The first stage of the Happiness Movement

The positioning of happiness as an academic topic constitutes the first stage of the Movement. It was necessary to incorporate the subject of happiness into the relevant disciplines, and happiness scholars were compelled to show the soundness and scientific foundations of their research. In economics, this stage took place during the late 1990s and the early 2000s. It was a difficult endeavor because mainstream economists were not familiar with the foundations of happiness research; in addition, the emphasis on subjectivity triggered suspicions in many scholars who were trained within the postulates of objectivism (Rojas, Reference Rojas and Rojas2019a). Nowadays, happiness research has earned a position in economics, with the number of publications on the topic expanding at an exponential rate. Of course, as is expected in the academic world, there will always be debate on many issues, and this debate is enriching, but it is now widely accepted that happiness research follows sound scientific methods and that it provides valuable and fresh knowledge to economics.

The second stage of the Happiness Movement

Many economists were uneasy with using so-called subjective data because they were not part of their canon. Economists are used to working with reported data, but they are not used to working with reported data on a variable that is inherently subjective, such as the experience people have of being well. Similarly, national statistical offices were used to keep track of countless variables and indicators – such as Internet coverage, clothes expenditure, school enrollment, disease incidence, capital flows, kilometers of paved roads and many more – but even with such a long list of variables, it was impossible to know whether citizens were satisfied with their lives.

Scholars in the Happiness Movement had to show that people's reports on life satisfaction and on experiences of being well provide useful information that is not available anywhere else and is up to the high standards statisticians require. Hence, a second stage in the development of the Movement took place when statistical offices recognized the utility of gathering and keeping track of subjective wellbeing information. At the present time, many national statistical offices run systematic surveys to gather information on people's wellbeing. Debates on measurement methods are also part of academic life, and they will go on in the future; however, it is now accepted that subjective wellbeing data provide useful and valid information on people's experiences of being well.

The third stage of the Happiness Movement

With happiness now positioned in the academic and statistics worlds, it is easier for happiness economists to move towards a third stage: that of using research findings to make a contribution to greater happiness in the world. It is now possible to address questions such as: How can knowledge from happiness research be used in public policy? What actions can governments undertake to contribute to people's wellbeing? It is within this third stage of the Happiness Movement that the paper entitled ‘A happy choice: wellbeing as the goal of government’ is highly welcome.

It is expected that this third stage will follow a process of experimentation in the design, implementation and evaluation of public policies and social programs. The process of experimentation has the purpose of helping us to learn as much as possible while minimizing the wellbeing costs of errors. In this stage, it will become necessary for happiness researchers to be in close contact with policy-makers and public officers, as well as with politicians.

Distinguishing between final and intermediate goals

Public action takes place in the space of instruments that influence intermediate goals. Policy-makers rely on controlling instruments such as budget allocation, interest rates, vaccination campaigns, school curricula, tax schemes, foreign investment incentives, cash transfers, investment in green areas, urban regulation, transportation systems, anti-trust regulation, unemployment insurance and so on. It is with these instruments that policy-makers aspire to influence intermediate goals such as income, education, physical and mental health, housing, infrastructure and others. Economists have a good – although not perfect – understanding of the relationship between instruments and intermediate goals. However, it is important for policy-makers not to confuse the set of intermediate goals with the final goal of public policy; Frijters et al. are right when they state that wellbeing is the goal of government action. In the end, public policy aims to impact on the experience people have of being well; policies that have no impact on wellbeing may look great in the dashboard of instruments, but they will not be appreciated and recognized by citizens. Thus, the importance of specific intermediate goals needs to be assessed in terms of their impacts on the final goal of government: people's wellbeing.

Cost–benefit analyses and the value of money

By incorporating wellbeing into public policy, it becomes possible for policy-makers to evaluate the different courses of action at their disposal and to opt for those that have the largest wellbeing impact at a given cost. Cost–benefit analysis is not new in economics – economists are used to assessing the costs and the benefits that are expected from different policies; however, they assess costs and benefits in monetary terms, and usually on the basis of market prices. In those situations in which no market price exists, economists rely on alternative methods to estimate costs and benefits, such as contingent valuation methods.

Frijters et al. argue that subjective wellbeing is useful for complementing traditional valuation methods in cases of externalities and non-market goods. I would add that the usage of the wellbeing approach in valuation practices is based on a deeper critique of valuation theory: economists value everything in terms of money, but economics provides little insight into what the value of money is. In fact, money can be valued in terms of the experience of being well with which it is associated. Happiness research has shown that money has different values across people and that it depends, among many other factors, on the amount of money people have, on their cultural background and on their own tenets and standards (Rojas, Reference Rojas2007). If money has different values to different people, then it is wrong to make interpersonal wellbeing comparisons on the basis of monetary values, and it would also be wrong to use these monetary values to guide public policy. The wellbeing approach allows for the estimation of the value of money for particular population segments, and it provides a closer look at what people value.

Unfair distribution of income and the shortcomings of monetary values

Cost–benefit analysis relies on market prices, which are sensitive to the distribution of income; thus, the analysis is deficient in societies where the distribution of income is unfair. In situations where the distribution of income is very egalitarian, it is possible to argue that differences in people's willingness to pay reflect differences in the value that people assign to the different options. However, in situations where the distribution of income is very unequal, a person's willingness to pay does not reflect the value he or she attaches to some options, but rather his or her purchasing power constraints. Hence, the association of people's willingness to pay to the value people attribute to the options may lead to erroneous policy recommendations when the distribution of income is very unequal and considered unfair. One famous example of such an erroneous policy recommendation is the memorandum signed by Larry Summers, a highly respected economist and then Chief Economist at the World Bank. Summers recommended the migration of dirty industries from high- to low-income countries on the basis of people in high-income countries being willing to pay higher prices to avoid the negative consequences from dirty industries. It is true that somebody from a high-income country may very likely pay more to avoid nuclear waste than somebody from a low-income country; however, this does not imply that a person in a low-income country suffers less from the loss of a child who has been exposed to nuclear waste than a person in a high-income country.

If policy-makers consider that the distribution of income is not fair, then it is not appropriate to associate people's willingness to pay with the value they attribute to goods and services. The happiness approach provides better estimations of what people value; it even becomes possible to test Summers’ assumption that the loss of a child diminishes more the wellbeing of high-income people than that of low-income people.

Identifying other drivers of wellbeing

Income is clearly the central variable in economics, and economists believe – with little corroboration – that people's wellbeing increases with income. However, the assumption of a close relationship between income and life satisfaction is questioned by findings from happiness research.

Independently of what the impact of income on life satisfaction is, happiness research has shown that there are other drivers of wellbeing, and that some of them may be more important than income. Frijters et al. present information on the relative importance of other factors in explaining the ‘best possible life’ variable in their figures 2 and 3. These figures rely on data gathered by the Gallup World Poll. Frijters et al. acknowledge that there may be other factors not included in the figures; however, they assume that these other factors ‘are fixed, like genetics or personality aspects, or very transient, like the weather.’ Unfortunately, there are important variables that the Gallup World Poll does not incorporate and are neither fixed nor transient – of particular importance for people's wellbeing is the relational realm of life. The literature on domains of life shows that family satisfaction is very important for wellbeing and that it is only weakly related to income; in other words, it is possible to enjoy high family satisfaction even if income is low, and it is also possible to have low family satisfaction when income is high (Rojas, Reference Rojas2006). Further research shows that the quantity and quality of interpersonal relations is fundamental for life satisfaction. In fact, it is the abundance of high-quality human relations that explains the high satisfaction levels in Latin America (Rojas, Reference Rojas2018). Thus, the wellbeing approach allows us to find other important drivers that are usually neglected by policy-makers; it also allows us to assess their relative importance across cultures and persons.

Expanding the set of instruments

There are multiple drivers of life satisfaction, and this should be good news for policy-makers, who now have at their disposal many instruments to increase people's wellbeing. Hence, the wellbeing approach broadens the scope of public action and allows policy-makers to be creative in working with different policy combinations.

For example, poverty-abatement programs commonly focus on increasing household income. A rise in people's income could be one way to increase their wellbeing, particularly when income is low; however, this is not the only instrument that policy-makers have to raise the wellbeing of those in income poverty. Reversing chronic poverty is very difficult, and the degree of success of many poverty-abatement programs is low. Considering the existence of some chronic conditions that make it difficult to get people out of income poverty, it becomes relevant to explore alternative instruments that can raise people's wellbeing even when their income is not increasing (Rojas, Reference Rojas2008). The wellbeing of people in income poverty could increase as a consequence of raising income, but it could also increase as a consequence of policies that aim at building community and public spaces, fostering gratifying leisure activities, increasing public safety, reducing domestic violence and others (Rojas, Reference Rojas2009). By broadening the scope of instruments, policy-makers can find the appropriate combination that better fits the population's particular situation. For some population segments it may be more effective to pursue an increase in income, while for other subpopulations it may be more effective to focus on alternative policies.

There are many other cases where having more instruments to increase people's wellbeing is highly beneficial; for example, it is difficult to reverse some chronic illness conditions, but there are many other ways of increasing the wellbeing of those who are in such situations. Similarly, it may be impossible for governments to raise pensions, but there may be alternative ways to raise the wellbeing of those retirees who have low incomes.

By recognizing that economic growth is not the only method policy-makers have to raise people's incomes, it becomes possible to think about policies that contribute to people's wellbeing and are also environmentally friendly. For example, policies that strengthen the quality of interpersonal relations and promote gratifying leisure activities are wellbeing enhancing and environmentally friendly.

Observing hidden costs and benefits of public policies

Public policy is usually designed around specific intermediate goals, such as income or health; this implies that the success of policies is evaluated on the basis of their impacts on the intermediate goal. However, the impact of any policy goes beyond the intermediate goal under consideration; in fact, most public policies and social programs also impact on other drivers of wellbeing, and these side impacts are usually neglected by policy-makers.

The effects of public policies on other wellbeing drivers are usually not observed by policy-makers; hence, these effects represent wellbeing costs and benefits that are experienced by people but hidden to policy-makers. By keeping track of wellbeing, policy-makers can observe all of the costs and benefits that citizens face as a consequence of the implementation of specific policies.

As an illustration, conditional cash transfer programs to abate income poverty have become popular in Latin America. These programs require people to undertake health and education-related actions that contribute to raising their income and, as a consequence, to reduce poverty rates. Policy-makers observe the change in household income in order to evaluate the success of conditional cash transfer programs, and by doing so they risk not observing some wellbeing costs (and benefits) associated with the program. There is even a risk of declaring as successful some poverty-abatement programs that fail to increase people's wellbeing (Rojas, Reference Rojas, Glatzer, Moller, Camfield and Rojas2015). For example, household income may increase as a consequence of an adult member migrating to obtain a higher-income job; this migration decision may reflect a higher household income, but it may also imply a worsening of family and health satisfaction, as well as a deterioration in the nurturing conditions of children who will also experience wellbeing repercussions in the future.

By keeping track of wellbeing, policy-makers can become aware of the hidden costs and benefits of their policies, and this will allow them to design more efficient policies that have a greater wellbeing impact on citizens.

The importance of incorporating the intrinsic motivation of beneficiaries

It is common for citizens not to show the same enthusiasm for policy achievements than that which is shown by politicians and policy-makers. This happens because policy-makers are used to evaluate achievements in the space of intermediate goals, while citizens care about their experience of being well.

Many social programs treat their presumed beneficiaries as simple elements that the program moves from one situation to another, with complete disregard for their wellbeing and motivations. It is important to incorporate a wellbeing approach in the design and evaluation of public policy because citizens’ intrinsic motivations are based on their experience of being well. It is not only that policies should make people's wellbeing their final goal; it is also that by neglecting the intrinsic motivation of the beneficiaries it becomes less likely for public policies and social programs to attain their goals. For example, teenagers are more likely drop out of school and patients are less likely to continue therapies if they are unhappy. Those policies that only impact on the dashboard of indicators but not on the experience of being well cannot count on people's intrinsic motivation and are less likely to be successful.

Moving away from compartmentalized institutional frameworks

The institutional framework that is behind the design and implementation of public policy is highly compartmentalized; some institutions within governments focus on economic aspects, while others focus on education, on health care, on urban infrastructure, on housing solutions, on national parks, on childhood nutrition, on public transportation and so on. This compartmentalization of action may be efficient from an implementation perspective, but it may lead to a focus illusion problem: institutions magnify the importance of their area of action while neglecting or diminishing the importance of other areas. In addition, interest groups emerge in each institution to lobby in favor of the relevance of their area of action. By incorporating people's wellbeing as the final goal of governmental action, policy-makers can take a more holistic people-centered perspective that allows them to assess the relative importance of the different areas of action.

Furthermore, the large multi-task organizations – such as the United Nations and the Organisation for Economic Co-operation and Development (OECD) – are usually exposed to a kind of multiple personality problem; some of their departments advocate more economic growth, while others call for environmental actions or emphasize the rights of children to have a greater quality of life. These organizations would benefit from taking a wellbeing perspective that places people's experience of being well at the center of all of their work and provides coherence to all of their internal narratives.

Happiness research and a new notion of development

Frijters et al. show that happiness research has an important role to play in the design, implementation and evaluation of public policy. In my opinion, happiness research has another and even more important role to play, which is the promotion of a paradigm shift in the notion of development. To date, countries have been classified on the basis of their per-capita income, and the road to development has been considered necessarily to proceed through economic growth. The pursuit of development within this paradigm induces national governments, international organizations and aid donors to implement programs that foster economic growth, with unclear wellbeing consequences.

Development as economic growth was the mantra of the twentieth century, and gross domestic product (GDP) became the central indicator to assess social progress. It was postulated that societies should aspire to an age of high mass consumption.

During the twentieth century, many economists and politicians expressed their skepticism about the simple association between high income and wellbeing, and the first empirical findings from happiness research supported this skepticism. In fact, in the 1970s, the Easterlin Paradox provided the first empirical evidence questioning the foundations of this development-as-economic-growth mantra (Rojas, Reference Rojas2019b).

At the beginning of the twenty-first century, there are several social and academic movements arguing for a reconsideration of what development is and what societies should strive for. Local and regional initiatives proliferate and call for new measures of development in societies; these initiatives call for a beyond-GDP agenda that takes into consideration people's wellbeing. Recent initiatives by the OECD (Measuring the Progress of Societies), the Government of the United Kingdom and the President of France (the Stiglitz Commission for the Measurement of Economic Performance and Social Progress) raise the question of what should be considered as development in the twenty-first century; these initiatives also discuss what indicators are necessary in order to properly assess the progress of societies. In Mexico, the Initiative Measuring the Progress of Societies: A Perspective from Mexico conducted extensive deliberation on the conception and measurement of progress in Mexico and in the rest of Latin America. Some initiatives in South America call for a conceptualization of progress that incorporates the traditional values of indigenous peoples. All of these initiatives and many others that have proliferated at the local level recognize that income indicators are insufficient for assessing people's wellbeing. Most of these initiatives also support a conception of development in which people's experience of being well becomes central. In 2012, the United Nations General Assembly approved a resolution entitled ‘Happiness: Towards a Holistic Approach to Development’, which explicitly stated that ‘the pursuit of happiness was a fundamental human goal [and] recognized that the gross domestic product (GDP) indicator was not designed to – and did not reflect adequately – the happiness and well-being of people.’

Happiness: a new development narrative

A new conception of development as wellbeing is emerging, and it is expected to have an enormous impact on development strategies, foreign aid and public policies. The new paradigm states that development is not about abundance of material wealth, but about citizens being satisfied with the lives they lead.

The paradigm shift in what is considered as the ultimate goal in societies implies a re-examination of the fundamental notions that guided development strategies in the twentieth century. The new narrative moves from the notion of physical capital to that of the livelihood of surrounding conditions, from the notion of natural capital to that of the planet being our home, from the notion of human capital to that of children acquiring the knowledge and skills to lead satisfactory lives, from the notion of social capital to that of the intrinsic value of warm and genuine human relations, from the notion of work being considered as bad to that of establishing conditions for satisfactory jobs, from the notion of leisure as unproductive to that of the enjoyment of free time, and from the notion of consumption as a production booster to that of consumption as a mechanism to satisfy human needs (Rojas, Reference Rojas and Rojas2016, Reference Rojas2019c).

In addition, the new paradigm of development as happiness recognizes that a one-size-fits-all approach is not useful and that cultural, historical and value issues are relevant. The wellbeing approach is able to capture the richness that exists in multicultural societies as well as in a multicultural world.

Development strategies for happiness require a different approach than public policies for happiness

Addressing development issues requires a different mindset than that used in public policy.

Public policy assumes the existence of direct causation from instruments to goals; that is, it focuses on how particular instruments impact on intermediate goals in order to influence wellbeing. Public policy relies on mechanistic quantitative models that provide estimates on the impacts of specific variables. These models have an aspiration for precision in the estimation of parameters. In addition, public policy assumes that policy-makers are capable of controlling the behavior of instruments.

Development strategies follow a different approach. Rather than having a social engineering perspective of societies, they follow an organic view; thus, they recognize that societies are highly complex, that variables are interrelated and that their relationship depends on many other factors. There is no aspiration for complete control or for precision, and it is impossible to foresee the full consequences of some actions. Historical trajectories and cultural aspects play an important role, and it is fruitless to think in terms of direct causation because, in the long run, factors co-evolve.

Development strategies aspire to influence but not to control long-term social trends. It is within this stance that development strategies for happiness focus on identifying important drivers that can act as pillars to steer the historical flow of societies. In the end, it is the actions of people that move the wheel of progress, and the aim for greater happiness in societies requires changing the narrative of what development is and what societies should aspire to.