Conference Earth - A decade of action


The Economics of Happiness

Dr Michael Ellis © 2004

This split between the more rational, the logical and the creative approaches to economics is expressed also in the way quality of life has been measured up until now. In his 1974 paper, the Economic Historian, Richard Easterlin formulated what was later known as the Easterlin Paradox. Basically above a very low level, economic growth does not seem to improve human welfare. Later evidence confirms his observation, Americans were no more likely to describe themselves as happy in the 1990's than they had been in the 1940's.

Economist, Andrew Oswald at Waricks University, England in his paper, 'Happiness and Economic Performance', April 1997, stated that industrialised well-being appears to rise as national income grows but the rise is so small it is sometime undetectable and employment however, seems to be a large source of unhappiness.

This suggests that governments ought to be trying to reduce the amount of joblessness in the economy. In a country that is already rich, policy aimed instead at raising economic growth may be of comparatively little value.

In his most recent paper, Oswald was studying whether money makes people happy. It showed that people who won lottery money or received an inheritance had a higher mental well being in the following year. A windfall of 50,000 pounds, was associated with a rise in well-being of 0.1 and 0.3 standard deviations. He ended by saying whether these happiness gains wear off over time remains a good question.

It is interesting to see that the kind of parameters he was using was dependent on the British Household Panel Survey which consists of questions which could just as easily be asked by a GP on his patients if the GP wanted to find out whether they were depressed or not.

They were also based on stress reactions and did not seem to be measuring basic personality types, cultural acquisition, creativity, levels of actualisation, educational attainment and other things.

Quality of Life and Culture

One thing we can say is that culture alters quality of life and that that individual quality of life is enhanced by a persons ability to be educated and be brought up in a warm, caring environment.

Within this context of mind and matter there are several papers which are of interest. First it has been shown that the intellectual or emotional development of children from the age five to the completion of high school is adversely affected by lack of social capital. The social capital refers to unfavourable environments which basically do not give care or support. The effect was specifically noted in socio-economic deprived families, Quote Pediatrics Volume 101 1998, Children who Prosper in Unfavourable Environments, the Relationship to Social Capital.

Another study has found that dementia occurs at a much higher rate amongst people with learning disabilities than it does amongst the general population. This is independent of the association between dementia and Downs Syndrome.

It is obvious that intellectual stimulation and loving, caring support from family, friends, and the community at large is extremely important for the general well-being of the individual as well as for the prevention of intellectual deficit later in life.


Globalisation on the free trade model of the neo-liberal Washington consensus economics is colliding with local cultures natural economic sovereignty, social customs and values, as well as traditional agriculture, indigenous rights and the protection of biodiversity and the environment. The fundamental issue is the very economic model underlying today's Globalisation of technology, trades and markets. The critics from many diverse perspectives agree that free trade doesn't account for social and environmental costs and cultural disruption in the price in traded goods and services will continue to cause more harm than good.

The World Bank, the IMF, the US Government and the WTO still refuse to recalculate prices and microeconomic indicators including the GDP to include these social and environmental costs, which contribute towards the deterioration of human life. Civil society movement groups throughout the world are committed to the idea of preserving human identity and enriching biological and cultural diversity.

Power of the Human Mind

Complex technologies have tremendous potential for harm. The most under used resource on the planet is the human mind. Although we may have finite resources, we have one infinite resource which is the human mind and this faculty is the least understood aspect of humanity on the planet, and should encompass the term bio-mind which means the complete or self actualised human being.