The British government is spending £2m on trying to work out what makes us happy. After doing that, the Office for National Statistics will collect data on our wellbeing on a long-term basis. It is doing this so that it can, in Prime Minister David Cameron's words, promote the general wellbeing of the country instead of obsessively promoting economic growth. This policy is misguided for several reasons. Firstly, it is clear that governments do not try to maximise economic growth. The size of the state in economic life is well above the level that maximises economic growth in the UK and most other Organisation for Economic Cooperation and Development countries.
Indeed, if the share of government spending in national income had been maintained at the level that pertained in 1960 for the last 50 years - then national income today would be twice as high as it currently is. Growth retarding regulation abounds – planning restrictions, employment law and so on. People will have different views on whether bigger government is a good idea, but it is very clear that government policy in almost every area is not geared towards maximising economic growth. So, Cameron's policy is based on a false premise.
It is also deeply troubling that a British government should believe that the best way to promote national well-being is to try to collect aggregate statistics on our well-being. What makes us happier is deeply personal and involves trade-offs. One person in a particular family situation might be happier in a job that provided more time with the family. A different person might want to work all hours god sends in order to save up for the time when he or she will have a family. People have different views about the value of job security versus the chance of getting a new job after having been fired. One simply cannot aggregate this data into some sort of national-utility function and then direct government policy towards maximising that utility function.
If you look at the wellbeing data - it surprisingly bears little relationship with variables such as inequality, health, crime and other variables to which we would expect it to be related. The government would do well to create a framework in which we had the maximum freedom to pursue wellbeing. As it happens, the clearest relationships found in the data are between religion and wellbeing and strong families and wellbeing. Having a job is also important. Few would argue that the state should coerce people into a religion, but we might consider the incentive structures in the welfare state that encourage worklessness and discourage family formation.
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