employment – and explore what overarching policy approaches might look like if they were informed by well-being evidence.
Income, equality and redistribution
With an evidence-based well-being approach, policies around income distribution could look very different to the way they do now. Well-being evidence points to the diminishing marginal returns to income: across a population, the relationship between income and well-being is not linear but logarithmic, so that income has an increasingly weaker effect on well-being as you travel up the income spectrum. The strongest impacts of income on well-being are for those people with least income.
' The strongest impacts of income on well-being are for those people with least income '
This sort of relationship has been a standard assumption within economics, and the standard economic argument is that a certain amount of inequality is needed to generate a decent income for all( through allowing for investment and growth), and therefore there is a trade off if you wish to maximise well-being. But well-being science provides empirical data on the shape and position of the marginal utility of income curve, and it indicates that the optimum level of equality is high. This is because the growth that inequality generates is not so important – it doesn’ t contribute much to improving well-being – what matters is increasing income amongst the less well off. This is more easily done by redistribution. Hence the redistribution of wealth away from the top of the income spectrum and towards the bottom – through progressive taxation – is likely to have an overall positive effect on levels of wellbeing.
Unfortunately, arguments about the effects of income and economic growth( about which the evidence is more mixed) on wellbeing have become something of an albatross around the neck of well-being advocates. They have been caricatured to the extent that proponents of the well-being agenda are sometimes mistakenly understood as saying that‘ money doesn’ t matter’, and worse that it’ s ok for people to be poor. Let us be clear: income matters. And it matters more in terms of generating well-being at the bottom end of the income scale than it does at the top.
Moreover, using well-being evidence to inform policy is not – as has been intimated – about making people accept conditions of poverty with a smile on their face, nor about diverting people’ s attention away from the harmful effects of austerity. Cameron’ s announcement about the national initiative came in the midst of other announcements – about massive cuts in public spending, and consequently the two agendas may have come to be viewed by some as parts of the same whole. But the well-being agenda pre-dates the current government, with considerable attention paid to it across Whitehall under New Labour, and no doubt advocates will continue to promote it regardless of party politics.
' Using well-being evidence to inform policy is not about making people accept conditions of poverty with a smile on their face '
The idea, based on well-being research, that in order to improve overall population well-being, effort should be put into improving the lot of the least well-off clearly chimes with what Michael Jacobs refers to as‘ Labour’ s goal’ of‘ not just raising average incomes, but specifically the welfare of those at the bottom of the income distribution’. revolutionise. it 55