Can happiness redefine economics?
The world today is at crossroads of development. Countries are wary of growth brought about by conventional economics. The resources are being depleted at a faster rate than ever before in the quest for wealth. Current development practices are unsustainable and exploitative. The wealthy are in a rat race, chasing after even more wealth and hedonism, while others are dying of hunger and poverty elsewhere. The world has become a distorted habitat of insatiable Homo sapiens gripped by never-ending greed. Is the traditional economics failing as appropriate development model? Is there a need for an alternative development theory? The evidence that growth does not necessarily make people happy is ever becoming relevant to reassess the state of development around the world. The Globe caught up with Professor Shun Wang, a faculty at KDIS and one of the authors of the World Happiness Report, to shed some light on the happiness and development. Professor Wang believes that there is more to development than just measuring income and gross national product of a country.
Q: You were one of the authors who contributed to the World Happiness Report since 2012. Before we delve into the details of the chapters, please tell us what is World Happiness Report?
A: The first World Happiness Report was published in April 2012, in support of the UN High-Level Meeting on happiness and well-being. World Happiness Report reviews the state of happiness in the world today and shows how the new science of happiness explains personal and national variations in happiness. It also shows that well-being and happiness are critical indicators of a nation’s economic and social development, and should be a key aim of public policy.
Q: Why is World Happiness Report important in the face of growing materialism around the world?
A: It shows that besides income, many other non-economic factors play important roles in our happiness, such as health, social support, freedom, trust, and generosity. It advocates that government consider more about people’s well-being rather than traditional economic factors, such as GDP or GNI. It is in alignment with OECD’s commitment “to redefine the growth narrative to put people’s well-being at the center of governments’ efforts”.
Q: Can you tell us something about the chapters you wrote for the Report? Specifically the Chapters on International Migration and World Happiness and Growth and Happiness in China, 1990-2015.
A: I have been co-writing the second chapter of the Report since 2012. The chapter mainly reports the country ranking and dynamics of happiness and uses six factors to explain the levels and changes. In addition, the chapter may also discuss some other issues, for example, it discusses international migration issues in 2018. It shows that a ranking of countries according to the happiness of their immigrant populations is almost exactly the same as for the rest of the population. The closeness of the two rankings implies that the happiness of immigrants depends predominantly on the quality of life where they now live, illustrating a general pattern of convergence.
The chapter “Growth and Happiness in China, 1990-2015” extends Easterlin et al. (2012)’s earlier study on the dynamics of China’s happiness. It contrasts the sharply growing per capita income in China over the past 25 years with life evaluations that fell steadily from 1990 till about 2005, recovering since then to about the 1990 levels. It attributes the dropping happiness in the first part of the period to rising unemployment and fraying social safety nets, with recoveries in both since 2005.
Q: Richard Ainley Easterlin is one of the authors of the Chapter on Growth and Happiness in China, 1990-2015. Can you give us a brief idea of Easterlin’s works?
A: Richard A. Easterlin pioneered the economics of happiness more than 40 years ago. He is well-known for his 1974 article “Does Economic Growth Improve the Human Lot? Some Empirical Evidence” where the famous “Easterlin Paradox” originated. The Paradox states that: at a point in time both among and within nations, happiness varies directly with income, but over time, happiness does not increase when a country’s income increases. There are a lot of debates on this topic.
Q: What made you work with him?
A: I worked closely with Prof. John F. Helliwell for a couple of years, including the chapter 2 of World Happiness Report. He is one of the editors of the World Happiness Report. When we discussed the potential topics on the 2017 Report, we thought writing a chapter on China would be interesting. I have been working on China’s happiness issues for a while. Richard was famous in happiness studies and has done a paper on China’s happiness dynamics in 2012. Thus we decided to invite him to work with me to write a chapter on China’s growth and happiness. It was my great pleasure to work with him.
Q: Do you think happiness is measurable variable or concept within the studies of development around the world? Can you give some examples?
A: More and more countries are starting to measure their progress with reference to the happiness of their citizens. The UK is now systematically collecting data on happiness and life satisfaction. The UAE’s National Agenda aims to position the UAE as one of the happiest countries in the world. On 10 February 2016, UAE appointed the country’s first Minister of State for Happiness. Korea’s current government shows a lot of interests in measuring and promoting its citizens’ happiness.
OECD published OECD Guidelines on Measuring Subjective Well-being in 2013, leading the way in developing clear standards so that cross-country comparisons can be made.
Q: What would the report look like if you were to write the same chapter you wrote for the WHR in the Korean context: GROWTH AND HAPPINESS IN KOREA?
A: I checked the growth and happiness in Korea during the period 1998 and 2012, using Korea Labor Income Panel Studies (KLIPS) data, and found that economy and happiness followed a similar pattern of growth. During the period, Korea’s unemployment rate was also quite low.
Q: Why do you believe in welfare economics or a new approach to economics (like happiness and economics)?
A: Happiness provides a direct and comprehensive evaluation of one’s quality of life, incorporating all the material and non-material aspects of one’s life. GDP or income alone indicates the quality of life, but often incomplete and biased. Thus happiness data shall be a good complement to the traditional measures of well-being.
Q: Do you think traditional economists and hardliners are likely to look at non-economic parameters like well-being and happiness?
A: There are growing interests in the happiness study among economists, such as Economics Nobel Laureates Angus Deaton and Danial Kahneman, though still many of them are doubtful about subjective well-being measures. It takes time to change traditional economists’ attitude.
South Korea is no different than western economies. Will the concept of happiness in economics inspire or influence its economic development?
Certainly, Korean government will pay more attention to the happiness of its citizens and may make some policies toward this direction, but I have no idea how this may affect Korea’s economic development. If government policy can improve citizens’ happiness, it will be beneficial to economic development, since studies find that happier people are more productive.