Genuine Wealth and The Economics of Happiness
We all know that money can't buy you love or happiness, yet as North Americans, we persist in living our lives as if the mere accumulation of material wealth were the key to our dreams. Robert Kennedy, almost forty years ago, pointed out that the GDP (gross domestic product), the broadest measure of economic progress, fails to measure the things that actually make life worthwhile, like the strength of our marriages, the integrity of elected officials or the health of a wetland or forest.
If we measured personal happiness with dollar signs and increases in the GDP, then North Americans would be the cheeriest souls on Earth. But, that's not so. Despite more than fifty years of constant economic growth and material consumption, most indicators of quality of life have been declining since the mid 1970s in the United States and Canada. For example, our rates of happiness remain virtually unchanged since the 1950s, while rates of depression and suicide have increased.
Economists have long promised that a rising tide of economic development should raise the economic well being conditions of all boats, yet real wages for the average American have actually declined since the 1970s. Moreover, our voracious appetite for material possessions means that our natural capital is being used up at unsustainable rates as measured by our ecological footprint, or the amount of nature we consume to fulfill our needs and wants. At current rates of consumption, we currently require more than five planet Earths. In spite of our material success, why is it that countries like Bhutan, Costa Rica and Cuba can have the same number, or more, happy citizens with much less GDP per citizen and a significantly smaller ecological footprint?
To me, genuine wealth is a society where wealth is defined according to its original Old English meaning, "the conditions of well-being." This means measuring all of the conditions that make life worthwhile including the integrity and health of our human (people), social (relationships), natural (the environment), built (infrastructure) and financial capital assets. Realizing this vision requires a renaissance and consciousness about the true meaning of the word economy which in the Greek word 'oikonomia' means the wise stewardship of the household and the word happiness, which in Greek means "well-being of the spirit."
These definitions give meaning to the Dalai Lama's challenge that the ultimate purpose of economic development is that it enable true happiness, through the cultivation of such qualities as compassion, patience and wisdom. This will mean redesigning the way we measure and account for progress, including the reform of national, provincial and business accounting systems that take into account the impact of economic activities on the five capital assets of genuine wealth which include the human, social, natural, the built and the financial.
The onus of genuine economic analysis should be to demonstrate that the net impact of any proposed activity or development on the well being of citizens and the environment is either positive, neutral, or negative. The question to be answered is whether an economic development opportunity will result in the 'genuine' progress of society with respect to an improvement in the well being of all citizens.
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Mark Anielski is a well-being economist, entrepreneur, business professor (University of Alberta) and president of his family-owned corporation Anielski Management Inc. which specializes in well being measurement. He lives in Edmonton, Alberta, Canada with his family. Mark can be reached at firstname.lastname@example.org.
Mark is the author of The Economics of Happiness: Building Genuine Wealth. New Society Publishers.
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