status thinking. More micro thinking is ‘delivery’ and we all know that delivery is lower status than policy design. (Too bad if the important things involve sweating the small stuff.)

    Our whole apparatus of discussion follows this pattern. So, as I itemised the post I’ve linked to:

    Thus for instance a few years ago the BCA wanted to rev up the troops on regulation. So it got Access Economics to do a report on the state of play. How did it do it? It took the reg review manual about the need for robust regulation of the way regulators make regulation and then assessed each of the States’ regulatory performance against the set of quick and dirty criteria it had run up. Of course, it didn’t actually attend to the quality of specific regulation – because the vast bulk of it made that practically impossible. But everyone treated the report as a pretty serious exercise, even though one might be suspicious of the efficacy of the entire regulatory review apparatus. Further, the topic of ‘regulation’ is truly immense. It isn’t just ‘red tape’ – though that itself is a broad enough topic. … To take a small snapshot we’re talking about regulation regarding the environment, work health and safety, product safety, consumer and investor protection, labour market regulation. In all these areas, broad ideological [or managerial] preferences are of limited use – particularly where there’s so much substantive agreement between the mainstream parties, despite their grand rhetoric (mostly about the supposed extremes of their opponents) – and what matters is individual examples and the way they influence life on the ground.

    • paul frijters says:

      ” one could have a much more deliberate focus on wellbeing in a lot of the programs we run”

      I agree with that too. Pro-wellbeing policing, family policies, or community engagement needs local knowledge and will look different in different places. Hence the micro benefits by and large seem to be obtainable by educating people on the ground in the ‘ways of wellbeing’.

  6. Nicholas Gruen says:

    Here’s another example.

    Patent monopolies also distort the research process itself. Most obviously they encourage drug companies to pursue patent rents rather than finding drugs that meet the most urgent health needs. This means [inter alia] that if a pharmaceutical company produces a drug for a particular condition that earns large amounts of revenue, its competitors have a strong incentive to try to produce similar drugs for the same condition to capture a share of the rents.

  7. Well-being is a positive outcome that is meaningful for people and for many sectors of society, because it tells us that people perceive that their lives are going well. Good living conditions (e.g., housing, employment) are fundamental to well-being. Tracking these conditions is important for public policy. However, many indicators that measure living conditions fail to measure what people think and feel about their lives, such as the quality of their relationships, their positive emotions and resilience, the realization of their potential, or their overall satisfaction with life—i.e., their “well-being.”Well-being generally includes global judgments of life satisfaction and feelings ranging from depression to joy.

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