World Happiness Report
By Jeffrey Sachs | April 2, 2012
By John Helliwell, Richard Layard, and Jeffrey Sachs
As knowledge increases, societies will have a growing basis for a new type of policy-making aimed at increasing happiness and reducing misery. This would involve a change in the techniques of policy analysis.
At present many countries use a traditional form of cost-effectiveness analysis, in which benefits are measured in money units on the basis of what citizens would be willing to pay for those benefits. This works quite well when the primary benefits are indeed financial or can be readily transferred into monetary equivalents. This is often true for policies on industry, transport, education and employment. However expenditure in these areas is often no more than a quarter or so of public expenditure. The bulk of public expenditure is on health, social care, law and order, the environment, child welfare, and income support. In none of these cases does willingness to pay provide adequate guidance to the benefits that arise. Happiness would be an excellent added criterion for evaluating these expenditures.We should think seriously about the policies that produce subjective well-being.
So we can well envisage a parallel system of evaluation taking shape over time where policies are judged by the changes in happiness that they produce per unit of net public expenditure. Developing such systems should be a goal, at least provisionally. To make them fully operational will of course require more information and much more verification, but here the chicken-and-the-egg issue must be confronted. We should get started in serious thinking about the links of policies to produce subjective well-being, just as Bhutan is doing with Gross National Happiness.
More knowledge is needed before such methods can be used, but the knowledge is more likely to be produced if there is an adequate demand. It is therefore important for governments to foresee their own requirements for knowledge about the well-being of the population, and to set in motion the relevant sequence of data collection and research to develop that knowledge. If this is done, there will be then an ever-growing understanding of what things matter most to people and in which ways. This growing understanding may well provide a new basis for policy-making in the age of sustainable development.
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