Numbers and happiness

One of the points Richard Layard makes in his new book on happiness is that beyond certain levels of income and wealth, more money does not make us much happier. There are very significant policy implications. One is that most governments' de facto goal, faster economic growth as (badly) measured by GDP per capita, is even less useful than you might think. (For work on alternatives see, for instance, Redefining Progress.)

A Social Policy Bond regime would target explicit, quantifiable goals. Already this would improve on the current system, where goals are often unstated or sufficiently vague so that governments cannot be held accountable when they fail to achieve them. But Social Policy Bonds would target outcomes, and whoever issues them could make sure that their targets would be inextricably linked to increased social welfare. As Layard points out, at low levels of income and wealth, gains do translate into increased welfare, and it would therefore be worthwhile for governments (or other bodies) to target such gains. Far better to do that, than to target obsessively GDP per capita.

The problems with targeting economic growth to the exclusion of most other goals are becoming ever more obvious: a deteriorating environment; a fraying social fabric; the entrenchment of poverty; and health and education systems that seem perpetually to be in crisis. There is also the frightening prospect of violent political conflict; another area where significant financial incentives (to arms merchants and others) are available only to the creators of social problems, not to the would-be solvers.