But can money buy happiness?

Posted on November 24, 2010 in Child & Family Policy Context

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OttawaCitizen.com – Health/Citizen Special
November 23, 2010.    By James Milway

In its annual report released today, the Ontario Task Force on Competitiveness, Productivity and Economic Progress concludes that Ontario has an ongoing prosperity gap with the largest U.S. states.

That is, we are not realizing the full prosperity potential from our daily work, our business strategies, and our government polices. This prosperity gap is the difference in Ontario’s Gross Domestic Product and the median of the largest U.S. states and, at $6,900 per capita, it translates to more than $10,000 per average household in after-tax disposable income — enough to cover mortgage or rent payments. It also means $31 billion lost revenue for all three levels of government in Ontario.

But is GDP the right measure? Shouldn’t we be tracking happiness instead?

While GDP does a good job in capturing our economic success, it doesn’t measure quality of life or happiness. It focuses strictly on things with a dollar value. It doesn’t value our leisure time.

Policy-makers and academics have been studying these measurement issues. In 2008, French President Nicolas Sarkozy appointed a commission of respected academics to assess GDP as a measure of economic performance and social progress. The commission reported that it misses many factors affecting people’s well being.

Recently the British government announced it would be attempting to measure general well-being there.

Happiness is our ultimate goal, not more and better widgets. But GDP is a useful measure of our progress. A more prosperous economy helps achieve greater quality of life through better health, longer life expectancy, and widespread literacy. Higher GDP per capita correlates well with measures like the UN’s Human Development Index and the Gallup-Healthways Well-Being Index across the United States.

But to deepen our understanding of issues affecting life satisfaction, the Ontario Task Force’s research arm, the Institute for Competitiveness & Prosperity collaborated with the Centre for the Study of Living Standards (CSLS) to analyse recent results of Statistics Canada’s Canadian Community Health Survey. CSLS analysis of the 83,000 respondents’ reported life satisfaction and their characteristics yielded valuable insights into the drivers of life satisfaction. The survey gathered information on each respondent’s characteristics, such as age, income, education, and perceived mental health, their city-region, and the percentage of local population born in Canada and abroad.

The good news is that the vast majority of Canadians reported high levels of satisfaction — 91.2 per cent of Canadians indicated being “very satisfied” or “satisfied” with their “life in general.” This is consistent with Canada’s scoring near the top in global surveys of life satisfaction.

At first glance, people living in smaller, less populated settings appeared happier. On average, Ontario and British Columbia respondents reported slightly lower rates of happiness, while those elsewhere answered more positively.

People in larger cities like Toronto and Vancouver were less likely to report being happy.

But most of these apparent place-based differences are explained by deeper statistical analysis.

CSLS applied various statistical techniques to identify important variables for individual happiness. The factors that consistently increased individuals’ reported happiness included perceived better mental and physical health, higher income, being married, being born in Canada, a high sense of belonging to a local community, and not being stressed.

How does this square with the Task Force’s recommendations for greater prosperity?

Higher personal income is associated with higher reported happiness. Higher provincial or national economic success helps achieve high-quality mental and physical health care — two very important factors for happiness.

Since higher stress reduces happiness, does that mean the Task Force recommendations aimed at increasing competitive pressure in our economy are counter-productive? Not necessarily. Many other factors affect individuals’ stress levels, and we cannot be certain that less competition in our day-to-day lives will increase our happiness.

We already know that recent immigrants face challenges in economic integration; these results broaden the range of issues we need to address.

The CSLS report was also released today. It will be discussed at a public conference we are hosting on Dec. 1 in Ottawa — with experts in various facets of happiness and economic progress exploring the kinds of public policy initiatives we Canadians should be considering.

James Milway is the executive director of the Institute for Competitiveness & Prosperity competeprosper.ca.

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