Overall Well-being in the Virtuous Economy

Being the fourth of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

It is a debatable point as to whether broad based measures of wellbeing are or could be useful. Even the Benthamite concept of 'the greatest good of the greatest number' adopted by John Adams and Thomas Jefferson rather begs the question of what constitutes 'good' or indeed 'happiness' in 'life, liberty and the pursuit of happiness...'.

Indeed, shades of meaning have changed considerably over the years, more recently referring to a state of transient euphoria more than a stable contentment in the longer term and a legitimate pride in the real accomplishments of individuals, communities and society as a whole.

Having a job has an enormous impact on people's self regard and well-being. Therefore in any measures employment and wellbeing should be prominent and be policy objectives over and above GDP. Furthermore, as we have seen to our cost, GDP can incorporate unreal and undesirable activities.

Happiness itself however is very hard to quantify adequately - in fact it is probably easier to measure discontent. Happiness is also hard to sustain which is why the deeper seated rather than euphoric aspects should be emphasised.

Happiness can mean a great many things - from the bliss of the moment through the satisfaction of increasing achievements in the prime of life to a value judgement on one's life (and that of one's family) as a whole. In terms of happiness, what are the characteristics that we should value most? Personal satisfaction? The common good? Virtue? Liberty? Life itself? Pride in community and nation?

And equally importantly, society should consider those things that should not be valued? For example, people are not defined by what they own and unvalued items would certainly include those gains that result from unvirtuous qualities such as deceit, violence, exploitation, excessive self-reward and the degradation of the environment.

The more even and measured quality of contentment may give a better guide to overall well-being and the common good, overcoming variations of mood and short term fluctuations of fortune. Contentment, sustainability and the common good must be central to future social and economic assessments and underpin policy formation.

If numerical measures are to be sought beyond the simplest yardstick of life expectancy, while all societal measures are imperfect and can be open to misinterpretation and manipulation, any measure of the level of achievement, ‘satisfaction’ or 'utility' of the population in a virtuous economy should have properties that encourage respect for every member of society.

Therefore measures should certainly not be additive and in fact should take a multiplicative form, the better to reflect the detrimental impact on the common good of individual impoverishment. As an example, consider the simplest model:

V = abc

where V is the overall societal value for wellbeing and a, b and c are the levels of wellbeing for the three particular individuals that make up this modest society.

Thus, for example, if one person is totally neglected (so that one of these components takes a value of zero) the whole then also takes a value of zero.

Furthermore, the formula has the quality that if a particular action concentrates its benefit in one individual, then the gain for society will be less than if that same benefit were more evenly distributed amongst the population.

Consider an example, starting from a position in which the levels for the three individuals are a = 3, b = 3 and c = 3, we would then have an overall measure of 27 since:

V = 3X3X3 = 27

From this starting point, if the result of policy action (or inaction) produced three units of gain which were exclusively concentrated in one person only - say person 'a' - the society would then have reached the overall position of:

V = 6X3X3 = 54

In contrast to this, if the economy was organised so that the three extra units were distributed equally between all three citizens the position of society as a whole would then be:

V = 4X4X4 = 64

and a greater level of overall benefit for society will be indicated and policy measures to bring the about the more even spread would be prompted.

Of course, these are just very simple illustrations of one of the underlying principles only. But one further telling point at least is well worth re-iterating.

This is that if any one individual in the society has a well-being score of zero, that will necessarily result in a value of zero overall for the measure regardless of the levels achieved by other more fortunate members and will indicate necessary policy action and a direction in which to move.

The zero state, and positions near to it, are situations that should of course be eschewed and its avoidance is an absolutely essential factor in the proper workings of a virtuous economy and in any consideration of the common good. The construction of future measures of socio-economic performance should bear these considerations firmly in mind.