How human factors benefit the economy

There's a computer game a friend of mine used to play called Civilisation or Empire or some such

There's a computer game a friend of mine used to play called Civilisation or Empire or some such. It involves taking over the world and establishing fictitious societies. Success is based on a number of factors, such as wealth, health and productivity, but significant among the categories of success for your society is happiness - the well-being of your nations.

The game recognises economic growth is but one aspect of a society's success, that human factors are just as vital. A recent report from the Organisation for Economic Co-operation and Development (OECD) recognises the same thing.

The Well-Being of Nations, coauthored by Mr Tom Healy, a civil servant from the Department of Education, posits that in playing the government game in the real world, we must focus on how broader aspects of well-being feed back into the economy.

Drawing on ideas developed largely by Prof Robert D. Putnam, from Harvard, in his book Bowling Alone: The Collapse and Revival of American Community, this new study repeats Prof Putnam's observations that how happy, healthy, educated and socially involved people are is good for the economy. Education and friends enrich us, individually and collectively.

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These building blocks for well-being have been given the socio-economic terminology "human capital" and "social capital".

The concept of social capital sounds abstract, but it couldn't be simpler. Do you go on picnics? Do you trust people? How many clubs, societies or social groups are you a member of? Basically, how much social contact do you have in your life? These social ties, according to the research, will help you live longer, and are probably worth money to the economy.

The debate is timely in this country, where a general dissatisfaction is increasing as many see our economic growth failing to pay social dividends, and indeed causing a decline in social well-being.

The revolutionary concept, propelled by Prof Putnam, is taken up by the OECD report. It promotes the idea that social capital, or the benefits of strong community ties and social networks, can contribute to well-being and economic growth.

Or maybe it isn't so revolutionary. Anyone familiar with the phrase "It's not what you know, it's who you know" will probably already be aware of the benefits to be reaped from people's relationships with one another.

What Mr Healy and his co-author, Mr Sylvain Cote, do in The Well-Being of Nations is to bring those people-based concepts together with hard economic theory, underlining that they are interdependent, in language accessible (and acceptable) to economists and policy-makers. It formalises in policy-speak what many of us have known for years.

Looking at the research in both studies, the score of the game for OECD countries is as follows: America has been losing since the early 1970s, and Europe is still doing well, but could be facing a slump.

Prof Putnam uses immaculately researched surveys, studies and statistics to illustrate the simple truth - that people in America are not interacting socially nearly as much as they used to 25 years ago.

People are going to 60 per cent fewer picnics and joining 60 per cent fewer clubs. America is socially unhealthy, he concludes, laying a fair amount of blame on youth addiction to television.

The OECD report shows Europe's social activity to be quite healthy, with far less youth dependence on television, though trust between people and towards institutions has declined in most countries, including Britain, France and particularly in America. The decline is most notable among younger age groups.

As far as Ireland is concerned, research by the National College of Ireland indicates we are at a crossroads that is closer to Boston than Berlin, and could follow America's decline 20 years later.

The survey by Ms Freda Donoghue tracks the decline over the past decade in the numbers of people volunteering, from 39 per cent to 33 per cent, and the hours spent in voluntary activities. It notes time is the biggest factor in the decision not to volunteer or in giving up volunteering.

The social capital doctrine has found favour with political leaders across the globe. Mr Clinton and [ NO]Tony Mr Blair have both taken a personal interest, and it is at the root of the Third Way pursued by them. Prof Putnam has personally advised the American, British and German administrations.

He is now also informing public policy in this country. The current Fianna Fail administration has taken strongly to the idea of social capital. Mr Ahern, said to be "fascinated" by it, is currently reading Bowling Alone on the recommendation of his senior advisers.

Prof Putnam and Mr Healy both presented their research in Dublin earlier this year at a conference on March 29th, organised by the Department of Social, Community and Family Affairs at the suggestion of the Department of the Taoiseach.

At the conference Mr Ahern paid tribute to the doctrine, saying, "social capital is a concept which deserves to be a very positive influence in public policy development in this country ..."

He took extra time to chat with the Harvard luminary, and when Prof Putnam asked with whom he should keep in touch, Mr Ahern replied: "With me, with me, talk to me." His Department confirms the two are continuing to correspond.

The social capital concept has already found its way into national policies such as the Children's Strategy, and many of the elements in the National Development Plan are informed by it, evidenced by the high level of community development projects.

It is worth mentioning that Fine Gael has also adopted the social capital approach, applying it widely in the Plan for the Nation published several months ago. The party's spokesman on Social and Community Affairs, Mr Brian Hayes, feels it is vital that the non-monetary work many people do, such as volunteering, is properly recognised.

After presenting his research in Dublin, Prof Putnam warned that the demise in social capital, and resulting social disintegration, witnessed in America over the past 30 years could be replicated in European nations, including Ireland.

Mr Healy's report stresses that while social capital is informal and organic by its very nature, public policy can be instrumental in encouraging it, and urges social capital to be measured and encouraged.

If you were playing the computer game, you might build parks to encourage picnics and social interaction, you might offer incentives for community projects and clubs, to score well-being points.

If you are playing the policy game you should be doing the very same things, says this new research.

At this crucial juncture, the Government has funds for policies that could have crucial results, and so has the power to score points in the real-life Civilisation game.

The research reintroduces the concept of well-being as a key factor to discussions that, in recent years, have been perhaps over-focused on economics. But it seems unfortunate that for the concept to be seriously taken on, it has to be hardened up by being couched in economics. Have we really become that averse to the "softer" side of life that we have to pretend it's all about economics?

The Well-Being of Nations: The Role of Human and Social Capital, Healy/ Cote (2001), is published by the OECD Centre for Educational Research and Innovation.

Bowling Alone: The Collapse and Revival of American Community, Dr Robert Putnam (2000), is published by Simon Schuster.