24 Nov 10

The “Happiness Index” : A New Planning Tool

by Colin Mills, Econometrician

Since the banking crisis in 2008 there has been a wealth of editorial space and news reports dedicated to analysing GDP, government deficits and other financial metrics which define our performance as a nation.

Financial metrics are very important and have a major role to play in policy decisions. However we must ask; what else should the government take into consideration when formulating policies?

David Cameron feels that the government has to look beyond financial metrics towards the effects policies will have on the public’s well-being. As a result the prime minister has sanctioned the creation of the “Happiness Index”.

The index will be calculated using a number of questions that measure peoples subjective well being. The aim is to”...assess the psychological and physical well-being of people around the U.K.” Combined with existing data sets the “Happiness Index” will be given a central role in policy planning.

Last year French president Nicolas Sarkozy promised to include a similar happiness and well-being measurement when monitoring France’s economic progress. This idea was originally proposed by Nobel economists Joseph Stiglitz and Amartya Sen, who published a report urging governments to consider “household wealth” and “whether countries are growing sustainably or damaging the environment”.

Comments surrounding this article are divided. Some feel the subjective nature of the questions means that any data obtained will not be robust enough and shouldn’t be used to influence policies. “These happiness indexes are meaningless. You can't be objective about something that is fundamentally subjective.” Others are taking the idea with a pinch of salt “What is the betting that one of the questions will be 'How happy do you feel at 4:55pm on a Friday?”

Although some valid concerns have been raised, any efforts to gauge the public’s well being and improve our day to day standard of living have to be welcomed don’t they?

(Information taken from http://www.guardian.co.uk/news/datablog/2010/nov/15/happiness-index-wellbeing-nef)