Hamish McRae: How to improve the lot of humankind - the guidelines

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The Independent Online

The noise of the past 10 days – our Budget, Cyprus – drowned out the news of the next stage of an important OECD initiative, the publication of guidelines to promote well-being.

The idea is simply that narrow measures of economic progress, notably GDP figures, unemployment and so on – fail to capture other softer indicators of a society's progress. There has been a huge amount of stuff about happiness but the OECD argues that the wider concept of "subjective well-being" is a better measure.

One trouble is that its definition is a bit convoluted: "Better mental states, including all of the various evaluations, positive and negative, that people make of their lives and the affective reactions of people to their experiences". You can sort of see what they are getting at and maybe it sounds better in French (the OECD is based in Paris) but the words get in the way of the idea rather than clarifying it.

It gets worse, because in trying to explain the importance of including a sense of purpose in life in the evaluation, the OECD, says subjective well-being should include three elements: "life evaluation", "affect", and "eudaimonia".

Oh, dear. Part of the problem of economics is that given half a chance we use words no one understands. Collins doesn't include eudaimonia, but in the Shorter Oxford Dictionary it is "happiness or well-being consisting in the full realisation of human potential". So it is actually a useful concept. How do you pin it down?

Here the work of the OECD is helpful because it sets out guidelines on how to collect data: what questions to ask and in what order, how to train the questioners and so on. One possible template is the so-called Pisa study of pupil attainment at age 15, which the OECD started in 1997 and is now massively useful as it gives a feeling for school standards across the world.

So let's give the project a cautious welcome. It gets economists away from the obsession with GDP and brings the subject back closer to where it began, which was to find ways to improve the lot of humankind.