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Happiness in measures of economic growth

French President Nicolas Sarkozy is seeking an answer to the eternal question - so that happiness can be included in measurements of French economic growth. Read more...

business Updated: Jan 10, 2008 16:50 IST

French President Nicolas Sarkozy is seeking an answer to the eternal question - so that happiness can be included in measurements of French economic growth.

He has turned to two Nobel economists to help him, hoping that if happiness is added to the count, the persistently sluggish French economy may seem more rosy.

"It reflects a general feeling in Europe that says, 'OK, the US has been more successful in the last 20, 25 years in raising material welfare, but does this mean they are happier?"' said Paul de Grauwe, economics professor at Leuven University in Belgium. "The answer is no, because there are other elements to happiness," said Grauwe, once a candidate for the European Central Bank governing council.

In terms of gross domestic product, the internationally recognized way of measuring the size of an economy, French growth lagged behind the US throughout most of the 1980s, '90s and every year since 2001.

Although recent turmoil in financial markets may hit the U.S. economy harder, the loss of speed in the world economy's biggest player will also drag down growth in France. Economists say growth may fall short of the government targets this year. Sarkozy's move raised questions about whether he wants to ward off disappointing growth numbers as a rise in oil and food prices combined with a slowdown in the U.S. clouds the effect of his economic reforms.

Since his election in May he has sought to boost growth, notably by encouraging people to work longer than the much maligned 35-hour week.

Sarkozy has often appeared impatient with the French economy's lackluster performance, once declaring: "I will not wait for growth, I will go out and find it."

Frustrated with what he termed on Tuesday "the growing gap between statistics that show continuing progress and the increasing difficulties (French people) are having in their daily lives," Sarkozy said new thought should be given to the way GDP is calculated to take into account quality of life.

At a news conference Tuesday, Sarkozy said he had asked U.S. economist Joseph Stiglitz, winner of the 2001 Nobel economics prize and a critic of free market economists, and Armatya Sen of India, who won the 1998 Nobel prize for work on developing countries, to lead the analysis in France.

Sen helped create the United Nations' Human Development Index, a yearly welfare indicator designed to gear international policy decisions to take account of health and living standards. Once the preserve of philosophers, measuring happiness has now become a hot topic in economics.

A recent report from the Organization for Economic Cooperation and Development considers taking into account leisure time and income distribution when calculating a nation's well-being. And the European Commission is working on a new indicator that moves "beyond GDP" to account for factors such as environmental progress.

Richard Layard, a professor at the London School of Economics and author of the 2005 book "Happiness: Lessons from a New Science," said Sarkozy may be seeking recognition for policies, popular in Europe, which promote well-being but don't show up in the GDP statistics.

Governments are rated on economic performance, and this influences policy in favor of boosting GDP, the value of goods and services produced over a calendar year, he said.

"But people don't want to think they live in a world of ruthless competition where everyone is against everyone," Layard said. "Valuable things are being lost, such as community values, solidarity."

His book shows that depression, alcoholism and crime have risen in the last 50 years, even as average incomes more than doubled. Jean-Philippe Cotis, the former OECD chief economist who took over as head of France's statistics office Insee two months ago, said Wednesday that a measure of happiness would complement GDP by taking into account factors such as leisure time _ something France has a lot of.

France's unemployment rate is stubbornly high, and when French people do work they spend less time on the job _ 35.9 hours per week compared with the EU average of 37.4.

Cotis said he looked forward to a "passionate" debate beyond the traditional realms of his science.

"Statisticians are also interested in happiness," he said. And so, it would seem, are presidents.

Basking in the happy glow of new love with model-turned-singer Carla Bruni, Sarkozy showed on Tuesday that his concern for happiness is universal.

A president, he said, "doesn't have more right to happiness than anyone else, but not less than anyone, either."