The economics of happiness

For Professor Arthur Grimes, an important aspect of wellbeing is the ancient Greek concept of eudaemonia, or purpose in life.

Professor Arthur Grimes smiles in blue suit and pink shirt.

“The concept goes back to Aristotle, as many things do,” he says.

Arthur is the Chair of Wellbeing and Public Policy at the School of Government, where he spends much of his time thinking about how we can measure and maximise wellbeing.

“The difficulty that no one has yet mastered is how to incorporate wellbeing into a practical policy framework,” he says. “It’s all very well saying we want to improve wellbeing— and 2019’s Budget is going to be a Wellbeing Budget, according to the Minister of Finance—but what does it actually mean?

“Different people have different takes on this. Amartya Sen defines wellbeing as leading the life one wishes to lead, and having the capability to do that.

“The OECD’s Better Life Index, which has 11 different domains covering things such as health, housing, education, and life satisfaction, is one approach to represent the capabilities that individuals require to lead a fulfilling life.”

As it stands, Arthur doesn’t think we’re faring too badly in the wellbeing stakes. “In the Gallup poll (measuring subjective wellbeing) New Zealand is always in the top 10. We also tend to come out as one of the top countries in the Better Life Index.”

He says one area where New Zealand could do better is inequality. “For a developed country, we’re quite unequal on some of these measures, including life satisfaction and consumption.”

Since February, Arthur has been a member of the World Wellbeing Panel based at the London School of Economics. The Panel comprises almost 50 academics around the world, including economists, psychologists, political scientists, and sociologists.

Arthur was also involved in organising a very successful international conference on wellbeing and public policy in Wellington in September that was co-hosted by Victoria University of Wellington, the Treasury, and the International Journal of Wellbeing.

He says the conference highlighted some significant challenges to wellbeing, including sustainability.

“A big elephant in the room for future wellbeing is climate change. If that were to eventuate towards the worse end of the spectrum, sea-level rise alone would have devastating impacts on wellbeing.

“A further challenge is alienation through technology—people not interacting with each other directly.” Arthur notes that research has found people often experience happiness from doing things for others. “Will technology lead to more, or less, of that?”

When asked what wellbeing means to him personally, Arthur pauses.

“I suppose having a life that I can reflect on and think that it’s been worthwhile and enjoyable. And at a societal level, that essentially all people can say, ‘I was really pleased with my life’.”