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Tuesday, April 1, 2014

The Economics of Happiness

Moved by the suffering he saw in the world, a young prince reasoned that if he could kill desire he would be  eternally happy. A teacher’s voice rings through the ages “You lack one thing: go sell all that you have and give to the poor, and you will have treasure in heaven; and come, follow me”. The prince was Buddha and the teacher was Jesus.

Western thought philosophers have concerned themselves with the nature of happiness. According to Aristotle, it is for the sake of happiness that we all do everything else we do. John Stuart Mill and David Hume both held the view that the best society was one that had the greatest happiness for the greatest number.

The philosophy of happiness entered in politics and governance when US president Thomas Jefferson drafted the words of the in the American Declaration of Independence about life, liberty and the pursuit of happiness. Jefferson believed that happiness was the only legitimate objective of good government.

Many years ago, I thought there was an easy and tidy line between what one did, i.e., work for which one was paid and what made one happy. St. Augustine conceived happiness as the standard for all actions, not a means to an end. It is becoming increasingly clear that we need a very different model of our humanity. The proponents for a reformulation of the essence of our humanity have faulted material progress or monetary gains as a grossly limited formulation for measuring the sum of our worth and achievement.

The foundations of our conception of humans as purely rational thinkers, directed by conscious decisions have been shaken by the work of Daniel Kahneman.  In his book, Thinking Fast and Slow, Kahneman argues that we are combination of whim and rational thought, conscious and unconscious decision-making.

At a more fundamental level, happiness is the essence of our humanity. Going back to the subject of work for a moment, I have come to understand that it is not just doing something, which pays the most, but doing something that makes one really happy. But I am sure that if you are an employer or employee you might be interested in this. Economists have shown that people, who are happier, at work, earn more money and are 12 percent more productive at work.

Professor Ruut Veenhoven, Dutch Sociologist and pioneer happiness economist has shown that happiness is connected to economics and more. For instance it has been shown that happiness begets higher productivity and protects health. It has also been shown that happy people are more tolerant, which reduces aggression and social strife. Happy people make good citizens, who cheat less on their taxes. Moreover, happy citizens are less extremists in the political views and are more informed citizens.

The Gallup-Healthways Well-being Index showed in 2011 that between 2008 and 2011 Americans felt worse about their jobs and work environment than ever before. Across all ages and income levels, employees were apathetic about their organizations and detached from what they did. But here is why you must listen up if you are an employer.

Studies have shown that lower job satisfaction is a harbinger of poorer bottom-line corporate performance. According to Gallup, the cost of America’s work place apathy was a staggering $300 billion in lost productivity annually. When people do not care about their jobs or their employers their work quality suffers and they produce less.

As adults we spend most of our waking hours at work. Work should ennoble, not annihilate, the human spirit. Advancing and investing in employees’ well-being isn’t just nice and ethical; it determines your bottom-line and makes economic sense.

For employers, you do not get more productivity by paying more. Companies have increased income five fold not with bonuses but with compassion, good communication and greater autonomy. And in the words of Winston Churchill, we make a living by what we get, but we make a life by what we give.

Happiness and fulfillment come less from the scale of our material wealth and more from relationships we build. This reminds me of the king of Phrygia and his request to the Greek god Dionysus. King Midas asked that whatever he touched turn into gold. His wish was granted. But the king soon realized that it was a curse. 

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