Reoccupying Happiness: Building Flourishing Economies of Wellbeing - - PDF document

¡ 1 ¡

Reoccupying Happiness: Building Flourishing Economies of Wellbeing

April 14, 2012 Mark Anielski* One must make a new system that makes the old system obsolete. Buckminster Fuller Reclaiming the language of economics Economics and the gospel of economic growth has failed humanity as it relates to delivering on the returns to well-being we all desire: to live happy and meaningful lives. The economics of eternal growth has lost touch with the original Greek meaning of the word economy (oikonomia), which means the management of the household. Economists have also forgotten the meaning of words like wealth, which originates in the 13th century Old English meaning ‘the conditions of well-being.’ Or the word value, generally associated with money, which actually means ‘to be worthy or strong’ from the Latin valorum. And competition comes from the Latin (competere) meaning ‘to strive together.’ Instead of genuine economists, we have become practicing chrematistics (what Aristotle defined as the art of getting rich or the science of making money). Aristotle distinguished economics from chrematistics. He argued that the accumulation of money itself is an unnatural activity that dehumanizes those who practice it. As an Alberta ecological economist and adjunct professor of corporate social responsibility and social entrepreneurship at the University of Alberta’s School of Business, I ask my business students: what is an economy for? What is the role and responsibility of business in a society focused on returns to wellbeing? Why do we measure progress the way we do? Why is it that despite rising levels of gross domestic product (GDP) we have seen no commensurate increase in self-rated happiness of Americans or Canadians? If continuous economic growth has failed to improve the happiness index of nations, then why must be continue to grow the economy despite evidence that we may be destroying our very life capital (human, social and natural) which is the foundation of a good life? What if the progress of our economies were measured in term the conditions of wellbeing and self-rated happiness that psychologists tell us contribute most to our genuine happiness and societal wellbeing, including the strength and joy of our relationships? ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡

* Author of The Economics of Happiness: Building Genuine Wealth, and President of Anielski Management Inc. based

• n Edmonton specializing in the measurement of well-being and happiness.

¡ 2 ¡ Eduamonia: Happiness Aristotle, the Greek philosopher, defined happiness (eudamonia1) as ‘well-being of spirit’ and noted that happiness was a sense of well-being resulting from achieving excellence in the fulfillment of one’s functions. Another translation of eudamonia is "human flourishing.” This relates to the importance of living a virtuous life and requires that each individual discover their vocation – their purpose for being. Aristotle said that happiness results from a good birth, accompanied by a lifetime of good friends, good children, health, wealth and a contented old age, and virtuous activity. The Buddha noted that the purpose of our lives is to be happy. Whither Alberta’s Progress? It was in 1996, when I first read about the US Genuine Progress Indicator (GPI) – an alternative measure of wellbeing to the GDP – developed by Redefining Progress, a San Francisco-based economic think-tank. As a senior economic advisor at Alberta Treasury, I dreamed of a day when I might Alberta might adopt such a measure of wellbeing. In 1999 I had the opportunity to work on an update the US GPI as a senior fellow with Redefining Progress. Then in 2001, with a dream of a GPI for Canada, I lead a team of economists and biologists at the Pembina Institute to develop a prototype GPI sustainable well-being account of Alberta’s progress between 1961 to 1999. We asked: was Alberta

• n a sustainable path? The results of our study made the local and national news.

The front page of the Globe & Mail on April 23, 1999 announced the results with the headline “Fat Cat Albertans Struggle With Happiness’ while The Edmonton Journal’s front page read “Alberta’s Natural Capital Slipping.” We had struck a chord or a nerve through our forensic accounting of well-being. Our study revealed that despite 40 years of steady economic growth (an average GDP growth of 4.4 percent per year), Alberta’s overall index of well-being (a 50 indicator GPI composite index) had declined at an average rate of 0.5 percent during the same period. The economic credo that a rising tide of the GDP lifts all boats had been repudiated again. What we lacked longitudinal data on happiness of self-rated wellbeing that could tell us whether or not Alberta’s are feeling happier today than 40 years ago. It is rather remarkable that while pollsters collect opinions about all kinds of issues and economists track GDP quarterly, Albertans are not asked simple questions about what makes them happy (or unhappy) about living in Alberta. What might, for example, oilsands workers in Ft. McMurray say about whether their work is meaningful or brings them joy? One ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡

1 Etymologically, it consists of the word "eu" ("good") and "daimōn" ("spirit")

¡ 3 ¡ thing we do know: Alberta’s GDP continues to rise with each barrel of oil we extract and export. Since the release of the Alberta GPI report 10 years ago, I’ve continued to track key well- being indicators which I intuitively feel would matter most to happiness of my Alberta friends and neighbours. Two of the more disturbing statistics include the incidence of cancer and income inequality. Between 1981 and 2006 the incidence of all cancers (the rate per 100,000) increased by 23.6% in males and 28.4% in females while Alberta’s real per capita GDP increased by 52.2% over the same time period. Regrettably more cancer is good for Alberta’s GDP (the more we spend on cancer treatment the more GDP grows) though a liability for happiness. Income inequality is also rising. Alberta is second only to B.C. in terms of the gap between rich and poor and this gap has been rising since 1981. Alberta’s Gini coefficient for after-tax family income — a number between zero and one that measures the relative degree of inequality in the distribution of income — has increased 14.2% between 1981 and 2009. Why is inequality important to happiness? Recent research by epidemiologists Richard Wilkinson and Kate Picket in their book Spirit Level found concrete evidence that inequality in societies leads to regrettable erosion in the social capital of communities. The authors found that inequality causes shorter, unhealthier and unhappier lives; it increases the rate of teenage pregnancy, violence, obesity, imprisonment and addiction; it destroys relationships between individuals born in the same society but into different classes; and its function as a driver

• f consumption depletes the planet's resources. They also show that for virtually every

measure of quality of life there is a strong correlation between a country's level of economic inequality and its social outcomes. In almost all cases, Japan and the Scandinavian countries are at the favourable "low" end of inequality, and almost always, the UK, the US and Portugal are at the unfavourable "high" end, with Canada, Australasia and continental European countries in between. The bottom line is that we do better when we are more equal. Albertans are blessed with tremendous natural capital (oil, natural gas, arable farm land, and water), social capital (a strong sense of belonging) and human capital (people, entrepreneurialism, and spirit). Yet the province is without a comprehensive balance sheet that accounts for the wellbeing conditions of these most important forms of life

• capital. At the same time unfunded ecological liabilities, in the form of carbon emissions

and the degradation of ecosystem and their ecological services, go unaccounted for either

• n balance sheets of government or corporations.

Measuring happiness is the all the rage Since the release of my book (The Economics of Happiness: Building Genuine Wealth) in 2007, there has been an explosion of other books and works on the subject of the

¡ 4 ¡ economics of happiness. Most notably in 2009 French President Nicolas Sarkozy formed a commission led by former World Bank chief economist and Nobel Prize winner Joseph Stiglitz amongst others to conceive of a new accounting system for measuring progress and wellbeing. Sarkozy urged other countries to adopt new measures of economic output noting that the world has become trapped in a "cult of figures" and “behind the cult of figures, behind all these statistical and accounting structures, there is also the cult of the market that is always right," he said. Sarkozy’s commission reported that gross domestic product was flawed even as a measure of economic output, failing to account properly for public services or home-based activities. Worse, GDP was often equated with wellbeing itself and could also create perverse incentives. For example, it included spending on prisons and security systems, implying that more of this was good for society. Stiglitz noted that "what we measure affects what we do…If we have the wrong measures, we will strive for the wrong things." The Stiglitz commission proposed the use of objective measures of wellbeing and subjective indicators of happiness, covering income and wealth, health, education, social connections and relationships, the environment, insecurity and even political systems. More recently in November 2010, British Prime Minister David Cameron announced plan to measure Britain’s happiness as an alternative and better measure of how the country was doing beyond simply the GDP, which Cameron noted is no longer up for the

• job. Titled the National Wellbeing Project, the Office for National Statistics will ask

citizens to rate their own well-being, in terms of what matters most to people’s wellbeing with the first official happiness index due in 2012. Potential indicators include how people view their own health, levels of education, inequalities in income and the environment. China too is getting into the happiness game. In May of 2011, China’s National People’s Congress (NPC) met and announced that happiness is now more important to China’s future than increasing GDP. A new five-year plan was adopted at the meeting hailed as a blueprint for a “happy China”. It seems that the French and British have been inspired by Bhutan, the tiny Buddhist kingdom of roughly 700,000 people, who have since the 1970s been quietly advancing a new wellbeing accounting system called the Gross National Happiness (GNH) as a compliment if not alternative to the GDP. A few Canadians have been instrumental in Bhutan’s efforts. Most recently I was invited to Bhutan to advise their government on the challenges of sustaining interest in the GNH with the media playing such an increasingly significant role on promoting a life of consumption and materialism in this once isolated country sandwiched between China and India. Bhutan’s Prime Minister Jigme Yoser Thinley states unequivocally “In Bhutan personal spiritual fulfillment is not just a spiritual pursuit, it is government policy. My role is to help create conditions that will

¡ 5 ¡ help our people find happiness.” Imagine if these words were to be spoken by our own Prime Minister or any of our provincial premiers? Can Happiness be measured? Based on the recently released World Happiness Report, economics, psychologists, social scientists and others are demonstrating the possibility for both measuring happiness and wellbeing and using such measurements in the governance of our communities. New surveys such as the Gallup World Poll (GWP), the World Values Survey (WVS) and

• ther surveys have been designed specifically to measure subjective well-being asking

people to rate their life satisfaction (today), their current perceptions of happiness, their sense of their happiness yesterday (remembered wellbeing; “Overall, how happy were you yesterday), and the positive affects (e.g. enjoyment, happiness, laughter) and negative affects (e.g. worry, sadness, anger, depression) on happiness. When life satisfaction, happiness and these other questions are asked, they tell a very similar story about the likely sources of a good life. Happier nations (which include Denmark, Finland, and Canada) tend to have higher average incomes, healthy life expectancy, stronger sense of personal freedom, less likely to perceive widespread corruption in business and government, and are more likely to have someone they can call on in times of trouble. There are a common set of objective determinants of subjective wellbeing that are emerging suggesting we can combine both subjective happiness surveys with regular monitoring of the conditions of wellbeing that are know to contribute to higher self-rated life satisfaction and happiness. Strong correlations have been found from research that show that life circumstances (conditions of wellbeing) have a strong influence on subjective wellbeing or happiness and that many subjective measures of well-being are highly correlated with objective measures of well-being. For example, subjective measures of well-being have been correlated with a variety of objective measures that include facial expressions, brain- wave patterns, cortisol measures in individuals, and community and national suicide

• patterns. Measures of subjective well-being can be used to predict subsequent events and

behavior that are of importance to local governance. For example, many happiness measures are predictive of sickness so that collecting measures of happiness on a regular basis could be part of health maintenance and delivery of health services. Another example is that persons with disabilities tend to have lower subjective well-being ratings which is connected to the extent to which individuals can maintain strong social connections.

¡ 6 ¡ Happiness follows a U-shape or smiley face pattern over the life course of each individual, declining after puberty and then bottoming out between 40-50 years of age and then improving in later years. There is also a difference between hedonic happiness (pursuit of pleasure and materialism) and eudaimonic well-being (with emphasis on flourishing, meaning and purpose in life). Efforts to measure and promote happiness can be set within a broader accounting framework of measuring and reporting well-being, as proposed by the country of Bhutan with their Gross National Happiness framework. My proposed Genuine Wealth accounting system proposes such a system that would account for both subjective well- being and objective well-being based on an understanding of the determinants of well- being, that are both personal and external in nature. The Genuine Wealth accounting system would require collecting a broader set of information on the five-capitals of a community’s assets (human, social, natural, built and financial capital assets) that are relevant to the understanding and improvement of well-being in the community. In this system subjective well-being data and scores can be seen as directly democratic measures of the quality of individual and community life within a geographic area (e.g. community, neighbourhoods). Objective well-being data and indices can also be used to evaluate well-being conditions that contribute most to subjective well-being also within and across geographic areas and in the context of ecosystem boundaries. This commitment to measuring and reporting both subjective and objective well-being would improve the capacity of decision makers in community to build and enhance

• verall well-being in support of the good life for all. More comprehensive assessments of

‘returns-to-well-being’ that goes beyond conventional benefit/cost analysis is possible. The ability to demonstrate real value from taxes and programs as investments in building the genuine wealth of communities is possible. It would thus be possible to design, build and assess the relative importance of various policies and programs in terms of improving well-being conditions and reducing negative conditions or liabilities to happiness that might arise in communities. Determinants of Happiness Studies into the determinants of wellbeing and happiness show that the key contributor to a happy life are the combination of the quality of one’s upbringing and genetics (50%), followed by the strength and quality of relationships with family, friends and work colleagues (40%) and finally income and education (only 10%). New research suggests that the experience of one’s childhood years, more than genetics, is perhaps the most important contribution to one’s sense of wellbeing throughout life.

¡ 7 ¡ In recent research by happiness economist John Helliwell of the University of British Columbia, in collaboration with Robert Putnam (Harvard University and author of Bowling Alone) he has noted that the key contributions to happiness include:

• 1. Trust
• 2. Engagement- the more we get together…
• 3. Employment (paid or not, in a good job)
• 4. Family, friends and neighbours
• 5. Good health
• 6. High-quality of government, at all levels
• 7. Adequate income, relative to expectations
• 8. No TV

In the World Happiness Report (2012) researchers have found that while genes and environment are key features that determines a person’s quality of life there are other external features and personal features that contribute to either a life of happiness or misery. The external factors that are known key determinants of happiness include:

• income
• work (being employed, with intrinsic motivation tow work (eduaimonic returns

associated with flourishing;opportunities for advancement, job security, an interesting job, allowed to work independently, allowance to help other people and be useful to society)

• community and governance, and
• values and religion

Among the ‘personal’ features that are key determinants of happiness are:

• mental health (mental illness constitutes 50% of our total illness)
• physical health (measured in terms of healthy life expectancy)
• family experience (strength of family life measured by the proportion of people

separated, divorced or widowed).

• Education (measured in terms of adult educational levels), and
• gender and age (women tend to be less happy).

These external and personal features that are known to contribute most to happiness can become the framework for which well-being can be measured and reported at any geographic scale. There is a two-way relationship between the factors that contribute to happiness and self-rated happiness. For example, health affects happiness and happiness affects health. So there is a two way, positive feedback relationship.

¡ 8 ¡ The influence of income on happiness provides some interesting and conflicting results. Richard Easterlin, one of the foremost experts in the economics of happiness, found in 1974 that 1) at a point in time within society, richer people are on average happier than poorer people and 2) Over time within many societies, the population does not on average become happier when the country’s income rises. This paradox has been called the Easterlin paradox. Most data, particularly in the US and Germany, shows that despite rising average incomes in both countries, self-rated happiness has not changed and may have in fact declined over time. What is now known is that an extra dollar increases the life satisfaction of a poor person by 10 times as much as an extra dollar increases the satisfaction of a rich person who is 10 times richer. In other words a certain level of income does buy marginally more happiness but only to some point. But happiness levels are not permanently increased by higher income. Studies have also found that relative income versus absolute income does matter within communities. In studies in China and

• ther countries, they have found that people say they are mainly concerned about

comparing themselves with each other in terms of income so that the perceived relative income is one of the most important factors for happiness and life satisfaction versus absolute income levels. If happiness depends on income relative to the income of a comparator (e.g. your colleague) that means that when the ‘comparator’s’ income rises, happiness tends to fall; but this is not necessarily always the case. Also studies find that while income (as measured in terms of GDP per capita) can be a strong positive influence on happiness (though not in the US and Germany), however, when considered along with health, education, social support, freedom, corruption and family relationships, it is far less important. Who are the happiest Canadians of all? In 2010 the first study of happiness of its kind in Canada was released by the Centre for Study of Living Standards (based in Ottawa), titled Does Money Matter: Determining the Happiness of Canadians. A thorough statistical examination of subjective well-being or happiness statistics and analysis various expected drivers of happiness, using data from 2007-08, the researchers found that the most important contributor to happiness is a strong sense of belonging to local communities. A sense of belonging was highest in smaller communities, rural areas and in Atlantic Canada. Quebec had the lowest sense of belonging while Newfoundland had the highest. Next in order of importance to happiness was perceived mental health, physical activity levels, stress levels, being married, being a recent immigrant, and being unemployed.2 ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡

2 Canadian Centre for Living Standards (2010). Does Money Matter: Determining the Happiness of Canadians.

Canadian Centre for Living Standards, Ottawa. November 2010.

¡ 9 ¡ The least important factor contributing to self-rated happiness was household income. The researchers conclude that more money does not translate into happier households based on evidence that levels of income had the least statistical impact on happiness of any other factors. This is consistent with other studies by British economist Richard Easterlin who has found that both within and among nations, happiness varies directly with income, but over time, happiness does not increase when a country’s income increases. Who are the happiest Canadians? Based on a scale of 1 to 5, the average level of the happiness (life satisfaction) of the Canadian population 20 and over in 2007-8 was 4.26. Prince Edward Island had the highest level of self-rate happy people a 4.33, followed by Quebec (4.30) and third Alberta (4.30); Ontario was the lowest, at 4.23. However, the gap between the happiest province, PEI, and the least happy province, Ontario, is relatively small; a 2.5 per cent difference. Of the 33 cities analyzed the average happiness ranged from a high of 4.37 in Sherbrooke, Quebec to a low of 4.15 in Toronto. Calgary ranked 6th and Edmonton 22rd while Toronto ranked last overall. How efficient are Canadians in optimizing their returns to happiness for every dollar of income? In my own analysis of the relative returns to happiness per dollar of median household income (based on 2005 statistics), Sherbrooke, Quebec City and St. John’s ranked the highest overall while Calgary and Edmonton ranked much lower, 25th and 26th

• respectively. For example, median household income of Calgarians in 2005 was $79,084

with an average life-satisfaction of 4.33 (out of 5.0) while households in Sherbrooke had a median household income of only $42, 262 (more than $36,000 more) but a higher life- satisfaction of 4.37 out of 5.0. One could argue that Sherbrooke performs much better in terms of returns to happiness from money earned. This study shows that, since there is sufficient evidence that mental health status, sense of belonging, physical health, and stress level are more significant determinants of happiness than household income, policy makers could focus more on these areas to improve the overall happiness in Canada. Happiness as the ultimate objective of economic development What if happiness and wellbeing were the ultimate goals of economic development policies in Alberta, Canada and all nations? What if dream of our next Premier was to chart a course for building a flourishing economy of well-being investing the real and sustainable potential of all of our genuine wealth? What if our city counsels, provincial treasurers and our national finance minister were required to report regularly on the state

• f wellbeing conditions (both objective and subjective)?

¡ 10 ¡ Why must we continue to ‘grow’ Alberta’s economy exporting our surplus natural capital at the potential risk to ecological, human and social wellbeing? How can we go to bed at night content to know that we have more material wealth than we can possibly maintain while we suffer from deficits of quality time with those we love? What about slowing down the rate of oilsands extraction and natural gas exports? What about a shared responsibility between industry and government to invest more of the proceeds from our non-renewable assets into building genuine wealth in our communities? What about investing in the resilience of Alberta’s most precious natural capital; watersheds and arable land for growing food and ensuring local living economies and food security? Why not pursue a more enlightened form of genuine capitalism based on optimizing WROI (well-being return on investment) and cooperative business relationships? Conclusion Its time for a more compelling new system that makes the old system obsolete. Building societies based on the concepts of Genuine Wealth will be challenging. This will require virtuous action of courage, justice and wisdom. It will require a commitment to genuine engagement through listening circles with our neighbours, our children, our elders, and

• ur politicians rooted in my belief that all the solutions to our questions and challenges

lie within the collective wisdom of circle of ideas. Most importantly it will draw on our greatest strength: love. Do we have the courage and wisdom to build a more compelling and compassionate world for our children and grand children measured in terms of wellbeing, happiness and joy of the human spirit? About the Author: Mark Anielski (mark@anielski.com) is the author of The Economics of Happiness: Building Genuine Wealth published in 2007 by New Society Publishers and in China in

• 2010. Mark wears many hats as an ecological economist, entrepreneur, professor of

corporate sustainability and social entrepreneurship (University of Alberta), and president of his family-owned consulting firm, Anielski Management Inc. He lives in Edmonton with his wife and their two daughters.