Could the gilt be wearing off our golden age?

A breakneck drive for economic growth is less important to people than quality of life, writes Peter Clinch

A breakneck drive for economic growth is less important to people than quality of life, writes Peter Clinch

There is a saying that those who think money can't buy happiness don't know where to shop. But have rising incomes really improved the quality of life of Irish people?

In the final years of the 20th century Ireland was the economic wonder of the Western world. As the economy moves into a transition period, our book, After the Celtic Tiger, examines why Ireland made such startling progress and identifies the policies that will help, in changing circumstances, to carry us through to a promising future.

The principal purpose of economic growth is presumably to improve quality of life, and the key questions are whether this "golden age" of the Irish economy did improve quality of life and what implications there are for the management of the economy in the future.

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Economic performance is usually measured by variables such as GDP, which measures the value of goods and services in monetary terms. Such measures ignore, for the most part, many aspects of quality of life such as the natural environment, civil rights, social cohesion and the fabric of society generally.

To enable us to understand those factors that contribute to quality of life, we rely on representative surveys of the Irish population, one of which we carried out for the new Urban Institute Ireland at UCD.

This shows that, for four out of 10 people, family and relationships are the most important determinant of the quality of their lives; for three out of 10 it is their health. Work and financial security are considered the most important by just two out of 10 people.

Levels of life satisfaction among the population are generally high. Well over two-thirds consider their lives to be either "very good" or "good", with 14 per cent describing them as "as good as can be".

Overall Ireland lies in the middle of the EU happiness league table, ranking seventh out of the 15 states. Of the cohesion countries (Ireland, Greece, Portugal and Spain), the Irish are the most content with life, with just 12 per cent rating their lives as unsatisfactory.

The rich have more money, but are they happier? A simple analysis shows that happiness does vary by social class, but the association is not very close. There is not much difference between the four "higher" social classes from "professional" to "skilled manual", but there is a sharp fall off in happiness in the "lowest" classes. Of those "partly skilled" and "unskilled", seven out of 10 and six out of 10 respectively rate their lives as satisfactory compared to about nine out of 10 in the other classes.

This may be because the risk of unemployment is so high lower down the social order, and there is a strong relationship between employment status and happiness. Only four out of 10 of those who are unemployed rate their lives as satisfactory.

Care has to be taken in the interpretation of answers to questions about how we felt in the past. But our data show that one in two Irish people considered themselves "better off" in spring 2001 than they were five years before.

This is likely to be a reflection of the growth in the Irish economy and the fall in unemployment during the 1990s. But, while feeling "better off", people do not seem to feel more "satisfied with life".

This appears to be consistent with results from the US which show that happiness with life appears to be increasing, but the rise is so small that it seems that extra income is not contributing dramatically to raising feelings of happiness.

Similar proportions of people stated that the Celtic Tiger has either "improved" (42 per cent) or "made no difference" (40 per cent) to the most important things in their lives. However, in spite of higher incomes and lower unemployment, people are most likely to feel continual anxiety regarding money issues, work and job security.

Returning to the question of whether economic growth improves quality of life, it can be said that levels of life satisfaction as expressed by individuals are not strongly related to GDP growth, although they are linked to the unemployment rate.

Economic growth is worthwhile if for no other reason than it helps to maintain a lower rate of unemployment. But people do seem to judge their satisfaction with life in terms of their income relative to that of others.

So the maintenance of happiness may be partly a matter of keeping up with (or even ahead of) the Joneses. John B. Keane may have been right when he said that nobody in Ireland will be happy until everybody is better off than everybody else.

Given that those who are unemployed are considerably less satisfied with life, if a downturn in the economy results in an increase in long-term unemployment, such people will become marginalised and considerably less happy.

People are also less happy when inflation is high. Maintaining full employment seems more important than maximising incomes. However, several other factors that influence quality of life should be addressed. Traffic congestion and housing appear most urgent. The high value placed by the public on their health may explain concerns regarding the quality of health services.

Almost a third of people suggest that the Irish have become less friendly during the boom as the pace of life, stress and anxiety increase. This seems to be an unfortunate side effect of economic progress. It should serve as a warning against a breakneck drive for rapid economic growth.

Dr Peter Clinch is an economist at University College Dublin and, with Frank Convery and Brendan Walsh, is author of After the Celtic Tiger: Challenges Ahead, just published by O'Brien Press