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By Mark Lundegren
As I write this, United States central bank head Ben Bernanke has made headlines in the past week for launching his controversial QE3. No, Bernanke’s QE3 is not a new ocean liner, but instead an acronym for “Quantitative Easing Three.” QE3 is a third round of injecting additional money into the U.S. (and ultimately world) economy.
Federal Reserve Chairman Ben Bernanke
By acting to increase the supply of U.S. dollars through QE3, Bernanke and his fellow central bankers hope to make the currency cheaper and stimulate domestic economic and employment growth. Critics contend that QE3 will either have little effect, lead to similar and thus offsetting moves by other countries, or fuel increased inflation – price increases via the chasing of available goods and services by an oversupply of money.
Interestingly, Bernanke made a proposal last month at a global economic conference that garnered almost no headlines, even as what he proposed may be far more important and consequential than QE3 in the long-term. As covered by some reporters in the financial press – see Happiness Bandwagon and More Philosophy Please for a sample – what Bernanke proposed was that economists and others should begin to measure and define national success differently than we usually do, specifically by recasting success in terms of well-being or happiness rather than wealth.
Wealth And Modern Well-Being
Today, most industrialized and developing countries measure success or standard of living principally by overall economic activity or wealth – often in the form of Gross Domestic Product.
Related measures include the average wealth of a nation, how wealth varies across people, how quickly wealth is growing, how readily it can be obtained (via employment and business and investment opportunities), and how wealth is changing in real terms (when adjusted for price inflation over time).
This common set of measurements and concerns equally reflects and encourages the focus of most economists and political leaders on wealth as a general good, and even on wealth as an end or primary goal in itself. But as Bernanke highlighted in his remarks, while wealth and economic activity may be relatively easy to measure, they at best capture the what and not the why of economics.
This crucial idea may be counter-intuitive at first but is not hard to understand, especially when we remind ourselves that we are remarkably wealthy on average in much of the world by historical standards. In this context, when we consider our continued strong (even instinctive) collective preoccupation with wealth, in and out of economics, this modern-day preoccupation proves problematic on at least two fronts.
First, modern western societies were almost universally and intentionally constituted (or re-constituted) on the 17th century Enlightenment proposition that societies should be designed and governed to maximize total human happiness. In this revolutionary social philosophy, wealth was seen as aiding happiness, but not as a proxy or substitute for it.
Second, as human happiness itself is studied empirically by scientists, this earlier intuition regarding the relationship between wealth and happiness has been increasingly validated and become far better informed. We now more precisely understand wealth’s practical impact on happiness and well-being – notably, that positive wealth effects rapidly decrease, as individuals and societies become wealthier or as wealth becomes less equally distributed within or between societies.
A great summary of modern well-being research is contained in the prominent British economist Richard Layard’s Happiness. In this excellent book, Layard traces the development of the “happiness ideal” and then uses modern well-being science to propose seven key drivers of human happiness (in rough order of priority):
- Family relationships
- Financial security
- Work quality
- Community and friends
- Physical health
- Personal freedom
- Caring values
As the growing body of research that Layard introduces becomes better understood and taken to heart by people today, it promises to shake and re-shape our ideas of the place and foundations of happiness in our lives, and the modern national policies that popular thinking so often drives. And as Bernanke’s recent comments suggest, this research is likely to change mainstream economics and its ideas about wealth-creation as well.
Indeed, the fact that widely-respected economists like Bernanke and Layard have embraced a reconsideration of our modern social and economic measures (and thus our modern economic and social goals) suggests that relevant happiness research is already quite compelling and the case for change in many common national policies is strong.
A Wrinkle In The Happiness Formula
Though it may seem strange, the progress of modern well-being research and its growing general acceptance even suggest that the prospect of a formulas for stimulating happiness, in the form of intentional and integrated sets of social policies, are not far off.
This idea may take some getting used to, just as governmental actions to increase economic activity still do for many of us today. Indeed, the very real prospect of economists and governmental agencies directing resources to promote greater social happiness begs the question of whether the Enlightenment ideal of happiness maximization is still the correct overarching goal for modern 21st century societies.
It turns out that the happiness ideal continues to work quite well, especially relative to alternative social aims, although the happiness ideal must be qualified or adjusted somewhat to work optimally. Importantly, these needed adjustments have been understood to some degree since the Enlightenment, even as we do not yet adequately make use of them in our lives and nations three centuries later.
In theory and practice, an overarching goal of maximizing total happiness works quite well, as long as human happiness is pursued in ways that are informed and thereby made objectively sustainable and adaptive – across our individual lives and communities, across our societies and neighboring societies, and across successive generations of people.
When the happiness ideal is qualified in this way, however, I have argued that the ideal rightly deserves a new and clearer name, especially in a scientific and re-naturalized human world. This new name is health. If you would like to better understand this change and why it is needed to clarify and inform the Enlightenment’s happiness ideal, a discussion of the change is the subject of my article Balancing Health and Happiness, which is available free in HumanaNatura’s article library.
So, while Mr. Bernanke garners praise and scorn with his new QE3 policy in the weeks ahead, maybe you will look beyond this short-term development to his longer-term re-thinking of the correct aims and functions of central banks and their sponsoring governments.
If our first goal as a global society really is stimulating healthy happiness, perhaps we can begin to re-consider our individual and collective goals and actions, so that there is less future need to stimulate and pursue wealth – and thereby to risk inflationary spirals and other regressive economic and social cycles.
Mark Lundegren is the founder of HumanaNatura.
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