Toward an Economy of Well-Being

On the flight out to the conference I’m attending, I had the opportunity to read a lengthy article by Diener and Seligman called “Beyond Money: Toward an Economy of Well-Being.” It’s a very interesting article essentially making the case that societies across the world rely too heavily on measures of financial growth to index success and base policy decisions. They argue that, in addition to this, we also might do well to consider the more direct outcome of interest, which is well-being or happiness.

Some more specific points the authors make follow:

Although gross national products have risen across the world in the past 50 years, well-being has not followed the same trajectory. “For instance, depression rates have increased 10-fold over the same 50-year period, and rates of anxiety also are rising. . . Indeed, . . . the average American child in the 1980s reported greater anxiety than the average child receiving psychiatric treatment in the 1950s.” In fact, “by age 30, about 65% of the women born in 1950 had had one depressive episode, whereas fewer than 5% of the women in the 1910 cohort had had such an episode by the time they were 30.” In contrast, the Old Order Amish (living in Pennslyvania) have a 5-year prevalence rate of depression of only .5%.

There is a fairly strong correlation between income and well-being across the world. However, this seems to hold most true only when people’s basic needs are in jeopardy. For example, then, in the United States, there is a pretty strong correlation between income and poverty for the poorest among us, but once income reaches a meagerly $10,000/year, the correlation between income and well-being only is .08, a very modest relationship. Moreover, some of this relationship might be explained by the fact that happiness predicts income (rather than just being the other way around).

In contrast, as suggested in the popular book “Bowling Alone,” people prosper in neighborhoods and societies where social capital is high, that is, where people trust one another and are mutually helpful. . . Communities with high rates of volunteer activity, club membership, church membership, and social entertaining. . . all had higher well-being than communities that were low in these characteristics.”

Although materialism is related to a variety of negative outcomes, some researchers have found that this only is true insofar as “it arouse from a desire to gain power or flaunt wealth, but not if it arose from a desire for freedom or family security.” This is very interesting to me because it suggests that the nature of one’s ultimate goal might make a major difference in how different activities influence well-being.

In the end, the authors suggest the following “partial formula for high well-being: (1) Live in a democratic and stable society that provides material resources to meet needs, (2) Have supportive friends and family, (3) Have rewarding and engaging work and an adequate income, (4) Be reasonably healthy and have treatment available in case of mental problems, (5) Have important goals related to one’s values, and (6) Have a philosophy or religion that provides guidance, purpose, and meaning to one’s life.

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