TCS Daily


The Happy Economist

By George A. Pieler & Jens F. Laurson - November 6, 2009 12:00 AM

Should there be a Nobel Prize for creating happiness? Nobel laureate Joseph Stiglitz may think so—he chaired Nicolas Sarkozy's "International Commission on the Measurement of Economic Performance and Social Progress" (ICMEPSP? Let's say "ICM), which recommends a happiness-measure be incorporated into GDP. Nobel or not, it's hard to escape the conclusion this is high-flying nonsense. Writing in the Financial Times, Stiglitz argued that weighing things like government freebies and personal contentment will give more meaningful comparisons of how nations are doing. Skeptics say ICM was created to justify the French way of life with statistics: i.e., it's better to be semi-efficient and really casual about growth than hard-nosed about growth per se. A great way to get journalists off Sarkozy's back when the raw data don't favor the French model--"Hey, the economy is under-performing but we're happy and we have the GDHP (Gross Domestic Happiness Product) to prove it."

GDP measures are hardly sacrosanct, but the idea of measuring leisure time, eco-externalities, and state welfare spending to determine well-being is a trap. No country is "punished" by publishing GDP numbers; a nation's self-confidence or self-perception does not turn on statisticians picking winners-and-losers. Only politicians really care, and they care most about controlling public perceptions. Thus, the Stiglitz-ICM plans for highly subjective measures of contentment are putty in the politico's hands. Whatever defects GDP has, at least it gives hard numbers based on familiar methodology.

Mr. Stiglitz says if we have the wrong metrics we strive for the wrong things. Puh-lease. No economist, no matter how many Nobel prizes, could have the hubris to think statistics change the way a whole people thinks, what they like, or their habits and culture. Cultures don't define themselves through OECD numbers.. If they did, wouldn't the French already have changed? Imagine this cultural dialog: "We are not happy!" "Oh, no? Why not?" "Have you not seen the critical GDP numbers?" "Oh, mon dieu, you are so right. I must quit my vacance in the vineyards and return to productive work to be happy once more."

The proposed new ICM measures are not really new, anyway: If GDP doesn't measure environmental degradation and resource depletion, the answer is not a GDHP index, it's to determine objectively how best to measure these: Resource depletion (e.g. fish stocks) and scarcity of arable land increase future prices for once-inexpensive goods. New technologies and markets change the value of everything too, so caution is needed here. Calculating this means focusing on the long-term in economic measurements. That's not a happiness-measuring revolution, it's statisticians doing a tough job right. The problem isn't measuring the wrong things, but measuring the right things improperly. Worse, in any case: the inherent subjectivity of the 'happiness' task will only lead to abuse by self-serving politicians.

Indeed, those politicians are stepping right up to Stiglitz' challenge. The OECD hosted a 'happiness summit' in Korea (South) where it was announced that Korea will develop its own happiness index. Obama Treasury official Alan Krueger, who has done serious work on happiness-measures, is also a critic of traditional GDP. The Happiness Express is on the move, and not just across France.

A pause for reflection is in order. GDPH measures as a measure of social well being are a cop-out at best, and an absurdity at worst, when they suggest we should be counting smiles, not dollars. What about extremely happy, permanently smiling Africans that on average never see the age of 50? If we are willing to trade dollars for smiles, would we also take happiness over life expectancy? Infant mortality? Access to economic opportunity?

Neither Mr. Stiglitz nor the OECD would push the ICM agenda so aggressively if they thought it embarrassing. Flattered by Mr. Sarkozy, Mr. Stiglitz may think in returning the favor, he may garner many clients who need to know if this is for real, and what it may cost them down the road. Before going down that road, the world might consider why France has one of the highest suicide rates in the world.


Jens F. Laurson is Editor-in-Chief of the International Affairs Forum. George A. Pieler is an attorney and policy analyst.


5 Comments

Happiness Index = something cooked up by politicians of economic loser countries
of which, btw, we are joining the ranks thereof.

Happy in the Magic Kingdom
I had a pretty good life during my three years in the Magic Kingdom.
Housing, car, school paid for by the company, 6 weeks vacation.
I had to get permission to leave or enter or to even leave the city. I couldn't legally buy alcohol, but the most challenging was not having bacon.
It was a gilded cage, but still a cage.

Magic, or slight of hand?
>"Housing, car, school paid for by the company"

Sounds like the golden gilding on your cage was provided by "the company", not the state, which would imply two things: 1) that the gold was earned (if not by you, then by others in the company) by providing wanted products and services on the open market, rather than being confiscated, by threat of force, from the populace at large, via taxes, and 2) that you entered the gilded cage (employment contract) voluntarily, and could exit at will.

In other words, said happiness was provided by the free market operating within the Magic Kingdom, not by the Kingdom itself.

Disclaimer: The presumption expressed above - namely, that private corporations would have to "earn" their income by providing useful services to the general public on the open market - is admittedly based on an old fashioned understanding of how corporations operate, and predates the current paradigm of "corporation as welfare recipient" sucking at the teat of big government.

The markets are controlled in the Magic Kingdom.
The king of the Magic Kingdom can order you out at anytime for any reason as well as ordering out your employer.

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