Jobs and wellbeing

Work is pain; money is pleasure. Or so mainstream economic theory would have it. But our experiences don’t quite match the theoretical models.

Picture the proverbial old guy who just couldn’t retire. Turns out, he’s not that odd. People value the activities of production along with the joys of consumption. And each in nuanced ways.

Research on subjective wellbeing — how we each experience the quality of our lives — is expanding greatly. In this post, I scan the wellbeing literature as it relates to work. And find some surprises.

A pioneer in this field has been Yale political scientist Robert Lane. Here is Lane, from his 1992 paper, “Work as ‘disutility’ and money as ‘happiness’: Cultural origins of a basic market error”:

The market economists’ hedonic equation, namely, money and leisure are the pleasures that reward people for the pain of work, has been shown in recent research to be erroneous. Beyond a decent minimum, increased income contributes little to happiness (subjective well-being) and often a person’s actual working activities are enjoyed more than are leisure activities. Achievement at work is a much more important source of happiness than is a high standard of living. But market institutions and market economics cannot accommodate the idea that work is rewarding in itself or that money is not the principal source of utility.

And from his 1991 book, The Market Experience:

The premise of this book is that the market should be judged by the satisfactions people receive as a consequence of their market experiences and by what they can learn from them. I would substitute these criteria for the current criterion: efficiency in producing and distributing goods and services.

The UK-based new economics foundation (nef) has been a leader in compiling and interpreting wellbeing research. On the subject of work — or, conversely, unemployment — here key findings from their April 2012 report, “Well-being evidence for policy: A review” (pp.20-23):

  • Compared to their employed counterparts, unemployed people have lower well-being.
  • The loss of well-being far exceeds that expected from the reduction in income from unemployment.
  • Although some people with lower well-being may be more likely to become unemployed, these ‘selection effects’ do not explain the size of the relationship between unemployment and well-being.
  • Unemployment also affects the subjective well-being of those who are employed and live in regions with higher unemployment rates.

This last point should come as no surprise. The social pressures of joblessness are broadly felt in the U.S., let alone in countries with double-digit unemployment.

Given these growing understandings about the importance of work for personal and social wellbeing, what needs to change? Obviously, a greater focus on jobs, as we’ve been hearing from all sides of the U.S. political spectrum. How about deeper institutional changes? What would they look like?

One approach is job sharing or flexible work arrangements — basically, working less individually so that available opportunities are spread more broadly.

nef has been an advocate in this area as well. “A ‘normal’ working week of 21 hours could help to address a range of urgent, interlinked problems,” they write, including: “unemployment, over-consumption, high carbon emissions, low well-being, entrenched inequalities, and the lack of time to live sustainably, to care for each other, and simply to enjoy life.”

Economists and advocates Juliet Schor (“The 80% solution”) and John de Graaf and David Batker (“Americans Work Too Much for Their Own Good”) offer similar arguments.

The Netherlands is the poster child for workplace flexibility, referenced by both Schor and de Graaf-Batker. There, workers’ rights to part-time work are the law of the land (details here).

I’ve been sympathetic to these arguments. To be sure, current levels of social inequity are harmful, and ecological conditions are looking risky. “Slow down and smell the roses” seems like very good advice.

Yet, the nature of work is anything but simple, and so I was intrigued to come across a somewhat divergent case, discussed by University of British Columbia economist John Helliwell, who was lead editor on the recent UN-commissioned World Happiness Report.

In a 2011 paper, “How Can Subjective Well-Being be Improved?” (pdf), Helliwell looks approvingly — not at the Netherlands, but — at Korea.

He praises the South Korean response to the 2008 financial crisis:

In 1997-98, facing a … large drop in the external value of the won, South Korea instituted very tight monetary and fiscal policies, leading to sharp drops in consumption and employment [i.e., austerity — ed.]. This was a conventional package, at the time, for a country with a currency under external pressure.

Between then and 2008, it was recognized that the predominantly growth-oriented economic policies were not producing correspondingly better lives. Per capita incomes had indeed increased several-fold over the preceding twenty years but reported satisfaction with life was declining. When the 2008 crisis hit, a new strategy was constructed. It had features that could be taken straight from an SWB [subjective wellbeing] playbook.

Recognizing the high SWB costs of unemployment, the government acted to encourage both public and private employers to maintain employment, and to use their temporarily spare capacity to design and implement industrial changes for a Green Korea. “The ‘grand social compact’ which was agreed to in February 2009 set a guideline according to which the social partners should negotiate employment retention as a quid-pro-quo for wage concessions” (OECD 2009 pdf).

The Korean formula, in a nutshell: the largest fiscal stimulus package among OECD countries, coupled with a “grand social compact” to keep people working and avoid layoffs, in exchange for worker agreement to wage cuts (OECD 2009 pdf). Today, Korean unemployment is at 3.4 percent, down near pre-crisis levels (OECD 2011 pdf), and the lowest among the 34 OECD countries (OECD 2012 pdf).

It’s worth noting that in Helliwell’s praise for Korea, he continues to cite GDP as a measure of social and economic success — whereas nef and others engage in campaigns against the legitimacy of the standard measure.

Still, check this out. On the nef Happy Planet Index — which combines metrics for wellbeing, life expectancy, and ecological footprint — Korea gets a score of 43.8, slightly better than the Netherlands‘ 43.1 (and ahead of the U.S.’s 37.3).

Food for thought.

Image source: UN-commissioned World Happiness Report

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