Recently we found a fascinating lecture from Nobel prize winner Daniel Kahneman on the price — and nature — of happiness. His published work on the subject determined that $75,000 per year was the magic number. Below that we’re unhappy. There and up, relatively content.
The Financial Times has published a deep dive into the idea of creating national “happiness indexes”. A more touchy-fealy rival to Gross Domestic Product or other measures of national income.
The political value of understanding National satisfaction might be the chance to create policies that better serve what truly make us happy. Invest in road construction, for example, not just because it creates jobs, but also because we don’t like commuting and making it more pleasant would be a boon to quality of life and happiness. For investors, it might be trying to determine how happiness correlates to economic growth as they piece together a global asset allocation, or which industries or companies might benefit from a government push toward a national good mood.
Of course, as with all statistics, the first challenge is figuring out how to get decent data, and the second is interpreting it. Even calculations that seem far more straight forward like the inflation rate are fraught with debate based on what’s included and what isn’t, and in what proportions. Is one man’s happiness so easy to compare to another’s?
As Tim Harford notes in the FT story:
In one Eurobarometer survey, 64 per cent of Danes described themselves as “very satisfied” and only 16 per cent of French. It is tempting to question how much the survey really tells us about the relative wellbeing of France and Denmark.
Still there is certainly a march on to study national happiness, as Harford makes clear. In the US, the Bureau of Labor Statistics is test driving a questionnaire designed by Professor Kahneman and others to capture how much time people spend doing things that make them happy and unhappy. Nicholas Sarkozy of France and the UK’s David Cameron have also set their sights on measuring national well being.
There’s even a Facebook app measuring Gross National Happiness as indicated by those on Facebook. It may not be definitive, or very detailed, but it does indicate that people get pretty happy in India in July, that Thanksgiving beats Christmas hands down in a happiness face-off in the US, and that the Venezeulans (at least those on Facebook) are generally more upbeat than their North American brethren.
If this attempt to quantify national happiness seems a stretch of the imagination, it’s interesting to note some of the history of national statistics Harford points out. It wasn’t until Franklin Delano Roosevelt and his economic team were trying to figure out a solution to the Great Depression that the US even began measuring its national income in a systematic way. Now who could imagine where investors and prognosticators would be without GDP?