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Making a Serious Case for Happiness and the Economics of Well-Being

Happiness is high on the global agenda: progress can no longer be measured by profit alone. A consensus is growing: led by trailblazers in Bhutan, countries around the world are waking up to the value of health and well-being as a measure of progress. A 2011 UN resolution on happiness – agreed by 68 countries – states that gross domestic product (GDP) alone is not an adequate measure of human prosperity. The resolution says that a more inclusive and equitable approach is needed to promote sustainability, eradicate poverty and enhance well-being.1

Governments around the world are increasingly engaged in questions of well-being and happiness. In 2004, the Organisation for Economic Co-operation and Development (OECD) began its programme to redefine progress (OECD 2011). The European Union followed with its programme “Beyond GDP”. In 2008, Nicolas Sarkozy, President of France, launched the work of the Stiglitz Commission (Stiglitz et al., 2009). In 2010, David Cameron, Prime Minister of the United Kingdom, was the first national leader (outside Bhutan) to define well-being as a core goal, and to commission the United Kingdom’s Office of National Statistics (ONS) to measure population well-being.

David Cameron, in a speech to launch his government’s commitment to putting well-being at the heart of politics, quoted US Senator Robert Kennedy’s vision 40 years ago, saying that GDP “does not allow for the health of our children, the quality of their education, or the joy of their play. It measures neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.”2

Although the search for alternative models of progress is not new, the Global Agenda Council on Health and Well-Being is uniquely placed to firm up the happiness narrative. Convened by the World Economic Forum, the Council’s role is to gather important cross-sector thinking from business, academia, government and international organizations: to explore the spaces between the different stakeholders and help connect and define the contributions of each to make the world a happier, more prosperous place.

Well-Being in the Three Spheres: Work, Home and Community

Many now agree that happiness can lead to prosperity: happier workers generate better performance for companies; happier people have more successful families and create more harmonious communities. With this in mind, the Council published a report called “Well-Being and Global Success” (World Economic Forum 2012) to coincide with the World Economic Forum Annual Meeting 2012 in Davos-Klosters. The report can be viewed here.

In this paper, the Council will draw on the headline findings from the “Well-Being and Global Success” report: the need to support and measure well-being, and to focus on what determines well-being – what helps and what hinders. In turn, it will also explore some of the key contributions that can be made by individuals, governments and employers to provide a comprehensive framework for action.

Although there are many variables that contribute to well-being or happiness, the Global Agenda Council on Health and Well-Being has chosen to narrow its focus to three key areas: work, family and community. Readers are encouraged to take a more in-depth look at these issues in the “Well-Being and Global Success” report to get a fuller picture of how well-being can be a driver for development and growth.

Well-Being in the Workplace

Work – or the lack of it – has long been known to have both positive and negative influences on health and well-being. There is a general acceptance that the nature of work and the way it is organized dictates whether it is likely to benefit or harm the health and well-being of workers (Lundberg et al., 2011).

Mental health issues are the most important cause of disability in all regions of the world. Furthermore, unlike most chronic illnesses, the age distribution is relatively constant with adults of working age being as likely to suffer as those who are older. The economic cost to society is substantial, with depression estimated as absorbing 1% of Europe’s GDP (Sobocki et al., 2006); mental ill health alone in the next 20 years is estimated to account for a cumulative US$ 16 trillion of global output loss (Bloom et al., 2011).

For individual companies, mental ill health is often the most common cause of sickness absence in richer countries, accounting for 30% to 50% of all new disability benefit claims in OECD countries (OECD, 2011), and for up to 40% of time lost (Cooper and Dewe, 2008), with presenteeism adding at least 1.5 times to the cost of absenteeism (Parsonage, 2007).

For many people, the single most important issue at work is the relationship they have with their line manager. Studies have shown that, on average, individuals find meeting their line manager the least pleasant moment of the day (Kahneman et al., 2004). Closely related to this is the way in which work is designed. Workers’ well-being is greatest when:

  • The objective of the job is clear and is understood as part of a wider goal (task significance)
  • The worker has reasonable freedom and flexibility in how to do the work (autonomy)
  • The worker receives feedback and support for what he or she does (feedback)
  • The worker’s skills match the requirements of the job, but are also fully used (job fit)
  • Line managers are chosen who have the talent for personal relationships and technical management (managerial flair)
  • There is proper attention to fairness and procedural justice in the way work is organized (fairness)
  • There is sensitivity to the mental health problems of employees, with careful management of absence, adjustment of work arrangements and referral for treatment if necessary (mental health awareness)

Companies that pursue good practice in these respects can expect to achieve enhanced profitability. It is therefore advantageous for employers to measure the well-being of their employees, as many do, and to report this in their annual reports.

A Happy Home Life

A healthy emotional start in life sets an individual up with a lifelong advantage for well-being, influencing the child’s later functioning in school, with peers, in the family and in broader connections with society (Grantham-McGregor et al., 2007). The single most important factor for building resilience in youth is to enable parents to provide adequate psychosocial stimulation (Patel et al., 2008), from immediate skin-to-skin contact between baby and mother straight after delivery (Stewart-Brown & Schrader-McMillan, 2011), breast feeding (Kramer & Kakuma, 2002) and carrying the baby in a pouch, by both mother and father (Koner, 2010) all which lead to long-term educational and cognitive development and healthier development overall (Richards et al., 2002).

Family and society’s role-modelling continue to support well-being throughout life. The individual’s ability to satisfactorily combine work, family commitments and personal life is critical not only for the well-being of the person and the whole household but also as a predictor of enhanced productivity and ability to obtain better jobs in the future (Jané-Llopis et al., 2011).

A good family experience is crucial for a person’s lifelong well-being.

1. It provides emotional security:

  • For children, whose ability to love and learn depend crucially on the love and closeness of their parents
  • For parents, who can only be good parents if they have a good work-life balance, and if good parenting programmes are available to help them if they are struggling
  • For older people, who often need more social support than they frequently get

2. It provides economic security, which is essential:

  • For healthy eating and physical development
  • For intellectual development and awareness of a wider world

3. It provides physical security, provided there are proper policies to prevent domestic violence and to ensure adequate safe space outside the home as well as within.

To make sure that families use their best opportunities to invest in the well-being and personal development of their children, societies, communities and employers need to provide the right incentives (Anderson, Harrison et al., 2011).

Widening the Concept of Well-Being

Communities can impede or enhance human capital development, including health and well-being, educational and personal development, social capital, and the sustainable management of personal and material assets. There are three fundamental prerequisites: community sustainability, good governance, and equality and rights of community members.

A good community (being a social, municipal or country unity) and its governance are essential for the well-being of every person. Individuals depend crucially on their community as:

  • It provides much of their education, not only in cognitive skills but also in emotional literacy and in how to behave; the neglect of girls’ education in many parts of the world is a major source of injustice and inhibits necessary reductions in the birth rate
  • It provides a sense of identity and belonging; in good communities, happiness spreads through contagion, and there is a degree of equality from which all gain, both rich and poor
  • It ensures physical safety; opportunities for physical exercise, safe water, proper incentives for healthy food supply and systems for controlling greenhouse gases are crucial for the future of mankind

A Shift in Values: Towards Metrics that Matter

Well-being can be measured through indexes and surveys, ranging from an indicator of a country’s progress with OECD measures, to the single subjective well-being of populations (Layard, 2010). Measuring well-being in companies, schools and communities allows for better understanding of what resonates with people and provides a new set of priorities to support, whether from government, corporate or individual roles.

The idea that well-being matters is not new (McMahon, 2006), but recent trends have brought it into new prominence. First, there is popular questioning of whether economic growth is enough to solve problems, many of which appear more social in character than economic. Second, there is the obvious fact that future economic growth will become more difficult if we are simultaneously to avoid disastrous climate change. Third, the growth of a new science of happiness is needed, to provide concrete evidence on what new priorities are needed if societies are to achieve higher levels of well-being (Kahneman et al., 1999).

Increasing concerns have been raised about the adequacy of macroeconomic statistics, which currently measure economic performance such as GDP figures, as they do not adequately reflect what people perceive as their own socioeconomic conditions. Moreover, there are broader concerns about the relevance of these figures as measures of economic, environmental and social sustainability.

On this basis, the OECD, over the past 10 years, has gathered and analysed indicators on the well-being of individuals and households, recently published in its “How’s Life?” report. The OECD’s Your Better Life Index, based on indicators contained in the report, allows us to visualize well-being outcomes and rank countries according to the various components of well-being (http://www.oecdbetterlifeindex.org/).3

Subjective well-being can be measured through questionnaires that convey information, which has been found to correlate well with different measurements of electrical activity in the relevant brain areas, as well as with the factors that might affect well-being (Layard, 2010).

For well-being to influence the public debate, an important aspect is that the measures used are comparable across countries – a large part of the reason for the attention received by macroeconomic statistics such as GDP is that there is an international standard ensuring that they are collected and calculated in the same way across countries. Over the past 20 years, an increasing body of knowledge has accumulated regarding the best way to measure subjective well-being (See Table 3). However, the collection of such measures represents a new area for many national statistical agencies. Because of this, the OECD is currently developing Guidelines on the Measurement of Subjective Well-Being to support national statistical agencies and other producers and users of subjective well-being data in improving the quality of these measures. The guidelines may represent the first step towards an eventual international standard on measuring subjective well-being.4

The Council’s Work so Far

The Council’s work and recommendations, captured in the report “Well-Being and Global Success”, was launched during the Annual Meeting session “Metrics that Matter”. It provided a high-level discussion on why well-being is key to governments, business and society and a driver for the economy. Conclusions of the session were the Council’s recommendations for well-being that were later taken up in the Forum agenda.5

Consequently, the Council was visibly present during the recent UN High-level Meeting on “Well-Being and Happiness”, 2 April 2012, and its preparatory meeting at Columbia University on 1 April. The meeting, opened by Laura Chinchilla, President of Costa Rica, and Jigme Y. Thinley, Prime Minister of Bhutan, hosted over 600 participants in an interactive discussion on the critical importance of well-being for growth and development. It was suggested the concept of well-being would be included as one of three pillars to be proposed in the Sustainable Development Goals (SDGs). These recommendations are expected to inform the follow-up and Millennium Development Goals (MDGs) review and will be presented as part of the Rio+20 deliberations by the Prime Minister of Bhutan.

During the high-level meeting, participants including Ban Ki-moon, Secretary-General, United Nations; Helen Clark, Administrator, United Nations Development Programme (UNDP); and the current presidents of the UN General Assembly and ECOSOC were supportive of the initiative and called for continued action and deliberations in this space. The report of the Global Agenda Council was distributed to key representatives during the event and in the advisory group created for the initiative, chaired by Professor J. Sachs. Global Agenda Council Members were speakers and participants in both events.

The Council report and its recommendations continue to be disseminated through different channels and activities including key conferences, events, interviews and papers in peer review journals.

Next Steps: Keeping Well-Being at the Heart of the Debate

In the coming months, the Council is planning to organize an event in collaboration with the OECD and other global stakeholders to:

  • Raise awareness on how well-being is central to growth and development and can be impacted by stakeholders across the board
  • Hold a high-level dialogue on what multistakeholder actions would increase well-being and what different roles stakeholders can play
  • Identify new areas for development and what innovation can be leveraged jointly by the public and private sector to address the issue

The World Economic Forum is a unique platform for multistakeholder dialogue between business, government and civil society. The Council will continue to ensure the concept of well-being is firmly integrated within the Forum’s health programme.

Council Members are confident they are at the beginning of a new paradigm in which the economy serves individuals, not individuals serving the economy. And that we all – no matter which sector, disciplinary background, economic predicament or spiritual perspective – share a common interest in promoting well-being. We should all sustain the momentum to make a difference for the 7 billion people who share this planet (Anderson, Jané-Llopis & Cooper, 2011).

References

  • Anderson, P., Jané-Llopis, E., Cooper, C. (2011). The imperative of well-being. Stress and Health, 1-3.
  • Anderson, P., Harrison, O., Cooper, C., Jané-Llopis, E. (2011). Incentives for health. Journal of Health Communication. Volume 16 (2), 107-133.
  • Bloom, D. E., Cafiero, E. T., Jané-Llopis, E., Abrahams-Gessel, S., Bloom, L. R., Fathima, S., Weinstein, C. (2011). The global economic burden of non-communicable diseases. Geneva: World Economic Forum.
  • Cooper, C.L. and Dewe, P. (2008). Well-being – absenteeism, presenteeism, cost and challenges. Occupational Medicine, 58(8):5223-524.
  • Dolan, P., Metcalfe, R. and Layard, R. (2011) Measuring Subjective Well-being for Public Policy. Office for National Statistics. Centre for Economic Performance, Special Paper No. 23.
  • Goodman. R. (2001). Psychometric Properties of the Strengths and Difficulties Questionnaire, J. Am. Acad. Child Adolesc. Psychiatry, 40(11):1337-1345.
  • Grantham-McGregor S., Cheung Y., Cueto S., Glewwe P., Richter L., Strupp B. (2007). Developmental potential in the first 5 years for children in developing countries. Lancet; 369: 60–70
  • Jané-Llopis E., Anderson P., Stewart-Brown S., Weare K., Wahlbeck K., McDaid D., Cooper C., Litchfield P. (2011). Reducing the Silent Burden of Impaired Mental Health. Journal of Health Communication. Special Issue, Vol. 16, 59-74.
  • Jolly R. (2007) Early childhood development: The global challenge. Lancet, 369: 8-9.
  • Kahneman et al. (2004). A Survey Method for Characterizing Daily Life Experience: The Day Reconstruction Method. Science, 306(5702):1776-1780.
  • Kahneman, D., Diener, E. and Schwarz, N. (eds) (1999). Well-being: The Foundations of Hedonic Psychology. New York: Russell Sage Foundation.
  • Konner, M. (2010). The evolution of childhood. Cambridge, Massachusetts, Harvard University Press.
  • Kramer, M. S., Kakuma, R. Optimal duration of exclusive breastfeeding. Cochrane Database of Systematic Reviews 2002, Issue 1. Art. No.: CD003517. DOI: 10.1002/14651858.CD003517.
  • Layard, R. (2010). Measuring subjective well-being. Science, 327:534-5.
  • Lundberg, U. and Cooper, CL. (2011). The Science of Occupational Health. Oxford: Wiley-Blackwell.
  • McMahon, D. (2006). The Pursuit of Happiness: A History from the Greeks to the present. London: Allen Lane/Penguin.
  • OECD (2011), Sick on the Job? Myths and Realities about Mental Health and Work, Mental Health and Work, OECD Publishing. http://dx.doi.org/10.1787/9789264124523-en.
  • OECD Better Life Initiative: Measuring Well-being and Progress, (OECD 2011).
  • Patel, V., Flisher, A., Hetrick, S., McGorry, P. Mental health of young people: a global public-health challenge. Lancet 369: 1302-13; Patel, V., Flisher, A. J., Nikapota, A., Malhotra, S. (2008) Promoting child and adolescent mental health in low and middle income countries. Journal of Child Psychology and Psychiatry 49:3, 313-334.
  • Parsonage, M. (2007). The impact of mental health on business and industry – An economic analysis. Sainsbury Centre for Mental Health.
  • Prime Minister David Cameron’s speech given on 25 November 2010 http://www.number10.gov.uk/news/pm-speech-on-well-being.
  • Richards, M., Hardy, R. & Wadsworth, M.E.J. Long-term effects of breast-feeding in a national birth cohort: educational attainment and midlife cognitive function. Public Health Nutrition: 2002 5(5), 631–635.
  • Robertson, I., Cooper, C.L. (2011). Well-being: Productivity and Happiness at Work. London: Palgrave Macmillan.
  • Sobocki, P., Jonsson, B., Angst, J., and Rehnberg, C. (2006). Cost of depression in Europe. Journal of Mental Health Policy Economics, 9(2):87-98.
  • Stewart-Brown, S. L. and Schrader-McMillan, A. (2011) Parenting for mental health: what does the evidence say we need to do? Report of Workpackage 2 of the DataPrev project. Health Promotion International, 26, i10–i28.
  • Stiglitz, J. E., Sen, A., and Fitoussi, J-P. (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. (www.stiglitz-sen-fitoussi.fr).
  • World Economic Forum (2012). Well-being for Global Success: A report prepared by the Global Agenda Council on Health and Well-Being. Geneva: World Economic Forum. Available here.

Disclaimer

The opinions expressed here are those of the individual members of the Council and not of the World Economic Forum or any institutions to which they are affiliated.