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Has the credit crunch left us poorer... but happier?

Mark Easton | 15:36 UK time, Tuesday, 14 September 2010

I need your help with a question. Why are we apparently happier today in the middle of a financial crisis than we were at the height of the economic boom?

The government says it wants to keep track of the happiness of the nation and today the Office for National Statistics (ONS) published its thoughts on the best way to measure our subjective well-being [422KB PDF].

In considering the Treasury's demand for "broader indicators of well-being and sustainability", the researchers have been looking at the existing data measuring how satisfied we are with our lives.

The surprising finding is that, despite the economic gloom, Britain remains remarkably chipper. If anything, we are a bit happier now than we were before the credit crunch.

I know there will be some readers rolling their eyes at the whole idea that you can have a meaningful measure of something as intangible as happiness, but that view is dismissed by a host of academic studies, not least the 2009 report of the Stiglitz Commission [114KB PDF] set up by President Sarkozy and including no less than five Nobel prize winning economists. (I wrote about their report then.)

The ONS agrees that "recent developments suggest that subjective wellbeing is a valid construct that can be measured reliably" and says the question now "is not whether to measure subjective wellbeing, but how".

In fact, the government has been asking plenty of questions about life satisfaction for years and it looks certain they will continue to do so.

The Conservative manifesto explicitly pledged to "develop a measure of well-being that encapsulates the social value of state action" and the coalition's budget report said ministers intended to review how the Stiglitz report "should affect the sustainability and well-being indicators collected by Defra".

Defra is home to Whitehall's happiness central and officials have been quietly posting all kinds of fascinating data on the department's website assessing the way Britain feels about itself [138KB PDF].

One might imagine that national well-being has taken a bit of a knock with the recession, but the latest data suggest there has been little or no discernible change in our mood.

The standard question for measuring subjective well-being is this:

"All things considered, how satisfied are you with your life as a whole nowadays? Please answer on a scale of 0-10, where 0 means extremely dissatisfied and 10 means extremely satisfied."

In 2007, the average answer was 7.3 out of 10. In 2008 it was 7.5, 2009 it was 7.4 and, as reported from a survey in March this year, the current score is 7.5 out of 10.

table comparing people's happiness scores from a survey between 2007 and 2010

There we were back in March 2007, before Northern Rock, before Lehman Brothers, before the credit crunch, before the recession, and our happiness level was 7.3. Now, it is 7.5. Not a significant change perhaps, but good evidence that economic well-being is no proxy for emotional well-being.

Chart showing life satisfaction rating in 2010, by social grade

AB: Doctor, solicitor, accountant, teacher, nurse, police officer
C: Junior manager, student, clerical worker, foreman, plumber, bricklayer
D: Manual workers, shop workers, apprentices
E: Casual labourers, state pensioners, unemployed

Here's how satisfaction relates to what are defined as "social grades".

85 per cent of respondents gave a response between six and ten (suggesting that they were satisfied overall), compared with 82 per cent in 2007. 5 per cent of respondents gave a response of less than five (suggesting that they were dissatisfied overall), compared with 7 per cent in 2007. There were significant differences by social grade, with those in social grades A and B (e.g. doctors, solicitors, accountants, teachers, nurses, police officers) scoring an average of 7.7, compared with 7.3 for those in social grade E (e.g. casual labourers, state pensioners, unemployed). The gap in life satisfaction between grades AB and E is narrower than in the previous 3 years. This is largely owing to an increase in the average life satisfaction scores of those in social grade E, increasing from 6.8 in 2007 to 7.3 in 2010.

I don't know about you, but I find this all a bit puzzling. The poorest in society seem to be getting noticeably happier just when one might expect them to be become gloomier.

And the story gets even more counter-intuitive when you look at the answers to questions about selected aspects of people's lives.

Overall satisfaction with selected aspects of life

People say they are no less satisfied with their future financial security now than they were before the downturn. If anything, they are slightly more optimistic.

Perhaps, there was a sense in 2007 that the good times couldn't last, that something bad was bound to happen. Maybe the recession has persuaded people that economic growth is now more sustainable.

A clue to what is going on is offered by a table from the previous year's data. This looks at how those "social grades" measure up in comparison with the average. Group E, the poorest group, is below average on every measure except 'community'. The professional group is above average on every measure except 'community'.

Percentage of people fairly or very satisfied with selected aspects of life, by social grade, 2007

The biggest difference is on future financial security where group AB is almost 10 points above average and group E is almost 15% below.

It is hardly a surprise that the better-off are more confident than those in low incomes, but the central conundrum remains. Why, on almost any measure you choose to pick, are Britons more satisfied with their lives now than they were when the economy was at its height? Suggestions please.

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