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The economics of happiness and wellbeing

Professor Andrew Oswald’s pioneering research has shaped understanding of how economic outcomes affect individual happiness and has driven policymakers in the UK and abroad to adopt wellbeing as a measure of social progress.

What has the research shown?

Professor Oswald’s work has shown how people’s happiness correlates with personal characteristics (e.g. age and relative income), economic variables (e.g. inflation and unemployment), and measures of quality of life. In doing so he has challenged the assumption that rising productivity and Gross Domestic Product (GDP) necessarily imply that society is better off, highlighting the shortcomings of GDP as a measure of economic and social wellbeing.

What has happened as a result?

In the UK, Oswald’s work attracted significant attention across government. In particular, his public policy impact was reflected in the 2010 launch of the Measuring National Wellbeing Programme by the Office of National Statistics (ONS); Oswald presented his research to ONS staff and served on the ONS National Wellbeing Advisory Forum.

Internationally, Oswald was a member of the Stiglitz Commission on the Measurement of Social and Economic Progress, an early and prominent effort to better measure social welfare. The Commission concluded that both objective and subjective measures of wellbeing are important, and was instrumental in establishing an international agenda on measuring performance beyond GDP. Oswald’s research is referenced throughout its 2009 report.

The UN joined the movement with a High Level Meeting on ‘Happiness and Wellbeing: Defining a New Economic Paradigm’ in 2012. The first UN ‘World Happiness Report’ was published the same year, which cites Oswald’s papers throughout. Oswald is also referenced heavily in a number of publications on measuring wellbeing by the Organisation for Economic Co-operation and Development.

In addition, Oswald’s research has reached millions of people through extensive media coverage, increasing public understanding of the economic determinants of happiness and raising awareness of measures of social progress beyond income.

References to the research

1. Clark, A.E. and Oswald, A. J., 1996, Satisfaction and Comparison Income, Journal of Public Economics, 61, pp 359-381.

2. Oswald, A.J, 1997, Happiness and Economic Performance, Economic Journal, 107, pp 1815-1831.

3. Di Tella, R., MacCulloch, R. and Oswald, A. J., 2001, Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness, American Economic Review, 91, pp 335-341.

4. Di Tella, R., MacCulloch, R. and Oswald, A. J., 2003, The Macroeconomics of Happiness, Review of Economics and Statistics, v85, pp 809-827.

5. Blanchflower, D., and Oswald, A. J., 2004, Well-being over Time in Britain and the USA, Journal of Public Economics, v88, pp 1359-1386.

6. Oswald, A. J., and Wu, S., 2010, Objective Confirmation of Subjective Measures of Human Well-being: Evidence from the USA, Science, v327, pp 576-579.