The Economics of (un)Happiness?

The following piece is my latest thought piece published in Woroni, also available in print.
The Economics of (un)Happiness?

I was walking around the campus when I came across the poster presenting the premier Canberra screening of the movie “The Economics of Happiness”. Over the last few months, I have read one too many articles on how Australia is the happiest nation in the world. With the gradual increase in emphasis on happiness, I can’t help but wonder why society has become so obsessed with “the pursuit of happiness”, so much so it has to be measured quantitatively.

Since the 1970s, economists and governments around the world have been arguing that economic growth doesn’t equal happiness. Way back in 1972, the then King of Bhutan instituted a GNH (Gross National Happiness) index as the basis for the country’s future planning. The GNH was carefully selected as a measure rather than the usual GDP (Gross Domestic Product), which the Bhutanese believe reflects only one aspect of national development. Last year, the UK government launched its own “happiness index” as an alternative to relying on Gross Domestic Product (GDP) as a basic guide to the nation’s progress. Three months ago, the Organisation for Economic Co-operation and Development (OECD) unveiled Australia as the “happiest” nation in the world according to its Better Life Index. The Index allows citizens to compare well-being across 34 countries, based on 11 dimensions the OECD has identified as essential, in the areas of material living conditions and quality of life: housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety, work-life balance. Yet, just a few weeks ago, the Reserve Bank’s governor, Glenn Stevens, suggested that Australia’s households are unlikely to see a return of the “good old days”  of rapid spending growth, as consumers are now more cautious, suggesting that the country seemed “mostly unhappy”.

So, are we quantitatively certified “happy” or “unhappy”? Why are we so obsessed over measuring happiness? Do these measures really reflect happiness? In today’s society, it has become common to associate “the pursuit of happiness”  with a certain level of material success and economic activity. There is a constant pressure for people to have “bigger, better, more”. Yes, governments have attempted to shy away from focussing on GDP and economic statistics as a measure of well-being and happiness. However, measuring happiness has its flaws. Have a look at the Better Life Index launched by the OECD. Happiness economists, like the people at OECD, have attempted to measure well-being by taking into consideration citizens’ answers to quality-of-life questions like: “How satisfied are you with your life?” and “How would you describe your health?”, and “Do you know someone you could turn to in a time of need?” How accurate and reliable are these responses then? Other measures of well-being include looking at measures like income, jobs, education standards, political freedom and economic prosperity. However, reality seems to suggest that people do not seem to feel better when they have access to more money or when they are consuming more. Rather, a better quality of life seems to stem from a range of mostly immaterial things. The happiness paradox then questions the following: Why don’t people feel better despite the high standards the Western world has reached in terms of fields like economic prosperity, political freedom, hygiene and health standards and life expectancy? The happiness paradox therefore belies the statement ‘more income means more well-being’.

In reality, what we realise is that economic activity is largely related to providing relief for unhappiness. We constantly seek solutions to the negative externalities such as environmental degradation that comes with economic growth. So, instead of investing time and money into indices that actually says “Yes, you’re indeed the happiest nation in this world”, why don’t we focus on the economics of (relieving) unhappiness instead?


I was obviously a little bored, uninspired and freezing this morning. So, I took 10 minutes to do up these graphs.

They are pretty much self explanatory. The data series I’ve access to online goes all the way back to sometime in late October 2008. Given how cold it was over the weekend (hitting around -7 °C for the last two consecutive days), I wanted to see if this was the coldest for some time. Given the limitations in data, I could only plot the Autumn/Winter periods of 2009 to 2011 (ongoing). But, so far, it’s pretty obvious that -7 °C is the coldest we had since 2009, and am actually pretty sure it’s since 2008 too.


It makes things clearer if we just put the temperatures of 2010 and 2011 together. We bottomed out at -5.0°C on 28 June 2010. This year, we are already seeing -7°C over 14 to 15 May 2011. There really isn’t much I can say about causation, or correlation over here.

That said, there are of course a few possibilities:

1) We had a really mild summer (plotted the maximum temperatures over summer as well), compared to last year. So, we didn’t have the gradual easing into winter this year. Hence, we might just bottom out of Winter really soon this year, instead of waiting till October.

2) We are going to have a bitterly cold Winter just like the other countries because of the really mild Summer we have.


Whatever it is, I sure hope it’s possibility no.1 that we are experiencing here. I don’t fancy cold freezing winters with no snow at all. I might reconsider if you tell me it’s going to snow this year. Besides, I’m so going to ask the next person who asks me to quit complaining about the Australian weather to shut up as well. Come to Canberra, and you will get it. You don’t get the same temperature here like in other states/cities, just because we are inland.

Then again, it did snow in the suburbs of Canberra in 2008. According to myth and Canberrans, snow falls in the city every three years. It’s about time? I really want to know the temperatures in 2008! It could well be much colder in 2008. But, I’m not crazy enough to be paying the Bureau of Meteorology some money to get time series data.

Comments from fellow Canberrans found in this post I posted here.