Economic Theory

Government shouldn’t worry about our happiness – new research shows


Press Release

Dr Richard Wellings comments on the government's infrastructure folly

Labour Market

Mark Littlewood comments on the latest unemployment figures

New IEA research released

New research released today, on the most miserable day of the year*, shows the government’s strategy of measuring and explicitly promoting happiness over other objectives is counter-productive and a waste of money.

The report, “…and the Pursuit of Happiness: Wellbeing and the Role of Government”, examines the flaws in attempts to measure happiness. It suggests that:

  • The government should not be trying to measure or maximise happiness as an explicit policy goal.

  • There is no evidence that more equal societies lead to increases in happiness.

  • Contrary to widespread belief, the evidence suggests that happiness is in fact related to income and economic growth. The so-called Easterlin paradox (the idea that wellbeing does not increase with income) is shown to be fake.

  • Attempts to promote “wellbeing at work” through regulation are likely to be counter-productive in so far as increases in employment regulation increase unemployment. There is a strong link between unemployment and loss of wellbeing. In general, more intrusive and bigger government leads to a loss in wellbeing. One study finds that increasing government spending by one third would cause a reduction in happiness of 5%-6%.

  • Smaller government tends to make people happier. Public spending cuts could actually be the key to making Britain a happier place.

Commenting on the report, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“Governments have shown how hopeless and inefficient they are at attempting to run the basics of our economy. They seem to find it nearly impossible, for example, to resist racking up colossal debts. To trust them with something far more intimate, complicated and confusing as happiness would be inviting disaster. We need our government to do less, not more – and to stick to the very simple and straightforward tasks which they are just about capable of. All of us are better advised to pursue our own dreams, hopes and goals than to entrust such personal and intimate things to David Cameron.”

Commenting on the report, its editor, Prof Philip Booth, Editorial Director of the Institute of Economic Affairs, said:

“The government is spending money on collecting happiness statistics in order to promote government policies to try to increase aggregate national happiness. This is a flawed policy and based on a complete misconception that governments hitherto have focused only on increasing national income. The nation’s wellbeing will be improved if the government cuts back its activity and allows the economy, employment and families to flourish. The government should not be trying to increase aggregate happiness as a specific policy goal, nor should it be wasting money collecting data on the subject.”

*Today is widely thought to be the most miserable day of the year, dubbed “Blue Monday” due to a combination of factors such as the weather, proximity from Christmas, levels of debt etc.

Notes to editors

To arrange an interview about the report please contact Stephanie Lis, Director of Communications: 020 7799 8909, [email protected]

The full report “…and the Pursuit of Happiness: Wellbeing and the Role of Government”, edited by Philip Booth, can be downloaded by clicking here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.

The contributing authors to the report are:

  • Christian Bjørnskov, associate professor of economics at Aarhus University in Denmark.

  • Peter Boettke, a university professor of economics at George Mason University (GMU) and the BB&T Professor for the Study of Capitalism at the Mercatus Center at GMU.

  • Philip Booth, Editorial and Programme Director of the Institute of Economic Affairs and Professor of Insurance and Risk Management at Cass Business School, City University.

  • Christopher Coyne, the F. A. Harper Professor of Economics at the Mercatus Center at George Mason University.

  • Marc De Vos, professor at the Ghent University law school and the general director of the Itinera Institute, a non-partisan policy think tank based in Brussels.

  • Paul Ormerod, consultant and author of three best-selling books on economics: The Death of Economics, Butterfly Economics and Why Most Things Fail, a Business Week US Business Book of the Year.

  • Daniel Sacks, doctoral student in the Applied Economics Program at the Wharton School of the University of Pennsylvania.

  • Pedro Schwartz, Professor Extraordinary of Economics at San Pablo University in Madrid.

  • J. R. Shackleton, Professor of Economics at the University of Buckingham and an Institute of Economic Affairs Fellow.

  • Christopher Snowdon, read history at Lancaster University and has been a full-time author and journalist since 2009.

  • Betsey Stevenson, assistant professor of business and public policy at Wharton University of Pennsylvania.

  • Justin Wolfers, associate professor of business and public policy at Wharton University of Pennsylvania.