Chris Johns: Happiness requires economic growth but not excess

Nothing but economic growth has ever lifted humanity out of misery

Economists notice that self-reported levels of happiness decline after we achieve middling incomes. Photograph: istock

Happiness is big business – and not just because it is the "season to be jolly". A growing area of economic research lends itself to a lot of surprising conclusions, not least for policy.

Gus O’Donnell, former UK cabinet secretary, this week welcomed Boris Johnson’s Christmas present to the north of England – a proposal to rip up treasury regional spending rules. O’Donnell cited the plethora of studies that show happiness peaks at surprisingly modest levels of income. Boosting the incomes of England’s poorer citizens at the expense of Londoners is Johnson’s electoral revenge: people who didn’t vote Conservative will have to give money to those that did.

Behaviourally, the answer to 'how much is enough?' is always 'more'.

It turns out that this is good economics. The misery so inflicted will be more than offset by the happiness created.

Attempts to identify the drivers of human happiness have occupied philosophers since the time of Plato and Aristotle. Philosophers ancient and modern, the authors of the US constitution and the creators of wellbeing apps all assert that the purpose of human existence is the attainment of happiness. Most of what we strive for is merely the means to a single end. Money, power and honour are but stepping stones to the only goal that is desired for its own sake – happiness.


For Aristotle, moderation in all things is a big part of achieving happiness – the mean. Virtue is attained via the avoidance of excess (both its upside and downside). Buddhism echoes these musings, both pleasure and asceticism are to be moderated in order to achieve the middle way.

Economists notice that self-reported levels of happiness decline after we achieve middling incomes, thus confirming at least one philosophical prediction about of the benefits of moderation.

Money yields multiple paradoxes. Its claimed relative unimportance flies in the face of much lived experience: how many of us have ever asserted, with absolute honesty, that we have enough? The dysfunctional lifestyles of many rich people often contradict the idea that money equals happiness. Behaviourally, the answer to “how much is enough?” is always “more”.

That way lies madness, not happiness. It isn’t done to admit it, but our actions speak volumes. We haven’t paid much attention to Aristotle or Buddha.

In 1972, the King of Bhutan famously observed that governments should pursue gross national happiness, not gross national product. Lots of subsequent effort didn't lead to many consequences of note, despite explicit happiness strategies from the likes of Barack Obama and David Cameron. Grand visions met with disappointment. That's a general point – much unhappiness is caused by disappointment. Underpromise and overdeliver is a great rule to live by.

Leading academics suggest, not unreasonably, that resources should be devoted to where evidence suggests it will do most good. Mental illness, for instance, is one of our greatest sources of misery and can be improved with more money devoted to its treatment.

Economists have always known that there is only a loose link between GNP and happiness. But they also know that we do need GNP. And we know as much about the causes of GNP growth as we do about the fundamentals of happiness. Not too long ago the World Bank commissioned a Nobel laureate to write the definitive report on economic growth. Two years of work by more than 300 academics resulted in a 200-page document that offered a simple observation: nothing but economic growth has ever lifted humanity out of misery.

But they found no definitive menu of policy choices for governments to follow. Growth is as mysterious as happiness. We know something but not everything.

Environmentalists who insist that economic growth must stop to save the planet should keep that link between misery and growth in mind. Simplistic conclusions can be dangerously and superficially appealing. Economic growth is the only way to eliminate poverty. We might not need much income to be happy but we all need some.

And the proper study of growth teaches us that the miracle of productivity growth is about doing more with less. We can and do grow without necessarily consuming more resources. This should not be as controversial as it is.

Clearly, survival is necessary for happiness. And we need to stop consuming fossil fuels. Estimates – guesses really – vary wildly, but some researchers reckon it would take around $4 trillion to scrub the atmosphere of excess carbon. Global GNP is about $85 trillion. Annual global military expenditure is about $2 trillion (35 per cent of which is the US alone and the US military is itself a huge emitter of greenhouse gasses).

A spend of $4 trillion isn’t a lot to save the planet. We saved the banks, why not ourselves? The resources do exist to cure the climate emergency without impoverishing the world’s economy and making its inhabitants miserable.

A funny thing about happiness is its relationship with age. David Blanchflower, professor at Dartmouth in the US, has written extensively about the "U-curve of happiness". After controlling for all sorts of factors, happiness seems to depend mostly on how old we are. Blanchflower finds that happiness troughs at about age 47-48 and then creeps upwards ever after, even into our dotage.

His latest findings, published just before Christmas, are consistent across 132 countries. Money, indeed, can’t buy us love but we really shouldn’t worry: we will, eventually, be happy.