Entry: Holly Houston, World Cocoa Foundation
How would you rank your life relative to the best possible life you can imagine? This question is one being posed and considered by several circles in the economic development arena. The concept of incorporating happiness as a measurement in overall well-being is not a new one but is once again generating buzz among many including economists, policy makers, and monitoring and evaluation experts. Years of research offers interesting data for discussion and consideration especially for those working to improve the livelihoods of others. The World Cocoa Foundation is committed to supporting efforts to improve the livelihoods of cocoa farmers and their families and considers this research valuable to the design and execution of such efforts.
I recently have been reading articles on this topic and attended a Brookings Institution event last week which stimulated thoughtful dialogue among panelists and the audience. Several interesting findings and observations are summarized below.
Carol Graham, senior fellow of the Global Economy & Development and Foreign Policy Programs at the Brookings Institution, has dedicated her research to understanding and measuring happiness, and is the author of Happiness around the World: The Paradox of Happy Peasants and Miserable Millionaires (Oxford University Press, forthcoming). Carol and several other economists shared their observations last week at an insightful Brookings event titled “Happiness in an Age of Uncertainty”.
A less tangible and objective measure than traditional economic metrics, happiness economics is based on what people say, not what people do (i.e. spending and saving figures). In Dr. Graham’s research, survey results are based on respondents’ answers to how happy they are relative to how happy they could be and these have been tracked alongside other metrics, notably income. Panelists agree that there is a clear positive correlation with wealth and happiness. Poorer countries become happier as they become richer countries. The relationship seems to change however once basic needs have been met by adequate income; incremental income does not necessarily translate into incremental happiness. Panelists cited the U.S. and Japan as ranking among the wealthiest of nations but ranking lower on the happiness scale than less wealthy Scandinavian countries. Afghanistan’s happiness ranked at a similar level of overall Latin America happiness. Guatemalans are happier with their healthcare system than people in the more developed Chile.
How does one explain these trends? Adaptation to surrounding circumstances was cited as an important factor in assessing happiness as people are generally highly capable of adapting to changes and retaining their overall state of well being. When surrounded by others with a similar status, there is a propensity to feel more at ease with your current situation. Where adaptation seems more difficult is when people are faced with uncertainty, even if the outcome is positive. Nations that experienced very rapid economic growth versus slower growth tended to rank lower on the happiness scale. The notion of “keeping up with the Joneses” is clearly observed in rapid, high-growth areas where people who focus on amassing more often overestimate the satisfaction that more money will bring to their lives.
Researchers are quick to point out that while the relationship between higher income and greater happiness becomes fuzzy, the one between trusting relationships and happiness is clear. Among survey respondents, personal relationships, in addition to good health, rank as top factors supporting their state of happiness. And the concept of relationships goes beyond one’s family and friends. As NYTimes columnist David Brooks points out, “If you want to find a good place to live, just ask people if they trust their neighbors. Levels of social trust vary enormously, but countries with high social trust have happier people, better health, more efficient government, more economic growth, and less fear of crime.” In the development arena, the implications are substantial. Economic growth through higher income may not be the full picture. In order to see long-term success of improving the livelihoods of others, it is important to analyze and improve social bonds and foster trust among community neighbors and leaders.
Leaders across the political and economic spectrum are taking notice of these factors in promoting public and development policy. The U.S. Bureau of Labor Statistics is said to have added a measurement of wellbeing to its surveys. In 2009, President Sarkozy called for a shift in development thinking after a 2008 study on the measurement of economic development and social progress – a key message being “to shift emphasis from measuring economic production to measuring people's wellbeing.” While measuring happiness and wellbeing may not easily fit defined quantitative measures of progress, it is an important qualitative component to consider if we wish to fully improve the livelihoods of others.