OUPblog > Current Affairs > Business & Economics > Making space for well-being?

Making space for well-being?

By Mia Gray, Linda Lobao, and Ron Martin

The New Focus on Well-Being
“There is a paradox at the heart of our lives.  As Western societies have got richer, their people have become no happier” (Layard, 2005).

Layard has not been alone in questioning the relationship between economic growth and well-being.  Theoretically, empirically, and politically, there is increasing dissatisfaction with growth as the main indicator of well-being.   As such, there is renewed interest in analysing the institutions and conventions through which the economy and society are measured and understood.

The wealth of nations – and for that matter, regions and cities – has traditionally been assessed in terms of some measure of output, consumption, or income, such as Gross Domestic Product (GDP) per capita or Gross Value Added (GVA).  The major thrust for the creation of modern national income accounting came with the economic crisis of the Great Depression, the military conflict of World War II, and the emergence of Keynesian economics and policy-making.  These conventional metrics have long been used to gauge the pace and scale of economic growth, and to compare one nation’s (or region’s) prosperity with that of another.  Important and revealing though such traditional measures are, it has  long been recognized that per capita GDP or GVA or average incomes exclude some key ‘non-market’ factors and activities that may not be easily measurable in monetary terms but which nevertheless play a major role in shaping the quality of everyday life. They therefore not only contribute to an individual’s and society’s sense of ‘well-being’, but should also be taken into account when measuring national ‘prosperity’ or ‘output’.

This issue was raised nearly four decades ago, when Easterlin argued that despite economic growth, human satisfaction had not necessarily increased – this became known as the Easterlin paradox. In recent years, this paradox has received renewed attention  and helped to stimulate a new ‘economics of happiness’  and a growing interest in well-being more generally. The thrust of this burgeoning literature is the argument that in assessing economic ‘progress’ we need to take social well-being and sustainability explicitly into account.

Policy makers are listening. Influenced by the report on well-being by Joseph Stiglitz and his collaborators, French President Sarkozy has claimed that France intends to pioneer the construction and use of a new measure of national economic prosperity that goes beyond GDP “to put more emphasis on measuring the well-being of the population than on economic production”.  Likewise, the UK Government has announced its commitment “to developing broader indicators of well-being and sustainability”, with the UK Prime Minister announcing that “just as the GDP figures don’t give the full story of our economy’s growth but do give a useful indicator of where we’re heading… so this new measure [of happiness] will give us a general picture of how life is improving”.

The Geographies of Well-Being and Quality of Life
A number of international rankings of well-being now exist which try to capture relative well-being. One recent study suggests that North European Countries (Scandinavia, Finland, together with Switzerland, Austria and Ireland) score well compared with other European, and especially East European, countries, although the rankings for personal well being and social well being are not entirely consistent (Table 1).

Table 1: Well-Being Indices for European Countries, 2006-2007

Personal Social
Rank Score Rank Score

Denmark 1 5.96 1 5.89
Switzerland 2 5.80 4 5.52
Austria 3 5.61 10 5.13
Norway 4 5.61 2 5.77
Finland 5 5.52 9 5.26
Ireland 6 5.50 6 5.37
Sweden 7 5.45 5 5.44
Netherlands 8 5.33 8 5.30
Cyprus 9 5.30 12 4.93
Belgium 10 5.16 13 4.92
Germany 11 5.14 17 4.88
Spain 12 5.12 3 5.58
UK 13 5.07 15 4.90
Slovenia 14 5.04 20 4.78
France 15 4.97 19 4.80
Poland 16 4.79 18 4.83
Estonia 17 4.71 16 4.90
Portugal 18 4.52 7 5.31
Slovakia 19 4.50 21 4.64
Hungary 20 4.41 11 4.64
Bulgaria 21 4.30 14 4.91
Ukraine 22 4.17 22 4.61

Source: New Economics Foundation (2010)

It is also the case that national personal well-being scores are significantly correlated with national GDP per capita (Figure 1 below), suggesting that income conditions and shapes many aspects of quality of life.  Nevertheless, such national comparisons seem to suggest that national differences in well-being, tend to reinforce differences in income.

Figure 1: Personal Well-Being and GDP per Capita across 22 European Countries

But of equal potential importance is how well-being varies geographically within nations. We know that not only economic prosperity and per capita incomes vary significantly from region to region, from locality to locality, within most of the advanced countries, and the available evidence for some nations suggests that broader measures of well-being and quality of life also display marked spatial variations (for the case of the United States, see Figure 2 below). We need to know much more about such local disparities in well-being because these disparities may throw light on the local determinants of both social and personal well-being, and hence may inform  policies designed to improve wellbeing and the quality of life.

Figure 2: Well-Being Index for US States and Congressional Districts, 2010

Note: This index scores areas on the basis of a 100 point scale, which for the purpose of this map has been divided into quintiles

Well-Being in an Age of Economic Crisis and Austerity

The need to widen and revise our conception of economic growth and prosperity to incorporate other aspects of well-being is all the more relevant given the recent historic financial crisis, consequent deep economic recession, and subsequent programmes of fiscal austerity being pursued to restore stability. Our existing system of national accounting was forged in a period of uncertainty and crisis surrounding the depression in the 1930s and wartime planning.  Times of crisis, and the periods of restructuring which often follow, force us to challenge and rethink our theoretical and policy approaches.  As such, the current period of crisis may promote and encourage a period of critical and constructive reflection and help forge a consensus around developing new conventions through which the economy and society are measured and understood. Perhaps more than ever before, we need to rethink what we mean by ‘wealth’, prosperity’ and ‘growth’, and how we measure, explain and respond to inequalities, both socio-economic and spatial.  We cannot simply go back to the same growth model that fuelled the long boom of 1992-2008, for that model was unsustainable and socially divisive. And likewise the new austerity that the collapse of that boom has provoked will almost certainly compound societal and economic divisions. A new post-crisis mode of growth and distribution is sorely needed, and such a model must give explicit emphasis to the issues of well-being, quality of life and happiness if it is to be both sustainable and equitable.

Mia Gray, Linda Lobao and Ron Martin are Editors on the Cambridge Journal of Regions, Economy and Society. Mia Gray is a Senior Lecturer in the Department of Geography in labour, economic and urban geography at the University of Cambridge and Fellow of Girton College, Cambridge.  Linda Lobao is Professor of Rural Sociology, Sociology, and Geography at the Ohio State University. Ron Martin is Professor of Economic Geography in the Department of Geography,  President and Professorial Fellow of St Catharine’s College, Cambridge, and a Fellow of the British Academy. Their co-authored paper has been made publicly available by Cambridge Journal of Regions, Economy and Society and can be viewed in full and for free here.

Leave a Reply