Put another way, what matters for life satisfaction is the growth not of mean income, but of median income — the income of the typical person. Consider a population of 10 people (say, a factory) in which the managing director earns US$150,000 a year and the other nine, all workers, earn US$10,000 each. The mean average of their incomes is US$25,000, but 90 percent earn US$10,000. With this kind of income distribution, it would be surprising if growth increased the typical person’s sense of well-being.
That is not an idle example. In rich societies over the past three decades, mean incomes have been rising steadily, but typical incomes have been stagnating or even falling. In other words, a minority — a very small minority in countries like the US and Britain — has captured most of the gains of growth. In such cases, it is not more growth that we want, but more equality.
More equality would not only produce the contentment that flows from more security and better health, but also the satisfaction that flows from having more leisure, more time with family and friends, more respect from one’s fellows and more lifestyle choices. Great inequality makes us hungrier for goods than we would otherwise be, by reminding us that we have less than the next person. We live in a pushy society, with turbo-charged fathers and “tiger” mothers, constantly goading themselves and their children to “get ahead.”
The 19th-century philosopher John Stuart Mill had a more civilized view: “I confess I am not charmed with the ideal of life held out by those who think … that the trampling, crushing, elbowing, and treading on each other’s heels, which form the existing type of social life, are the most desirable lot of human kind … The best state for human nature is that in which, while no one is poor, no one desires to be richer, nor has any reason to fear being thrust back, by the efforts of others to push themselves forward.”
That lesson has been lost on most economists today, but not on the king of Bhutan — nor on the many people who recognize the limits of quantifiable wealth.
Robert Skidelsky, a member of the British House of Lords, is professor emeritus of political economy at Warwick University.
Copyright: Project Syndicate