Write a report that examines the extent to which increased prosperity in the UK has been accompanied by an increase in happiness.

Write a report that examines the extent to which increased prosperity in the UK has been accompanied by an increase in happiness.

Prosperity accompanied by happiness in the UK

Introduction

This report will explore the UK economy and its relationship between recent change, the environment and increased wellbeing. We will look at three different ways of measuring and presenting economic growth in an attempt to examine the extent to which increased prosperity in the UK relates to an increase in happiness.

What is an Economy?

An economy is a variety of activities that amount to the production of goods and services e.g. food, clothing, health care etc.
Also, an economy is the distribution of produced goods and services – managing whom may have access to them and in what proportion.
The exchange of goods and services be that through buying and selling, through government taxations or through household work carried out; is also economic.
An economy covers consumption of goods and services.
Economics function at many interactive levels too, from Household economics, Firms, Local/Regional, to global economics.

The UK economy and environmental impact

The UK is a developed economy with individuals earning high levels of income. It is an open economy, meaning it is free to trade goods and services overseas. A key feature of this is the UK’s openness to inward and outward foreign direct investment (FDI). The UK specialises in producing services and has done so since the governance of the conservative party under Margaret Thatcher (1979-90).

Average Income Increases
According to data from the Office for National statistics, the average income of UK citizens has increased more than double since the 1980’s. Data also suggests, “full-time employees were on average 62% better off in 2011 than in 1986.” (ONS, 2012, p.1)

Luxury Items
As a result of such income increases, people generally tend to have more luxurious items as they did years ago; items such as electronic goods, designer clothing, and a vast array of household appliances. Generally, food is more widely available at a lower cost and access to exotic foods is greater.

Living for Longer
People in general, tend to be living a lot longer too. In 2008 a 21-year-old male would be expected to live to the age of 79+ compared to a 21-year-old man in 1981 who had a life expectancy of 72.

Consumption as an effect
As economies and people become wealthier, an increase in the consumption of luxury items such as electrical goods, vehicles and air travel, can be seen. In turn, this increases the volume of pollution being created. Often politicians can be heard using the term ‘trade off’ when considering the growing economy’s needs against concerns of environmental pollution.

Measures of Economic Growth

There are several different ways of measuring and presenting data of economics. Here we will look at some examples.

Gross Domestic Product (GDP) Outward FDI
GDP is the measurement of the total market value of produced goods and services within a country during a particular time frame e.g. a year. When we consider investments based in the UK acquiring long-term interest overseas it is known as outward foreign direct investment (FDI). In 2003, the UK had an outward FDI of 60% suggesting that households and firms own more assets overseas than UK assets owned by people and firms overseas. A large percentage of this FDI relates to the UK’s production of services.

Gross Domestic Product (GDP) Per Capita/Head
The division of the total economy by the total population equates to the level of GDP per head. This data is often used to consider the size of countries and the nations or regions within a country. In 1997, the UK had a GDP per capita of $22,312 , in 2005 this had increased to $32, 860. (OECD, 2007b, cited in Fribbance, 2009, p. 26)

Gross Value added (GVA)
The UK is made up of different regions and nations. The measure used to compare the economic growth of these is called Gross Value Added (GVA). When looking at GVA per head in the UK as a percentage, it can be seen that London has a much higher level of GVA compared to Wales and the North East of England presenting the lowest. Northern Ireland presents GVA level that is 20% lower than London and Scotland fairs very close to London’s GVA percentage. (ONS, cited in Fribbance, 2009, p.27)

Gross National Income (GNI)
In an attempt to understand how well off people in particular countries are, social scientists are interested in looking at different types of data. In order to get an idea of how much more or less economic output (money received from and paid out to, other countries) the UK has, compared to other countries, a measure called Gross National Income can be used.

Average measures, strengths and weaknesses

It is not always ideal, to rely on these particular measures, to determine how happy or well off a particular country nation or region are; this is due to a number of factors.

1. These measurements are averages and could potentially be hiding many different levels of inequality within individual countries e.g the unequal distribution of money exposing individuals to extreme poverty.

2. The measures do not take into account the creation of pollution, waste; socially corrupt activities such as the sale of weapons and drugs or environmentally damaging issues, for example the cutting down of the rainforest with no plan or intention to renew them.

3. Figures of GNI and GDP do not highlight how long individuals have to work in order to create the economic output that encompasses the UK National Income. An individual may find themselves financially better off due to working long hours but are they happier than an individual from a different country, working fewer hours that may argue to have a better quality of life? The answer to this question cannot be found or measured by GDP alone.

In light of this, wider questions relating to measurement of happiness must be explored. In order to do so, social scientists often observe measurements in other countries to make comparisons. The United Nations Development Programme has created a measure known as the Human Development Index (HDI), in order to seek a broader view of overall wellbeing. HDI is made up of GDP but also includes measures of the environment. GDP in the UK has increased, individuals are richer, have greater access to luxury items and are living longer; but are we happier?

Social Scientists
Social scientist Richard Layard uses empirical research to support his claim that people do not seem to become any happier with increases of income. Layard believes that the pursuit of happiness itself can often be responsible for making people unhappier. Layard also suggests that societies should focus on values such as equality, fairness and trust in order to achieve increased happiness.

Opposite to Layard’s view, American economists, Stevenson and Wolfers, argue that their empirical research supports their claim that there is a defined link between levels of wellbeing and GDP per head. These economists argue that the richer you are the happier you will be and that this is the case, even in the highest levels of earning.

Conclusion

In this report, we have examined the UK economy, its relationship and impact on the environment, measurements of economic data, and what the social scientists and economists think; in order to explore the relationship between increased prosperity and increased happiness in the UK.

To conclude, it is vital to highlight that while economic measures suggest individuals within the growing economy of the UK are better off than 20 years ago, whether or not we are happier is an open ended question to which there is constant debate and rethinking, as can be seen by the conflicting views of Layard and Stevenson and wolfers.

References

Fribbance, I. (2009) ‘The changing UK economy: making a greener and happier society?’, in Bromley, S., Clarke, J., Hinchliffe, S., and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University.

Office for National Statistics (ONS) (2012) http://www.ons.gov.uk/ons/dcp171776_28266.pdf (Accessed 3rd March 2014)

References: Fribbance, I. (2009) ‘The changing UK economy: making a greener and happier society?’, in Bromley, S., Clarke, J., Hinchliffe, S., and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University. Office for National Statistics (ONS) (2012) http://www.ons.gov.uk/ons/dcp171776_28266.pdf (Accessed 3rd March 2014)