A major policy plank in the re-branding of the Conservative Party has been the adoption of well-being economics – one of the favourite fads of the left. Six years ago, David Cameron made a speech in which he said that there is more to life than money and that it was time we focused not on GDP but on GWB (general well-being). Twelve months ago, he re-entered the fray again stating that “[measures of well-being] could give us a general picture of whether life is improving” and eventually “lead to government policy that is more focused not just on the bottom line, but on all those things that make life worthwhile.” The economics in the speech was facile, and notable for three examples of what economists call the “broken window” fallacy. The Prime Minister suggested that crime actually increased GDP because it increased spending on locks, clearly not understanding that it merely diverts spending towards locks from other things.
Today the Institute of Economic Affairs published a new study “…and the Pursuit of Happiness: Wellbeing and the Role of Government” , that examines a