Sunday, March 04, 2018
Don't worry, be happy - even when confidence is weak
Posted by David Smith at 09:00 AM
Category: David Smith's other articles


My regular column is available to subscribers on This is an excerpt.

If we’re happy and we know it we should probably clap our hands, as I think I remember singing many years ago. And, however you may feel today, the official verdict is that we are indeed getting happier.

Thanks to an initiative a few years ago by David Cameron, the former prime minister, the Office for National Statistics now measures happiness, alongside whether life is worthwhile, life satisfaction and anxiety.

The latest results, just released, show that in the year ending last September there were what the ONS described as slight improvements in all these wellbeing measures.

Anxiety has risen over the past two years, is higher among women than men, and is only up compared with when it was first measured in 2011-12 among the young, those aged 16 to 24, and the old, those of 90-plus. High anxiety, as in the Mel Brooks film, has been broadly stable.

Though the measures only go back a few years, you could say that we have never felt happier since records began. Many would choose to go back a bit further, perhaps to the 1950s, for a time when they were really happy and you could leave your back door unlocked at night. Even then, however, Harold Macmillan had to reassure voters that they had never had it so good.

Only after a longer run of data will a fuller picture emerge. It is worth saying that the survey was launched when things were pretty grim, a combination of high inflation and a lot of worries about unemployment and austerity.

The official happiness measures raise some questions. How do the statisticians know? And how do we square rising happiness with other measures, like consumer confidence, which suggest people are feeling squeezed and rather miserable?

The answer to the first is that the ONS carries out a survey of a sample of people aged 16 and over. They are asked to respond to four questions: how satisfied are they with life, whether the things they do are worthwhile, how happy were they yesterday and how anxious did they feel.

They respond on a scale of 0 to 10, 0 being not at all happy and 10 being delirious, or at least completely happy. The latest average scores are 7.52 for happiness, 7.69 for life satisfaction, 7.87 for life being worthwhile and 2.92 for anxiety. It is not rocket science, but it is an approach that gives you usable measures.

How do we square it with weak consumer confidence? Consumer confidence, measured since the 1970s by GfK, dropped by a point last month to an index reading of -10. It has been depressed since the EU referendum, as retailers know to their cost. Can people be simultaneously be happy and lacking the confidence to spend?

Yes they probably can. For one thing consumer confidence is an economic measure while life satisfaction and happiness are far wider. For another, confidence has fallen but from a high base. 2015 was the best year for confidence in the 40-plus years the survey has been conducted.

It is also the case that weak confidence reflects, not people’s own financial wellbeing, but their perception and concerns about the wider economy. This disconnect, not uncommon in surveys, shows that a net 5% of people are confident about their own financial situation over the next 12 months, while a net 26% think the economy will do worse. They are taking the view that, if their fears about the wider economy are justified, they will not be the ones to suffer.

When, all those years ago, Cameron announced funding for the ONS to develop happiness measures, he was accused of trying to divert attention away from the economic data. He insisted that it was not but that it could “lead to government policy that is more focused not just on the bottom line, but on all those things that make life worthwhile".

That is the focus of a book I attended the launch of a few weeks ago at the London School of Economics and have been meaning to write about since. The Origins of Happiness, by Lord (Richard) Layard, Andrew Clark and colleagues, looks at happiness and well-being and addresses the question of whether policy should be directed more towards it.

It begins from a characteristic common to many happiness studies that, notwithstanding recent improvements, huge increases in living standards in recent decades have not produced much of an increase – and in some studies have resulted in a decrease – in happiness. You can explain this by reference to the hedonic treadmill, the tendency for happiness to revert to its previous level even after big positive or negative events. Or it can be explained by the “money does not buy happiness” Easterlin paradox, under which, after a certain point, increases in income do not make people happier.

The authors of the Origins of Happiness say public policy should shift its focus from wealth creation to wellbeing creation. I don’t think that is going to happen, particularly with the current crop of politicians. But there are useful and relatively inexpensive things that governments can do. Depression and anxiety are major causes of unhappiness. Modest additional investment in what used to be called the talking cure could help.

The break-up of relationships is a major cause of unhappiness, for couples and for children and, on the face of it, there is not much that government policy can do about it. But the authors argue that more investment in relationship and social skills, at an early age, can make a significant difference. Maybe cramming young people with too many exams is counterproductive.

They also have the striking finding that emotional health at the age of 16 is a far more important than academic qualifications up to the age of 25 in determining whether people will live satisfying adult lives. Investing in the emotional health of young people will pay dividends in the long run.

There is another striking finding, enough to make any politicians sit up and take notice, which is that in elections in Europe since 1970, life satisfaction is the best indicator of whether a government gets re-elected. In that respect, rising happiness is good news for Theresa May. But then it was rising last June, and we saw what happened then.