This May in Reykjavik, Iceland, the elegantly modern Harpa Concert Hall and Conference Center will host a meeting of academics, policy makers, business leaders, and politicians known as The Wellbeing Economy Forum. Aligned with sustainable development goals promulgated by the United Nations, the stated purposes include “reshaping our economic systems to operate within environmental limits and prioritize the wellbeing of all generations.” The evening program looks promising, with a singalong and dancing the first night. Daytime sessions will feature more serious fare, such as “Current economic paradigms and the need to rethink them for shared prosperity.”
There is practically a global circuit of gatherings such as these, and their combination of paternalistic rhetoric with vast attendee power often sets conspiracy theorists’ keyboards to clacking. But what is the subject of the Reykjavik meeting—wellbeing economics—really about?
A Google NGram of the term looks like the East Face of Mount Everest. Before 2007, wellbeing economics was practically unheard of. Not coincidentally, that was also the start of the Great Recession, which caused an upheaval in economic thought that has still not shaken itself out. The free-market-based neoclassical paradigm, which once reigned at most American universities, remains a formidable force in both theory and practice. But a mishmash of other schools of thought—from the political left and right—have been gaining power, with each hoping to one day assume the throne.
By itself, a plurality of approaches to the study of economics is a good thing. Like competing firms in product markets, they lead to a wealth of ideas for refinement and growth. When I was in graduate school in the 1990s, for instance, even though neoclassical theories predominated, there were also Keynesian, Monetarist, and other schools which provided opportunities for constructive criticism and healthy debate. All of those approaches, however, were in virtual agreement on the objective yardsticks by which models should be measured and compared. In macroeconomics, that was first and foremost the gross domestic product (GDP), the amount of goods and services the economy produces in a given timeframe. Its dynamics were the mystery which the field’s leading minds were trying to unravel.
Not so with wellbeing economics, which sounds like it was named in a Madison Avenue focus group. After all, what kind of monster would oppose wellbeing? Rather than attempt a scientific approach, though, wellbeing economists want to replace strictly objective yardsticks like GDP, unemployment, and profits with an amalgamation of hard and soft factors, typically structured around the concept of happiness.
One of the movement’s more eloquent voices, Dutch econometrician and environmentalist Gaya Herrington, gave a 2024 TED Talk at last summer’s Bloomberg Green Festival in Seattle in which she outlined a schema to “change the goal of our economic system from growth to human and ecological wellbeing.”
“In a wellbeing economy,” she added, “business activities, government policies, and citizen behavior are aimed at meeting our physical, social, and spiritual needs within planetary boundaries…We differentiate between what should and should not grow, depending on whether it contributes to wellbeing.”
Unfortunately, sometimes one person’s wellbeing is another person’s nightmare. The problem with constructing a God equation to judge our economic theories by is that the kind of people one finds at the Reykjavik meeting, or any meeting anywhere, are simply not up to the task. This is the same egotism that once led monarchs to base their accumulation of power on the belief that it was for the benefit of the ruled, who were too simple-minded to be trusted with directing their own lives.
The classical economic theories of people like Adam Smith turned this idea on its head, as did the U.S. Declaration of Independence that made it not only the right but the responsibility of individuals to define and pursue happiness for themselves.
In the same vein, neoclassical economics at least has the humility to know its limits. It is not the responsibility of the economy to make people happy, if happiness is even the variable someone chooses to maximize in their life. The economy’s job is nothing more or less than producing goods and services which people demonstrate a desire for in their decentralized purchasing decisions.
Economics, of course, can never be as objective as a hard science such as physics. But that does not mean we should muddy its waters with subjective policy goals such as happiness. Top-down impositions of such things are doomed to fail for the same reason centrally planned economies fail. Centralized elites lack the inherently decentralized and ever-evolving knowledge people have of their own lives, values, and goals.
Supporters of approaches like wellbeing economics often complain that there is more to life than can be captured by strictly quantitative economic measures, and they are right. Sometimes economists need to be reminded of this. But their prescription for change is, in typical leftist fashion, both too grandiose and ignorant of the lessons of history. Wellbeing economics wants to centralize power to make everyone happy, whether they like it or not. Speaking only for myself, I’ll be in the latter group.