Happiness, Subjective Wellbeing and Behavioural Economics: Old Ideas, New Understandings Jon.Hall@abs.gov.au

1. Happiness, Subjective Wellbeing and Behavioural Economics: Old Ideas, New UnderstandingsJon.Hall@abs.gov.au

2. Two Key Questions How do we measure Subjective Wellbeing? Whydo we need to measure Subjective Wellbeing?

3. Two Key Questions How do we measure Subjective Wellbeing?

4. Two Key Questions How do we measure Subjective Wellbeing? What is Subjective Wellbeing?

5. What is Subjective Wellbeing? How individuals rate the quality of their lives Two broad approaches based on… How individuals evaluate the quality of their lives. Positive and negative emotions, measured momentarily or remembered.

6. What is Subjective Wellbeing? Different questions, different uses “How satisfied are you with your life?” is much more influenced by life circumstances than our day to day emotions. People are “happier” at the weekend, but no more satisfied with life overall. Life satisfaction questions are useful for looking at which circumstances of life drive happiness.

7. What is Subjective Wellbeing? Different questions, different uses Momentary assessments – based on (in real) time use diaries – show different answers to remembered assessments e.g. time spent with children, experiences of pain Which is the more important to understand?

8. What is Subjective Wellbeing? Different questions, different uses Evidence shows respondents do interpret their relative position in the world well e.g. self-assessed health declines with age. But the decline is eliminated when respondents are asked to compare their health to their peers.

9. Ed Diener’s Would You Move? Test of validity

10. Why do we need to measure Subjective Wellbeing? 1. Happiness/Wellbeing is a legitimate goal of public policy

11. Why do we need to measure Subjective Wellbeing? Happiness/Wellbeing is a legitimate goal of public policy 2. SWB drives objective wellbeing

12. Why do we need to measure Subjective Wellbeing? Happiness/Wellbeing is a legitimate goal of public policy 2. SWB drives objective wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter

13. Why do we need to measure Subjective Wellbeing? Happiness/Wellbeing is a legitimate goal of public policy 2. SWB drives objective wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter 4. Looking at policy through an SWB lens generates new ideas

14. Why do we need to measure Subjective Wellbeing? Happiness is a legitimate goal of public policy 2. SWB drives objective wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter 4. Looking at policy through an SWB lens generates new ideas

15. Bhutan

16. USA

17. Why do we need to measure Subjective Wellbeing? Happiness/wellbeing is a legitimate goal of public policy 2. SWB drives objective-wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter 4. Looking at policy through an SWB lens generates new ideas

18. Happiness and Health This is a new science Extremely difficult to test for links between happiness and health because of confounding variables, false causality etc. etc. – few “laboratory” experiments are possible

19. Happiness and Health

20. Happiness and Health

21. Happiness and Health

22. Social Benefits of Happiness Trust Happiness Social Connections

23. Why do we need to measure Subjective Wellbeing? Happiness/wellbeing is a legitimate goal of public policy 2. SWB drives objective wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter 4. Looking at policy through an SWB lens generates new ideas

24. Happiness and the headlines

25. Happiness and the headlines Discovered: The Happiest Man in America By CATHERINE RAMPELL Published: March 5, 2011 Gallup’s answer: he’s a tall, Asian-American, observant Jew who is at least 65 and married, has children, lives in Hawaii, runs his own business and has a household income of more than $120,000 a year. A few phone calls later and ...

26. Happiness and the headlines Happiness Monthly happiness indicator triggers public discussion Why the changes? Which groups/regions faring differently? Trojan Horse for facts-based debate about health, wealth, education, employment, environment etc. etc. TIME

27. Why do we need to measure Subjective Wellbeing? Happiness/wellbeing is a legitimate goal of public policy 2. SWB drives objective wellbeing 3. SWB measures can promote a facts-based debate about the statistics that matter 4. Looking at policy through an SWB lens generates new ideas

28. Behavioural Economics

29. Behavioural Economics People do not seek necessarily to maximise their own utility.

30. Behavioural Economics People do not seek necessarily to maximise their own utility. Which would you prefer? a. You and all your team receive $1000 pay rise

31. Behavioural Economics People do not seek necessarily to maximise their own utility. Which would you prefer? a. You and all your team receive $1000 pay rise b. You get a $2k rise – your colleagues each get $5k

32. Behavioural Economics People do not seek necessarily to maximise their own utility. Which would you prefer? a. You and all your team receive $1000 pay rise b. You get a $2000 rise – your colleagues each get $5k Economic theory says b) Human nature says a)

33. Behavioural Economics Unemployment, happiness and your partner

34. Behavioural Economics Ingenious natural experiments …. The Dutch postcode lottery – keeping up with the Van Jones’s

35. Feelings matter – for behaviour & policy

36. Feelings matter – for behaviour & policy responses

37. Feelings matter – for behaviour & policy responses

38. Feelings matter – for behaviour & policy responses

39. Feelings matter – for behaviour & policy responses

40. Feelings matter – for behaviour & policy responses

41. The Policy Revolution

42. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” “To those who say that all this sounds like a distraction from the serious business of government, I say finding out what will really improve lives and acting on it is the serious business of government." David Cameron, 2010

43. 3. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters

44. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters Different conversations e.g. community cohesion

45. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters Different conversations Different behaviours & policies e.g. commuting or police investigations

46. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters Different conversations Different behaviours & policies Cost benefit analyses – inflation vs. unemployment

47. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters Different conversations Different behaviours & Cost benefit analyses Management practices – the weekend effect

48. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters Different conversations Different behaviours & policies Cost benefit analyses Management practices Korea’s response to the GFC

49. Subjective Wellbeing – the New Business of Government From Bhutan to the UK, governments are getting serious about measuring “happiness” … “subjective wellbeing:” … “flourishing societies” A new science…. but we know that wellbeing matters By 2030…? Radical reform of the how we understand/think about policy…

50. Subjective Wellbeing – the New Business of Government Consider education policy. To educate and build socially inclusive communities where all Australians have the opportunity to reach their full potential and to actively participate in a rewarding economic and social life. DEEWR, 2011