Well-being

Lord Desai Excerpts

Thursday 12th March 2020 Lords Chamber

[Lord Desai (Lab)]

My Lords, I thank the noble Baroness, Lady Tyler, for introducing this topic. However, for various reasons I am among the sceptics. I will make this short speech more technical than may be strictly welcome to other noble Lords—it may not add to your Lordships’ well-being, but I had better get it over with.

First, this is not new. As the noble Earl, Lord Dundee, said, this is where Bentham started, saying that the purpose of government was to secure the greatest good of the greatest number. We are now in this same logic, except that we are defining “good” in a different way. In those days—to make this story rather rapid— there was something called the welfare function. The Government had to maximise the social welfare function, which was the sum total of the utilities of individual citizens that they derived from various things like consumption. That was logical, and it also turned out that utility was such a peculiar thing that the higher the income, the lower the margin of utility of the extra dollar you got. It was no good to give money to the rich, so inequality turned out to be a bad thing for social welfare.

That led to a counter-reaction, especially from Lord Robbins, whom the noble Lord, Lord Layard, remembers, because he first put forward his brilliant analysis of happiness in the Lord Robbins memorial lecture. The thing is, you may be able to make a connection between say, income and well-being, but your well-being and my well-being may conflict. Well-being is not what we call aggregable—you cannot add up different people’s well-being. There might be the reaction: I may not like your happiness or your riches—I may feel unhappy that you are rich. What will you do about that? The idea was, “Let’s forget about those things and go to objective, measurable variables.”

The real question then arises. Suppose you had a measure of welfare, well-being, or whatever it is. Can government do anything to achieve it? What is the transmission mechanism between government policy and the outcome regarding well-being? Do only the Government cause well-being, or are they only one of the many actors that could promote well-being? Of course, they may not succeed—not every government policy succeeds, regardless of the Government’s intentions. Therefore this situation is not as simple as it looks. We can talk about well-being and it makes us feel good, and if we say that the Government ought to encourage well-being, who could object to that? The problem is whether this is a measurable variable and an achievable policy goal.

I am aware that GDP is not a very good measure, therefore we ought to try a better one. I was involved in something called the human development index. Basically, it adds up life expectancy, educational enrolment and income, which are weighted in a particular way. All those things are characteristics of aggregates. You can say that life expectancy can be measured for a whole population—it has to be. School enrolment is obviously a collective variable for a society, and income was basically calculated on a per capita basis. Therefore, one may be able to get a measure of a group of people without worrying about individual welfare. If I go from a country with a low life expectancy to one with a high life expectancy, my human development index does not go up; my life expectancy is mine, because it may be to do with my health. But you can say that, collectively, this society is better off than that society, because we are measuring collective variables, which do not conflict among individuals.

Any Government at any time can claim, “Of course we encourage well-being. We will give you a measure of well-being that will show that we encourage it.” Well-being is such a soft thing; get some clever people and you will be able to say every time, “That is our business. How could we not measure well-being? We have been doing that for ever and ever. Even austerity was good for people because we learned to live within our means and that is a good thing to do, because spendthriftness is a bad thing.”

One must be aware that things that are subject to manipulative measurement should not be used or urged on Governments as policy variables, because Governments are not to be trusted and they are not very competent.