Posted January 18, 2006 to Career News | Section Home | Print

Wealth vs. Happiness: A New Look at an Age-Old Question

Which is more important: wealth or happiness?

While America has traditionally measured its success by looking at numbers such as the Gross Domestic Product (previously the Gross National Product), a growing number of scholars are questioning whether this is really the best way to assess how well off we are.

“Negative events that reduce well being actually increase GDP,” says A. J. Senchack, holder of the Lucy King Brown Chair in International Business at Southwestern University in Georgetown, Texas.

Hurricane Katrina is a case in point. While this was a personal disaster for hundreds of thousands of citizens, recent figures for the country’s GDP showed a robust growth of 4.1 percent due to the huge medical expenses and rebuilding costs associated with the hurricane. Many other transactions such as crime, divorce and environmental degradation have a similar impact on GDP.

Senchack says that GDP – which has its roots in the 1930s – was never intended to be a direct measure of economic health or well-being. “Our policymakers, economists and the media bestowed that role on it,” he says.

Their rationale for doing so, he says, was logical: the more a nation produces and consumes, the wealthier it is. This also means its standard of living becomes higher. Hence, its citizens should be better off or happier.

“But there is a disconnect here,” Senchack says. “Being wealthier simply does not translate into being happier. Many studies shows the United States to be no happier than it was 50 years ago; we are no happier than when we were poorer.”

Researchers have recently created a new field of inquiry known as the economics of happiness or well-being. The field is a multidisciplinary one that draws on work in economics, neuroscience, psychology and sociology.

Several of the leading researchers in the field will gather at Southwestern University Feb. 9-10 for a symposium titled “GNP or Gross National Well-Being?” It is the first conference in the United States to be devoted entirely to this topic.
Speakers at the symposium include Ed Diener from the University of Illinois, the leading authority on the psychology of well-being; Rafael Di Tella, a macroeconomist from Harvard University; Read Montague, a neuroscientist from Baylor College of Medicine; and Tim Kasser, a psychologist from Knox College.

Senchack, who organized the symposium, says he hopes it will help lead to alternative, national well-being measures that give a more representative picture of how happy people are. An example of such an index is the “Genuine Progress Indicator” created by the public policy organization Redefining Progress. This index starts with GDP and then adjusts for income distribution and leisure time, adds household and volunteer work, and subtracts the costs of crime, family breakdown and pollution.

He also hopes the symposium will encourage governmental policies that take well-being into account, rather than solely focusing on economic growth.

“We need to be as concerned about ‘affluenza’ as we are about influenza,” Senchack says.

Additional information on the symposium is available at http://www.southwestern.edu/brownxxviii. The symposium is free and open to the public.