International differences in the quality of government – as assessed mainly by outsiders
and published by the World Bank – are far more important than international differences in
GDP per capita in explaining differences in people’s reported life satisfaction. That is one of
the research findings reported by Professor John Helliwell, writing in the March 2006 issue
of the Economic Journal.
Helliwell reports results from recent empirical research on the determinants of subjective
wellbeing, and sketched some implications for public policy. The results also suggest that
measures of ‘social capital’ – including especially the corollary measures of specific and
general trust – have substantial effects on wellbeing beyond those flowing through
economic channels, as measured by incomes and employment status. These results are
based on national and international samples.
There have been sceptics about wellbeing data, both within and outside economics. They
doubt whether answers to subjective questions about life satisfaction can provide a reliable
basis for anything. If subjective wellbeing is so high in Sweden, some ask, why do Swedes
commit suicide so often?
That query sparked parallel analysis of wellbeing and suicide data for fifty countries.
Sweden turned out to fit both models very well. The country’s very high ranking on the
wellbeing scale, compared with their more average ranking in suicide rates, is explained by
the fact that Sweden is especially strong in those variables that are more important for
wellbeing than for suicide – such as quality of government – and has relatively low belief in
God and high divorce rates, both of which variables are more important in explaining
suicide than wellbeing.
In other research, Canadian wellbeing data have been used to estimate the incomeequivalent
value of a variety of non-financial aspects of jobs – what have been referred to
as ‘compensating differentials’. The results show very large estimates of the value of social
capital in the workplace.
For example, to have a job in a workplace where management can be trusted affects life
satisfaction as much as an income change larger than the average salary. These values
are so large as to suggest the existence of unexploited opportunities to improve both
employee satisfaction and enterprise efficiency.
In short, recent wellbeing results suggest renewed policy emphasis, in both the public and
private sectors, on the social and institutional contexts within which firms and governments
operate. Beyond this potentially vast, but largely unstudied, set of process improvements,
there is an additional range of policy issues. These relate to the collection of data and the
construction of research and policy agendas.
Since subjective wellbeing measures are plausibly linked to the underlying ‘utility’
experienced by individuals, and because such measures are very cheap to collect in the
context of established surveys and pilot projects, there is scope to increase the amount of
wellbeing data available to aid future analysis.
In particular, Helliwell argues that policy interventions should be routinely accompanied by
initial and posterior measures of wellbeing, using questions matched to those used in the
regular large scale surveys.
On a more ambitious scale, large census-linked surveys of social capital and wellbeing,
ideally collected as elements of existing surveys, offer the potential for developing
community-level measures of social capital and wellbeing that can supplement the existing
set of census-based community-level data.
ENDS
Notes for editors: ‘Wellbeing, Social Capital and Public Policy: What’s New?’ by John
Helliwell is published in the March 2006 issue of the Economic Journal.
Helliwell is at the University of British Columbia.
For further information: contact Romesh Vaitilingam on 0117-983-9770 or 07768-661095
(email: romesh@compuserve.com) or John Helliwell via email: john.helliwell@ubc.ca