In the wistful imagination of many wage slaves chained to their desks, France is a land where everything is better: long holidays, crusty baguettes, fine wine and a Gallic disregard for money-grubbing individualism.
So perhaps it’s not surprising that French President Nicolas Sarkozy wants to export the French penchant for the good life to the rest of the world. Last week he launched a major new report by the Nobel Prize-winning economist Joseph Stiglitz and a panel of experts on how to ensure that governments take full account of their citizens’ happiness and well-being, instead of measuring their success by GDP alone.
Sarkozy made no secret of his target: the rapacious Anglo-Saxon neo-liberals who hoovered up multimillion-dollar bonuses while bringing the world economy to its knees.
“For years, we proclaimed the financial world a creator of wealth, until we learned one day that it had accumulated so much risk that it plunged us into chaos,” he said.
But there is much more to Stiglitz’s work than a critique of the naked pursuit of profit. Even before the crisis, a growing number of concerned economists were beginning to question whether a single-minded devotion to maximizing GDP growth led to governments neglecting other important goals.
GDP simply totals up everything made within an economy in a year, from widgets to whizzy financial products, at market value. It was John Maynard Keynes, the great 20th-century economist, who pushed for more detailed “national accounts” to guide governments seeking to manage their economies, at a time when reliable data was scarce.
LOSING TOUCH
But just as corporations have been accused of fetishizing “shareholder value” in recent years, pursuing quarterly gains in their stock price, sometimes through sheer recklessness instead of steady, step-by-step growth, economists have been charged with losing touch with the reasons we were interested in GDP in the first place — as a measure of social, as well as economic, progress.
There have been two pressures for wider measures of national success from outside mainstream economics. Environmentalists point out that conventional national accounting doesn’t allow for the heavy costs of economic progress in terms of pollution, depletion of natural resources and so on.
As Stiglitz explains, looking at GDP without accounting for environmental damage in the figures gives an artificial picture.
“A firm would look at its assets and liabilities if it wanted to see if it was better or worse off,” he said. “Yet we don’t look at any of these things when we talk about the balance sheet of society.”
Meanwhile, psychologists — and economists with a psychological bent — have for decades been gathering a large body of evidence showing that beyond a certain point, rising national wealth stops making the population any happier, a puzzle known as the Easterlin paradox, after the economist Richard Easterlin, who worked on the question in the 1970s.
In the ensuing 30 years, a whole branch of “happiness economics” has developed, mapping the correlations between people’s reports of how satisfied they are with their lives and a host of different criteria.
Some of its insights have been quirky rather than having obvious policy implications: a 2003 study by David Blanchflower, the former member of the Bank of England’s monetary policy committee, and Andrew Oswald, a professor of economics at Warwick University in England, showed that having regular sex makes people happier, especially if they’re well educated, for example.
RSS