from the Wellbeing policy tools course held by the What Works Centre for Wellbeing and the Centre for Economic Performance on 4 Oct 2017

1. Priorities for improving wellbeing
Policy-making to Maximise Wellbeing
What Works Centre for Well-Being
October 4th 2017
Andrew E. Clark (Paris School of Economics – CNRS, and
London School of Economics)
http://www.parisschoolofeconomics.com/clark-andrew/

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• Economics has started to take subjective
well-being (SWB) seriously
• There has been an explosion in the
literature over the past 25 years.
• Four of the 20 most-cited articles ever
published in the Economic Journal
explicitly have the word “happiness” in
their title.
• Two of the four most-cited articles in the
Journal of Public Economics are on SWB

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We believe that policy can learn from this
outpouring of research on the sources of
SWB
I will here summarise some of the results
from our own and others’ work, although I
cannot of course do justice to the breadth
of the findings in 30 minutes

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To organise our thoughts, I have split up
the analysis into four sections, inspired by
the figure below:

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1) Contemporaneous Adult Outcomes:
own and others’

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We use British Cohort Study data to
evaluate the effect on adult life satisfaction
of changing adult outcomes, holding the
individuals’ childhood outcomes and
family background constant.
We also consider data from the British
Household Panel Survey.

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What makes a happy life: an illustration

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What makes a happy life: an illustration

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These results come from multiple
regression analysis of adult life
satisfaction using many (tens of)
thousands of observations
These show how the well-being of adults
is affected by many different adult
outcomes at the same time: we jointly
consider the many potential adult causes of
well-being

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Some of you may be used to statistical
analysis relating own life satisfaction to
own income, employment, marital status
etc.
But what is happening in the second
column of this table?

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What makes a happy life: an illustration

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One of the most important lessons we
learned:
The effect of my own behaviour/outcomes
on others’ well-being is as important as the
effect on my own well-being

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This is well illustrated by the Easterlin
Paradox.
• Richer individuals are happier than
poorer individuals.
• Yet, as countries grow richer over time
they do not seem to become happier
The paradox can be explained by your
income making you happy but me unhappy

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GDP per head and Average Life Satisfaction

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We find consistent comparison-income
effects across four countries
Comparison income here is average
income in the same sex, age group, region,
and year in question

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Analogous results are found for education
Potential offsetting external education
effects: better-informed voters; tax
externalities via higher incomes; less crime

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On the contrary, some adult outcomes
have the same effect on the individual
concerned and on others.
• Unemployment and crime (both
negative)
• Partnership (both positive)

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The relative size of these different adult
outcome variables in BCS data (ages 34
and 42

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2) Past Adult Outcomes
Does the past continue to affect well-
being, even conditional on current
outcomes?
We first consider adaptation. Do we get
used to our current outcomes?
If so, the correlations described above are
not a good guide to policy, as the effect of
income or unemployment (say) will fade
away over time.

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There is evidence of adaptation to children

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And to separation

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And to widowhood

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But we do not adapt to unemployment

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Nor to partnership

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Or poverty
Poverty starts bad and stays bad
-0.4
-0.3
-0.2
-0.1
0
0-1 1-2 2-3 3-4 4-5 5+
Whole Sample Men Women

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6
The second way that the past can continue
to affect the present is through scarring.
The estimated effect of a past year of
unemployment is about ten percent of the
size of the effect of current unemployment
Similar analyses could be carried out for
past health problems or poverty (holding
current health and income constant)

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3) We can trace adult life satisfaction back
to family (incl. schools) and childhood.

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Effect on adult
life satisfaction (0-10)
Qualifications 0.13***
Behaviour (16) 0.06∗∗
Emotional health (16) 0.18∗∗∗
Changing adolescent outcomes, given the
family background, has a significant
effect on adult life satisfaction

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9
Equally, these adolescent outcomes are
themselves driven by a number of family
characteristics.
This allows us to see what would happen
to children (and so the adults they become)
as family characteristics change

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Effect on adolescent outcomes
Emotional Behavior GCSE score
health at 16 at 16 at 16
Family income 0.07 0.08 0.14
Mother’s MH 0.16 0.17 0.03
Parental Conflict −0.04 −0.14 −0.01
Family background, well-being and parental
style predict adolescent outcomes

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Effect on adolescent outcomes
Emotional Behavior GCSE score
health at 16 at 16 at 16
Primary school
quality 0.27 0.32 0.21
Secondary school
Quality 0.28 0.31 0.38
Schools are fantastically important

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2
We can also trace the impact that
individual primary school teachers have on
children, which is even larger on their
children’s emotional health than on their
learning of math. The effects of primary
school teachers can be detected 10 years
later.

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4) So much for the individual herself:
What about the society in which she lives?
Work here has related aggregate (country-
level) variables to individual SWB
- Richer countries are happier than poorer
countries.
- Although the question of income
distribution is very vexed…see Clark and
D’Ambrosio (2015).

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- In Di Tella et al.’s life-satisfaction
regressions both unemployment and
inflation reduce WB (the former twice as
much as the latter).
- There is good and careful work on the
importance of climate, green spaces and
pollution
- As well as the size and quality of
government, direct democracy, the
government’s welfare-state position and
the progressivity of taxation

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An obvious example of others’ negative
behaviour is crime.
We calculate that each crime is associated
with lower criminal’s own cumulated life-
satisfaction by 0.3 point-years; this effect
is far smaller than that on the rest of the
population, which we calculate as 1 point-
year.
Most of the well-being effect of crime is
on others

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We can consider societal social behaviour:
generosity, volunteering, political
participation, and sociability.
These are all defined at the aggregate
level.
Across countries, these are important
predictors of life satisfaction

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Gallup World Poll Cross-country correlates of
life satisfaction

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Many more details
on the analyses we
have carried out
appear in our
forthcoming book:

39. For a draft copy, please write to: H.Ogborn@lse.ac.uk