The happiness budget

EUROPEAN COUNCIL
THE PRESIDENT
Brussels, 23 May 2011
PCE 122/11
"THE HAPPINESS BUDGET"
speech by
Herman VAN ROMPUY,
President of the European Council
Ladies & Gentlemen, Dear Lord Layard, I too am an economist. I obtained my master's degree in
economics at the Catholic University of Leuven. What's more, I am the son and a student of a
former professor and Dean of the Faculty of Economics at that same university. My father, the late
Victor Van Rompuy, was not only an academic. He set great store by strong links with political and
social decision-making. He fully understood that economics is about people. It is a human science.
And people are impelled by many different motives, with material well-being an important element
but by no means the sole determinant. The Homo Oeconomicus can explain a lot, but cannot grasp
the turning points in economic history. The latest evidence is the financial crisis: it had nothing to
do with rational behaviour.
When I read your book, Happiness, a few years ago, the observation that even these days economics
professors are emphasising that economics is not driven by financial interests alone, almost made
me happy. My father would have liked your book and your message very much.
The chart that forms the basis of your book shows that in the USA prosperity has more than doubled
over the past fifty years, while the sense of happiness has stood still. You add that in continental
Europe, where regular data only became available from 1975, the picture is a little rosier. In many
countries, particularly Italy, a slightly upward happiness trend is perceptible, but in Belgium the
trend is sharply downward. In general, however, the change in happiness is awfully small by
comparison with the enormous increase in prosperity.
This chart corresponds to many people's gut feeling. Once we reach a certain level of prosperity,
increasing wealth contributes to happiness less and less. The extra amount of happiness we derive
from an extra unit of prosperity steadily decreases. In Robert Lane's words: "Once you climb above
the poverty threshold, additional income makes almost no contribution to greater happiness."
P R E S S
FOR FURTHER DETAILS:
Dirk De Backer - Spokesperson of the President - +32 (0)2 281 9768 - +32 (0)497 59 99 19
Jesús Carmona - Deputy Spokesperson of the President +32 (0)2 281 9548 / 6319 - +32 (0)475 65 32 15
e-mail: [email protected] - internet: http://www.consilium.europa.eu/
Economic growth and prosperity can never be an end in themselves. They must always be a means
to create more jobs, health, freedom, welfare, quality of life and happiness. This conviction is
powerfully summed up in the one-liner "If money can't buy you happiness, you ain't spending it
right". People will continue to strive for more economic growth only if they are convinced that it
will produce increased happiness over time. Without a happiness dividend, the economic dividend
is unsustainable. There is a risk that, as the feel-good factor fades, economic growth itself will
suffer. At the end of the day, a humane economic growth is a condition for economic growth as
such. Growth at any cost will kill growth. A paradox!
The first effects of this increasing gap are already in evidence. Allow me to give a striking example
that I have taken from a remarkable analysis of the UK labour market. In 2006, 960,000 people in
the UK were receiving unemployment benefit. Yet in that same year over one million people were
receiving incapacity benefit for stress and depression . These telling statistics from the UK show
that a lack of well-being can have far-reaching repercussions for the labour market and hence also
for economic potential. Thus a well-being or happiness crisis also has an economic cost. These
figures show irrefutably that the economic drive is restrained not only by fiscal and administrative
thresholds but also by emotional limits. Clearly, economics too has feelings!
Please do not misunderstand me. It is my deep-rooted conviction that we must never allow the
economic foundation of our European society to be watered down. Nevertheless, some feel a great
temptation to argue that "with one percent less economic growth we can still be happy, can't we?"
My firm answer to that is no! We must not fall into that trap. Our economy must grow by at least 2
%. We badly need this 2 %, even if only to cushion the effects of population growth and ageing. In
those apparently trifling percentage points of growth lurks the difference between the survival of the
European social welfare state and its downfall. We need growth in order to underpin our social
model but growth itself needs also a typical European content.
We have to defend and to promote our "European way of life" and our model of political
democracy, social protection, economic dynamism and peace. We should not give lessons to the
rest of the world, but we may have a message. Various emerging countries and others may well be
champions in terms of economic performance, but not in terms of the just distribution of income,
democracy, the rule of law or ecology. The global economic competition is not just about profits, it
is also about the soul of the overall political model of society. But our own model suffers from a
lack of happiness.
In short, we should not see prosperity and well-being as rivals but as allies. The choice is not
between more prosperity OR more well-being. No, it has to become AND – AND. We must work
towards a policy in which prosperity and well-being are mutually reinforcing rather than competing.
To proceed further, we must first answer the question that is on everyone's lips here, and that is:
What is happiness? The poet Thoreau intriguingly defined happiness as follows:
Happiness is like a butterfly
The more you chase it
The more it will elude you
But if you turn your attention to other things
It will come and sit softly on your shoulder.
In some ways, serendipity is at work. You find what you do not look for!
2
There is nothing we desire more than happiness, and yet there is nothing that eludes us more.
Therefore one cannot simply legislate for happiness. Accordingly, the authors of the US Declaration
of Independence in 1776 did not refer to the right to happiness, but to the right to the pursuit of
happiness. In principle, everyone is free to strive for happiness in his or her own way. That is the
best guarantee of happiness.
Throughout the ages, people have sought happiness. Philosophers of all times looked for a
definition of happiness and a way to get there. Aristotle saw happiness (eudaimonia) as a
comprehensive life-project, the art of a successful life. It is a view of happiness based on inner
balance and a deep appreciation by other people. In the nineteenth century, happiness was led astray
to mean a purely subjective well-being. There are important differences between an objective view
of happiness (like Aristotle's) and subjective enjoyment; between happiness associated with
virtuous ethics and that without ethical reference. There is also a tension between short-term
enjoyment and a lasting happiness that spans a lifetime (eudaimonia or a good life). I will not
discuss this in depth, but happiness has to do with many aspects of life. It is about enjoyment, but
also about meaning and ethics.
Happiness is not an end in itself. Or, as Professor Philippe Van Parijs rightly puts it in his
contribution to The World of Happiness, happiness is a "welcome by-product" of doing good. It is
the pursuit of our dreams, ideals and values that ultimately delivers the "welcome by-product"
called happiness. Or as is stated elsewhere in the same book: "It is not happiness that leads to a
more meaningful life, but a meaningful life that leads to happiness".
Happiness can mean that you have to do things that may in themselves be unpleasant, according to
'normal' standards. For example, why do so many mountaineers want to climb to the top of Mount
Everest? Gasping for oxygen at 8,000 metres and risking your life at twenty degrees below zero to
stand on the roof of the world for a few minutes is not exactly my own idea of "bliss"… Yet
conquering Everest is the absolute pinnacle for every mountaineer. For those who succeed, it is a
source of satisfaction that they will carry in their rucksacks long after the event.
Happiness happens mostly when you do something for free, without expecting a material reward.
The famous French economist, François Perroux, wrote about "l'acte gratuit", -- those free deeds,
mostly in the realm of helping people. "GIVE AND TAKE" is the rule of negotiations, but
"GIVE" entails more satisfaction, more happiness. Lasting and sustainable happiness is mostly
oriented towards others. Whoever wants to save his ego will lose it. Again, a paradox!
So happiness is not something you can legislate for or strive for in a direct way, and it is certainly
not something you can buy, as the advertising would have us believe. It's not what you consume but
what consumes you!
To be happy, therefore, we should not so much look at what we are doing, but why we are doing it.
It is not the activities themselves that determine our level of happiness, but the values we wish to
realise thereby.
3
Striving for ideals and values can lead not only to greater happiness but also to another "by
product", namely economic added value. Thus the most successful enterprises often aim not only at
maximising profits, but also at creating economic and social added value. In just the same way as
the happiest people are often not those who pursue only their own happiness, but those who try
above all to do good for themselves and for others. John Kay said in his book Obliquity that everyday experience tells us that, while greed is a human motive, it is not, for the most part, the dominant
one. The richest men are not the most materialistic. And while there are people who are obsessive in
their greed, that obsession frequently destroys them -- or their organisation. Again, the financial
crisis is a terrible lesson. The most successful companies are often headed by entrepreneurs who are
"purpose-driven" as well as "profit-driven". Accordingly, the most efficient economic policy is
aimed not only at maximising profit but also at creating added value(s) for society.
Our European societies suffer from various ills to which politics must help to find an answer, but
not politics alone! Politics is in everything but not everything is politics.
On the one side, there is the feeling of unhappiness because we live in an envious society in which
people make constant comparisons and therefore create their own unhappiness. Income inequalities
are smaller in Europe than elsewhere in the world. Yet envy still plagues us. Competition motivates
us to "move forward", but too much competitiveness and jealousy undermine self-confidence and
are even economically unproductive. That is why new, large income differentials are not a "bonus"
for society, and we, in families, in schools, in the media, must learn what life really is and how to
give real meaning to our lives.
People must continue to look forward, they must be able to keep on hoping. In North Africa and in
many Arab countries people no longer had that hope. There can be no happiness without hope.
In the countries of Europe and within the Union, we must manage prosperity and the lack of
prosperity and help to guide it. Also, people must feel that their leaders are "guided" by a sense of
the public interest and for their "happiness". Motivation plays a part here, too. This is not just about
gaining the greatest number of votes. After a while people understand why politicians act. Yet even
with good intentions, failure is a possibility. But I know from experience that a short-term electoral
strategy leads to errors and electoral defeats, just as in the commercial world. Here too, the profitseeking paradox applies: the most profitable companies are not the most profit-oriented. Similarly,
the most electorally successful politicians and parties are not the most electorally-oriented. Those
who always try to please, to make people 'happy' are at the end not even respected.
In order to convince Europe's citizens that the endeavours of these times are worthwhile, this is the
moment for Europe to invest in a new, enticing economic and political dream. Or, in the words of
the French author Antoine de Saint Exupéry:
"Si tu veux construire un bateau,
ne rassemble pas tes hommes et femmes pour leur donner des ordres,
pour expliquer chaque détail, pour leur dire où trouver chaque chose...
Si tu veux construire un bateau,
fais naître dans le cœur de tes hommes et femmes
le désir de la mer."
"If you want to build a boat, then instil in the hearts of men and women a longing for the sea."
4
Let us build on that dream of a better European society. I am convinced that, as things now stand,
this dream can and must help to lay the foundation of a strong economy and that in time this will
also lead to that "welcome by-product" called… happiness.
Thank you.
___________________
5