The UN World Happiness Report, conducted by the Earth Institute at the Columbia University, was released last week (click here to review) . Taking its cue from the tiny Himalayan country Bhutan that has been measuring “Gross National Happiness” instead of GNP for decades, in this new report the United Nations advocates using happiness as a measure of national well-being instead of wealth.

The premise behind the report is that there is an optimal level of wealth that enhances our happiness. (The government knows what the optimal wealth is and can therefore tax us to redistribute wealth from those who have “too much” to those who “don’t have enough”).  Beyond that optimal level, argues Jeffrey Sachs, one of the report’s authors, material wealth is bad for us: it leads to obesity, anxiety, addictions and other ailments, and makes us hoard material possessions that we don’t really need. (None of these claims were substantiated in the report.) In other words, too much wealth makes us unhappy, and therefore we should give up our “excess” wealth (through taxes) to those who do not have “enough” and focus on pursuing happiness instead.

What’s wrong with this argument? And why, in fact, is wealth at any level good for our happiness? In order to answer these questions, we need to be clear about the meaning of “wealth” and of “happiness.” Wealth is created by production (such as by picking coconuts or by manufacturing satellite phones) and can be exchanged by using money. The more wealth, or money, we create, the better able we are to buy things that enhance our lives: better nutrition; better medicine; better education; high quality tools, recreation, entertainment, travel; time spent engaging in enjoyable activities instead of chores. The list of life-enhancing good and services obtained with wealth is endless. If human life and flourishing is the standard of value, then there is no upper limit to wealth creation.

Happiness is the emotional state that results from the achievement of our values. We are happy when we do meaningful, enjoyable work, when our children are thriving, when our business is performing well, when we are in a satisfying romantic relationship. While it is true that wealth—money—cannot buy many of our values, it does help buy many material values that enhance our lives, and it helps us buy time to pursue values that are important to us. (Note that hoarding material possessions for the sake of hoarding them is not a value but a sign of psychological illness.)

The most important requirement of both wealth creation and the pursuit of happiness is freedom. We cannot pursue our values if the government—or the UN—tells us what values to pursue and curtails our freedom to do so by taking the wealth we create and redistributes it to those who have created less or none.

In next week’s post: Why wealth creation is good for the planet.

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad.Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.

4 COMMENTS

  1. Excellent article.

    The UN’s survey smells of mind-body dichotomy, severing thinking from action, which underlies much of the UN’s activities.

    Observe the drive-to-the-bottom presumption that people will spend on ruining their health, consistent with the presumption that people won’t act for life. (When in reality conditions like obesity are a result of thinking skills and skewed values. The presumption denies effectiveness of the human mind for life.) Craig Biddle’s Loving Life and Tara Smith’s “Being Selfish, Being Happy” would be better inspiration than UN reports.

    (Of course Mercantilism has the same foundation, but in societies like Canada it is weak compared to Latin America for example.)

    The UN’s parameter might play well in mostly-Buddhist Bhutan. Buddhism is a mindless religion, less inclined to action than Christianity for example. And Bhutan will get greeny points from the UN for its environmentalist claims, from an easy basis of having hydro-electric power for energy.

    And beware that in surveys people may use terms differently, and even lie especially if an authority is asking. For example, a Canadian doctor was intrigued by the long life expectancy in a country in that region, but discovered that since being old resulted in greater respect people lied about their age.

  2. Note that Bhutan ranks high in economic freedom, tops in South Asia, according to Wikipedia, and its army is volunteer.

    However, it has not fully upheld its constitution, for example it forces people to wear a particular ethnic style of clothing if visiting public facilities or working in government.

    Even worse, one ethnic group was shoved out of the country.

    And religious promotion is prohibited. http://www.bhutannewsservice.com/main-news/pastor-sentenced-to-3-yrs-in-prison for promoting Christianity in Bhutan.

    Those aren’t reasons to be happy.

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