Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.
Perhaps David Cameron had better foresight than he’s given credit for. At a Google conference in 2006, the then leader of the opposition declared “It’s time we admitted that there’s more to life than money, and it’s time we focused not just on GDP, but on GWB – general well-being.” With the financial crash ravaging the public finances through 2010 and conventional economic indicators in the doldrums, he risked opprobrium by tasking the Office for National Statistics (ONS) to measure wellbeing for the first time.
Well, his desire to be judged on such metrics now looks incredibly prescient. Never mind sluggish GDP growth throughout and after his premiership. Forget the polarisation of Brexit. The ONS’s latest wellbeing stats, released last week, show that the British people are significantly happier and more satisfied than back in 2011.
It really is remarkable. Every self-reported measure of wellbeing has improved near continuously in the past eight years. Asked on a 1-10 scale whether they are satisfied with their lives (0 being “not at all” to 10 “completely”), the public’s mean score has risen from 7.11 to 7.42, with the proportion answering 7 or above rising from 76 percent to 82 percent. This isn’t some anomaly either. How worthwhile we perceive our lives and self-reported happiness have been ever rising too, on average. Anxiety, meanwhile, has fallen, albeit having levelled out recently. If Cameron had convinced us of wellbeing’s central importance, we’d now be celebrating his wonderful legacy.
As it happens, of course, this “good news” got about as much coverage last week as a positive Brexit business story. Remainer demands for a new Brexit impact assessment show that pounds and pence are still king in UK politics (at least until there’s an EU regulation the same Remainers want us to follow). We free-marketeers were fearful, when subjective happiness metrics were introduced, that they’d become active targets of policy. We needn’t have worried. Political leftists’ attachment to them proved skin deep, falling away as soon as they suggested Britain was not hell on earth under the Tories.
But was classical liberals’ fear of such metrics misguided? Perhaps. Consider a new paper from researchers at the University of Warwick. Reviewing eight million publications digitized through Google Books, the study aims to construct longer-run indices of wellbeing from 1820 through to 2009. Its findings are even more jarring than the ONS stats.
Here’s how their index is put together. Use of positive words in published books, such as “cheerful,” “happy,” and “joyful,” are considered proxies for better subjective wellbeing. Negative words such as “sad” or “miserable,” are tallied up as measuring worse wellbeing. In short, the academics assume that in a happier world, more “happy words” would be written in published tomes.
Now, I was sceptical of that methodology. But they check their results against life satisfaction data over recent decades from Eurobarometer and the UN, finding strong correlations in the numbers. Emotive positive/negative language does appear to proxy well for self-reported wellbeing since the 1970s, when both sets of data are available. Having satisfied themselves of the methodology, the retrospective application to earlier periods produces fascinating results.
Wellbeing was consistently high in the UK in the 19th century, fell around the time of World War One, before then recovering. Unsurprisingly, it plunged again during World War Two, before rebounding to a lower peak. But the post-war phase is most striking, splitting clear into two obvious periods. From the 1950s to 1980 there was a sustained fall in wellbeing. After 1980, there was a dramatic rebound, fitting with Eurobarometer data showing a sustained improvement in life satisfaction in the UK over the past 40 years. Britain’s life satisfaction index since 1950 is therefore distinctly V-shaped.
What might explain this dramatic inflection circa 1980? Social trends would surely be a slower burner. People had been getting better off between 1950 and 1980 too, so this is about more than rising wealth. No, there’s one rather obvious explanation fitting the time trend: the UK’s abandonment of its quasi-socialist economic model and embrace of Thatcherism.
Such a thesis is supported by the fact the US experienced a near identical V-trend in its index centred around the launch of Reaganism. Germany, in contrast, saw wellbeing completely flatline from the 1950s onwards. Neoliberalism’s birth, it seems, facilitated sustained rises in wellbeing.
These findings dunk all over accepted truths. Claims from the Spirit Levellers that inequality and marketisation made us miserable are dismissed. If anything, the exact opposite appears true: the post-war period saw socialist equality beget misery. Life satisfaction rose with inequality through the 1980s and continued to rise once inequality settled at a higher level.
Nor can GDP or the labour market adequately explain the trends. Rising GDP per capita, other things given, would be expected to improve life satisfaction, and Britain’s economy did perform well relative to other countries after 1980. But growth was stronger in previous decades, when life satisfaction was falling. Wellbeing does not appear to have fallen after the financial crash either. Sure, tightening labour markets might explain some of the rise in wellbeing since 2011, but Britain had very high unemployment in the 1980s, just as life satisfaction took off.
No, the absence of clear outcomes-based economic explanations suggests that my friend Terence Kealey may be right. What might explain the reversal from 1980 is simply that we Anglo-Saxons value our economic freedom, above and beyond its GDP or employment impact. Economic liberty makes us happier.
The post-war period saw high tax rates, capital controls, Keynesian demand management, nationalisations, price and income controls, and high inflation. Afterwards we shifted towards freer trade and migration, lower taxes, lighter touch regulation, and free movements of capital. Of course, we’re not near libertopia; if anything the Thatcher and Reagan revolutions proved a brake on a longer-term government juggernaut. But there was a paradigm shift on economic freedom. We Brits, and our American cousins, found it deeply satisfying.
For a libertarian, this isn’t surprising. Our worldview is centred on the belief that individuals know best how to live their lives to improve wellbeing. Thatcher, of course, claimed her economic liberalisation agenda was in tune with the true instincts of the British people. All this suggests she may well have been right.
David Cameron had no such ideological inclinations. In fact, he probably advocated happiness metrics, in part, to distance himself from the supposed economics-obsessed “libertarian” wing of his party. How ironic then that the sorts of wellbeing measures he championed took off when classical liberals turned the tide on socialism, and strengthened through the “age of austerity.”