• According to new research, released in the UK last month, we should all shift our focus from ‘wealth creation’ to ‘wellbeing creation’. (Getty Images)
A new study has confirmed what most of us have long known: positive relationships and good health have the potential to make us much happier than money. And its authors are trying to convince policy makers that tackling misery is relatively cheap.
By
Brad Kelly

18 Jan 2017 - 11:03 AM  UPDATED 18 Jan 2017 - 11:14 AM

If you think that slogging it out to save for your first home, pay off the mortgage, top up the super or hustle your boss for a pay rise will make you happy, you may have your priorities wrong.

According to new research, released in the UK last month, we should all shift our focus from ‘wealth creation’ to ‘wellbeing creation’ if we want to have a go at achieving happiness.

Researchers from the London School of Economics (LSE) have found that money is less important to our wellbeing than we first thought, and the costs of failed relationships and poor mental health contributes considerably more to human misery than low income does.

As lead author Professor Richard Layard writes in the new research paper, we should overhaul how we measure true progress and success. He also calls for politicians to create the conditions for people to live happy and fulfilling lives.

The countries best at turning cash into happiness
While Norway topped the list, Vietnam, Rwanda, Albania and Ethiopia have made significant strides turning their wealth into wellbeing.

“In the past, the state has successively taken on poverty, unemployment, education and physical health,” writes Professor Layard of LSE’s Centre for Economic Performance.

“But equally important now are domestic violence, alcoholism, depression and anxiety conditions, alienated youth, exam mania and much else. These should become centre stage.”

The report – which draws evidence from a household survey conducted in Britain, the United States, Germany and Australia – also finds that being in a relationship also has a positive effect on life satisfaction.

In Australia, partnered people were more satisfied with their lives by 50 per cent compared to singles and by 15 per cent compared to separated or divorced people.

The researchers found that it takes between two-to-four years to recover from the pain of separation.

According to new research, released in the UK last month, we should all shift our focus from ‘wealth creation’ to ‘wellbeing creation’ if we want to have a go at achieving happiness.

“Other things being equal, partnered people are happier than single people,” the report states.

“Human relationships at the most intimate level make a huge difference to a person’s happiness.”

The authors argue for increased investment in mental health support, as tackling mental illness would be virtually self-funding.

They estimate that it’s much more efficient to reduce the effects of depression and anxiety (spending $16.4K per person per year) than tackling poverty ($295.2K) and unemployment ($49.2K).

On the other hand, the study shows that policies targeting economic factors had less of an impact on overall happiness levels.

Dr Timothy Sharp, chief happiness officer at Australia’s Happiness Institute, agrees with the report findings.

He says governments could make voters happier by investing more in activities to help improve people’s wellbeing rather than boost their economic wealth.

"The reality is that our governments are not focusing as much as they could or should on those other variables and quality of our lives in terms of psychological elements and our relationships. That is certainly something where we should be doing a lot more,” says Prof Sharp.

"So what we have in Australia are millions of people who are not functioning at their best because of a psychological disorder or mental illness which is not being effectively treated. As a result, they're not as effective or productive workers and they are not contributing to society as well as they could do."

"Healthy people are more likely to be employed, to create jobs and they are more likely to contribute in positive ways. It becomes a positively reinforcing, virtuous cycle.”

One of Australia’s leading wellbeing indexes, the Herald-Lateral Economics Index of Australia’s Wellbeing found that poor mental health costs the Australian economy $200 billion per year, which is equal to 12 per cent of national output.

"Healthy people are more likely to be employed, to create jobs and they are more likely to contribute in positive ways."

But does more income increase happiness? Yes and no. The Easterlin Paradox says that people tend to compare their income with others – keeping up with the Joneses – and quickly adapt to the new level of income.

Meanwhile, the paper’s authors conclude that, “income is very salient and so it becomes a major preoccupation”.

“But most studies suggest that by doubling their income people can gain no more than 0.2 additional points of life-satisfaction,” the study reads.

“If everyone doubles their income, the effect is very much less because so much of the positive effect of income on happiness is an effect of income relative to others.”

 

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