Opinion: The Science And Economics Of Well-Being

Well-being is a term often used interchangeably with happiness. But I would now like to introduce to the readers the 'Science of Well-Being'. Those already convinced about the importance of well-being may not need to read this, but they may at least want to talk or write about it. The world really needs to re-centre its actions on well-being, both at the individual and organisational levels.

Studies support this strongly as an overwhelming majority of people declare 'happiness' to be their life goal, something that matters to them more than money, employment, or education. Famous happiness economist Richard Layard defines "well-being" as one's inner subjective state - the quality of life as you experience it, and how happy you are.

The centrality of happiness is not new and can be traced back thousands of years in various cultures and civilisations, in one form or the other. The great philosopher Aristotle talked of four levels of happiness - material possession, ego gratification, altruism, and finding your own calling. Ancient Indian philosophy emanated from the core principles of making yourself and the world happy.

The famous Sanskrit quote, "सर्वेभवन्तुसुखिनः", meaning "All should be happy", aptly highlights it with an underlying emphasis that it is in one's own control to do so. From Vedic literature to 'Gita' (even other holy scriptures) to modern-age movements like 'Hare Krishna, Hare Rama', the goal has always been to maximise the well-being of people.

From being an individual or spiritual pursuit, happiness came to be recognised as the main objective of governments or societies through centuries and across countries.

America's founding father Thomas Jefferson stated, "The life and happiness of the people is the sole legitimate object of government", and rightfully, the Constitution of the United States has "Life, Liberty and the pursuit of happiness" as its guiding principle.

The world has now come a long way, even in its official pursuit of well-being. The UN General Assembly, in a resolution of July 2012, recognised the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings and their recognition in public policy objectives. This was done at the instance of Bhutan, which has had a goal of Gross National Happiness over Gross National Product since the 1970s.

In 2015, the UN announced the 17 Sustainable Development goals with a focus on three aspects - ending poverty, reducing inequality and protecting the planet in order to ensure overall well-being. March 20 was declared the International Day of Happiness and for the last 10 years, the 'World Happiness Report' ranks countries on their happiness index and discusses the important factors that affect happiness. This report is a publication of the Sustainable Development Solutions Network (a global initiative of the United Nations) that uses data from the World Gallup poll and is supported by renowned professors from some of the most acclaimed international universities, in addition to one of four known foundations and non-profit organisations, whose main aim is to further the cause of well-being.

To retain the interest of our readers, it is important to handle some important criticism upfront.

Lots of people (those leaning towards science, mathematics, economics) criticise this concept of happiness/well-being as nebulous and redundant. They often state that this is an individual state that is culture-specific and difficult to measure. Yes, it is an individual concept but it is the sum of individuals that make up a society, and therefore if an individual's goal is to seek happiness, it has to be the overall societal goal as well.

The factors that determine well-being may vary across people and cultures, but much research has proved time and again that some critical components remain the same across cultures, even though their proportions vary.

The World Happiness Report outlines six common parameters - Gross Domestic Product, life expectancy, generosity, social support, freedom and corruption.

On measuring well-being effectively, three important ways have been defined by economists - the evaluative approach, the hedonic or the pleasure approach and the "meaningfulness" approach. Various countries have adopted different approaches per their context but the most well-researched and widely accepted is the evaluative approach. This is used by the World Happiness Report as well and entails asking a simple yet powerful question - "How satisfied are you with life nowadays?".

You have to rate yourself on a scale of 0-10 (Not Satisfied to Very Satisfied).

People critique this approach and question as being too subjective but that is precisely the point of going towards well-being measurement, as our lives are subjective, undoubtedly so. After all, we should have the freedom to decide how happy we are. Why should anyone else or any other parameter infer that for us?

Numerous research studies have validated the authenticity of this simple yet important question in successfully measuring well-being across populations. Many neuroscience studies have observed that these well-being scores were effectively corroborated by electrical activity in the relevant part of the brain. Self-reported life satisfaction scores were also well correlated with similar ratings done by one's families, or friends.

These well-being scores were also good predictors on aspects of individual behaviour, like divorce, quitting a job and even life expectancy.

All the studies I am referring to use the most reliable and valid statistical tools and can be looked up through a simple search on Google Scholar. Even the often-criticised World Happiness Report does sampling across countries in a very methodological manner and therefore, we must accept this measurement tool until we find another better way of measuring well-being.

Well-being research does not discard the importance of income or prosperity but only urges us to think beyond it as there is a worldwide movement in favour of going beyond the GDP.

The US has increased its GDP aggressively since the 1970s but its reported average well-being has not increased and remains the same, showcasing the diminishing marginal utility of money. It is also important to mention that a lot of countries with low levels of average per capita income report much higher levels of happiness.

Robert Kennedy rightly stated that "Gross National Product measures everything in short, except that which makes life worthwhile."

Robust text analysis of 2 of 4 words used in literature and social media over the last four decades clearly shows the manifold increase in the use of the word 'happiness/well-being' in contrast with the declining use of the word 'income'.

A large part of the world has already acknowledged 'well-being as a science' that should be used in policy formulation and OECD countries now measure the well-being of their citizens on an annual basis. Since 2011, the UK has been using four evaluative questions in their national survey done by the Office of National Statistics to measure well-being of citizens and similarly, the US has been measuring it through simple evaluative questions in their General Social Survey (GSS).

The European Council has called on member states to place well-being at the centre of their policy design and the UK already has a 'Green book' that outlines professionally how any policy proposal can be evaluated in well-being terms.

There is also a Wellbeing Economy Governments' partnership (WEGo) that shares policies and practices in this domain. It comprises six countries - Scotland, New Zealand, Iceland, Wales, Finland and Canada. In 2019, New Zealand attracted global attention for launching the pioneering Well-being Budget, which is committed to placing people's well-being and the environment at the heart of its policies.

At the level of policymaking, there are many methods that can be used to measure well-being, but the simplest is WELLBY, which is defined as well-being benefits in life satisfaction points. For example, if your baseline life satisfaction score is 4 out of 10 and if a policy intervention increases that by 1 point, then that policy improves your life satisfaction by 1 WELLBY.

The goal of any government should undoubtedly be to formulate or implement policies that maximise these WELLBYs. To elaborate, if we have X amount of money and need to spend it either on making roads or mental health hospitals, then as a policy maker, we should be able to evaluate which of these interventions will lead to more well-being benefits to the maximum number of people and plan accordingly within resources.

Despite the government's many priorities, well-being is the logical overarching goal that should serve as the touchstone for all policy evaluation. English philosopher Jeremy Bentham famously said, "It is the greatest happiness of the greatest number, that is the measure of right and wrong."

The UK has monetised the value of 1 WELLBY at 13,000 pounds on average and favours a policy intervention if it generates more than 1 WELLBY - implying that it leads to a one-point increase in the life satisfaction score of affected individuals, on average. There are of course more assumptions, calculations and statistics used in the formal evaluations.

The Well-being mission is gaining momentum, with established well-being research centres in the universities of Oxford, Princeton, Columbia, and London School of Economics, in addition to numerous foundations like The Happier Way Foundation, and Action for Happiness that are working zealously towards promoting this science.

There is an exponential increase in the number of books and articles written on improving inner peace, happiness and well-being. It is paradoxical to note that India, the fountainhead of the Eastern philosophy of happiness and spirituality, is now rated poorly at 4.036 (on a scale of 0 to 10) and ranks 125th among 149 countries - even below neighbours Sri Lanka and Pakistan - per the latest World Happiness Report.

We can, of course, argue or critique the methodology and suggest changes, but some questions are important - Are we happy as individuals or as a nation? If so, do we express it right or live with that satisfaction? Why don't we measure well-being or happiness in the national census or surveys? Can we not consider adopting the well-being approach to evaluate and make policies?

I leave you with these thoughts.

(Radhika Jha is an officer of the Indian Administrative Service, currently studying Public Policy and Well-Being at the London School of Economics.)

Disclaimer: These are the personal opinions of the author.