British National Happiness Plateaus Despite Improving Economy

We think we know what it is that makes people happier. A decent enough economy, a general increase in good health, the absence of war obviously, perhaps a combination of a general stability with things gradually getting better. However, when we go out to measure that actual happiness we find that it’s not so simple. This is the heart of the Easterlin Paradox, that richer nations, past a certain point, don’t seem to be generally happier ones. So, why?

The Office for National Statistics has released the latest measurements of that British national happiness and everything seems to be the same as it was last year. Despite the fact that things are generally getting better, wages are rising, lifespans continue to improve and so on. So, why aren’t we all full of ever more joy a the glory of being alive in this very moment?

We’re wealthier and healthier than ever before but no happier with life, a national survey has found.
New data – taken before the Brexit fallout – has revealed people feel no more worthwhile or content than they did the year before.
The drop in national happiness has been blamed on slowed economic growth and world events such as the refugee crisis and numerous terror attacks around the world.
It is the first time since the surveys began in 2011 that wellbeing rates have plateaued.

It’s true that we’ve only been collecting the information in this format for 5 years which is a pretty short time to be trying to base any conclusions on. But the wider collection of such data around the world does show that people aren’t generally getting happier as the world improves.

"UK adults are experiencing a slowdown in their levels of personal wellbeing, according to new figures.

Against the backdrop of an improving economy and high employment rates, the Office for National Statistics (ONS) said there is a “surprising” situation where people are not feeling better about certain aspects of their lives for the first time in five years.

There was no improvement in ratings of happiness, anxiety and the feeling that things in life are worthwhile in the financial year to March, according to the ONS data. Personal wellbeing had improved across each of the issues over the five years to 2016."

The report is here: http://tiny.cc/l5tscy

"Since 2011, we have asked personal well-being questions to adults in the UK, to better understand how they feel about their lives. This report presents headline results from the fifth year of data collection, covering the financial year ending March 2016, together with how things have changed over the 5 years."

A possible explanation is a long standing postulate of mine. Which is that it’s not the level of wealth (or health, life span, security and all the rest) which matters but the rate of change. That is, we need to look to the first derivative, not the level, to explain human happiness. Fortunately, this also explains that Easterlin Paradox quite nicely.

Simply put if you’ve got an economy growing at a nice little clip, 2 or 3% or so, if lifespans are increasing as they have done in recent decades and so on, then that makes people about as happy as they can be. This is going to be true past a certain level of wealth….someone going from $5,000 a year to $10,000 a year observably becomes happier. But someone going from $20,000 to $40,000 doesn’t seem to. That’s the result we get from a lot of such research (not just Easterlin but Layard and others too). One set of numbers tells us that incomes going over about $15,000 tend not to make people happier. That’s the general contention in this field at least. And my answer is that it’s not levels which matter above that $15,000 but rates of change.

Things generally getting better make people happier – and that level of happiness is the same if there’s 2% growth from $15,000 a year as it is from $30,000 a year (just to make up numbers here). Thus we wouldn’t expect to see an increase in happiness from a generally well ticking over economy – simply because it’s the generally ticking over which creates the level of happiness itself. There is thus no mystery and no Paradox. We can make people about as happy as they’re ever going to be just by having a decently growing economy over time.

Source: Tim Worstall - http://www.forbes.com/sites/timworstall/2016/07/08/british-national-happiness-plateaus-despite-improving-economy/#583f4b3a28ba