Money isn't everything

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A richer economy doesn't always equate with wellbeing and happiness, writes Rosie Walford.

Coromandel too precious to mine ceramic tile from Pauanesia. Photo / Natalie Slade
Coromandel too precious to mine ceramic tile from Pauanesia. Photo / Natalie Slade

When our politicians want to lay conservation land open for mining, they speak of "growing the New Zealand economy". At first this sounds like A Good Thing, and indeed, proper reasoning for a government to act upon.

"The economy" we hear about refers only to the market economy - the value of those goods and services that are exchanged for money. Its unspoken purpose is to maximise the value of these goods and services - assuming that the more activity there is, the higher the GDP and the better off we are.

But is this all that the economy is about? Or, is this what the economy should be about? Some of the things which make life most valuable cannot be expressed in monetary terms. What price pure drinking water, friendship, tranquillity, for example? Does our GDP really correlate with our wellbeing?

There's a deep assumption that material wealth is a path to happiness, that a country with a bigger GDP is happier. But scratch the surface of this assumption, and the cracks appear.

I wish everyone could see the graph drawn by Richard Layard, a British economist working with data from the World Bank. It shows that if income starts from a low level of physical comfort, more money brings more happiness. But soon, the correlation between satisfaction and wealth tails off. As average per capita income rises above $30,000, the curve on the graph turns flat: the extra happiness every dollar brings diminishes. Ratings of life-satisfaction in people with $30,000 and $120,000 are virtually the same.

At some level, we've all fallen for a shaky promise. I've seen many people, including myself, chasing after money or business success thinking it will bring the security, joy or approval their heart is seeking. Yet wealth rarely quenches our heart's thirsts - or if it does, not for long.

Nor, as it turns out, does a richer economy deliver wellbeing for society as a whole - indeed, it may actually make us feel worse. In the current edition of Economic Journal, economics professors Curtis Eaton and Mukesh Eswaran show with mathematical models that as a nation becomes wealthier, consumption shifts increasingly to buying status symbols with little intrinsic value - lavish jewellery, designer clothes and luxury cars. Despite the short-term deliciousness of these buys, the researchers warn: "These goods represent a 'zero-sum game' for society: they satisfy the owners, making them appear wealthy, but everyone else is left feeling worse off."

The strange thing is, we weren't born consumers and employees, but that is what most of us have become. We are socialised through our families, media and institutions to adopt norms and values which are essential for The Economy.

I wish we'd question that conditioning. As humans we privately ask very different questions when we evaluate the health of New Zealand - how well educated are we? What are our levels of violence, depression and substance abuse? How much time do parents get to spend with children? Do people feel over-worked? How cohesive are our communities? Do we have rising or falling feelings of satisfaction and achievement? Are we leaving the land to future generations in decent condition?

The sustainability movement started to ask such questions. It encouraged businesses to explain their performance, not just financially, but in terms of a triple bottom line. Adding social and environmental reporting to the Economic expanded our sense of what we should include in shopping decisions and measurements of success. But still we blur ends with means. While social and environmental wellbeing are genuine desirable endpoints, economic wellbeing is only a means - uncertain at that - to achieve those ends.

So, when we as readers and voters hear National's reasons for mining parks or developing rural zones, we need to remember that being good for the economy is not alone a virtue. There's so much more to ask. Are they suggesting we live off income or natural capital? How much soil, forest and water is spoiled through our activities? Does it point us towards meaningful living that enriches our lives long-term? Will it make society - as a whole - happier?

Our politicians bank on us swallowing one outdated assertion - that economy is king - and it really isn't serving us well.

British archbishop Rowan Williams puts matters straight: "The economy is a wholly owned subsidiary of the environment. The earth itself is what ultimately controls economic activity because it is the source of the materials upon which economic activity works." It's inconvenient for manufacturers and marketeers, but it's the absolute truth that is forgotten in today's debates.

What would New Zealand look like if we insisted that our primary goal was the wellbeing of society itself and of the planetary resources that sustain us? Would there be mining in parks, if economic policies were truly shaped to support that central goal- rather than the other way around?

* Rosie Walford runs The Big Stretch which coaches leaders and individuals who want to make values-based changes in their lives and organisations.

- NZ Herald

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