By Samantha Kagan
Those who follow the development and proliferation of wellbeing economics are likely already aware that earlier this year, New Zealand became the first country to reorient its national budget and decision-making framework to centre on wellbeing expansion, rather than on GDP growth. The shift was momentous, and it was executed with the intent from the Government of improving its service to citizens. Minister of Finance Hon Grant Robertson claimed in his speech introducing the new approach that “The things that New Zealanders valued were not being sufficiently valued by the Government”, and this was leading to outcomes undesired by citizens. However, he relayed confidence that implementing the new wellbeing framework would rectify previous missteps and improve outcomes delivered by government. The new approach was well-intentioned, but little evidence existed to support the notion that citizens are more satisfied with a government that pursues wellbeing expansion over one that focuses on GDP growth. I conducted a study to investigate this assumption, and I found evidence that the Minister, in fact, was correct: in New Zealand, citizens are more likely to regard the government highly when wellbeing expands, rather than when GDP grows.
I came to this conclusion using two complementary methods of analysis. First, I examined correlations between GDP and satisfaction with the government’s performance, then between wellbeing and the same measure. I found a tendency for government satisfaction to move more closely with wellbeing factors than it does with GDP level or GDP growth rate. Next, I distributed surveys to New Zealanders that pitted hypothetical policies against one another and asked participants to indicate which option they would support. One policy would grow GDP, while the other would expand wellbeing, and results showed a preference for the latter.
The findings of my study are encouraging, as they suggest leaders in New Zealand acted rationally by shifting government priorities to focus on wellbeing. The objective for adopting this scheme was to improve satisfaction among citizens, and it appears that the strategy was well-calculated. According to Adam Smith, the value of any government is judged in proportion to the extent that it makes citizens happy. Leaders in New Zealand improved their performance in this sense and have good reason to claim victory.
In other nations where government satisfaction is a concern, leaders would be sensible to consider launching a response like New Zealand’s. In Iceland and Scotland, such action is already underway, as each country’s government has introduced a plan to comprehensively restructure its framework. In Britain, although the proposal is yet to be approved, individual policymakers are pushing for wellbeing to take precedence over GDP in government decision making. Examples set by these countries and findings like those in this study should motivate policymakers to contemplate pivoting toward wellbeing to earn more satisfied citizens.
While improving contentment of citizens is itself a valuable objective, the findings of my study also have important implications for policy options available to legislators. Traditionally, policymakers are bound by the paramount goal of GDP expansion. If an otherwise sensible policy appears to threaten growth, it is usually denounced for precisely that reason. This study suggests when a policy is generally constructive, the fact that it may hurt growth should not lead to its automatic dismissal, and if the policy will enhance wellbeing, then it should be given serious consideration. In response to issues like the climate crisis or worsening mental health conditions, the most effective solutions may not be those most conducive to growth. They may even diminish GDP. This study, however, suggests that the public would prefer policies that sacrifice growth in the name of wellbeing, rather than forego wellbeing to consistently safeguard growth. Therefore, policymakers should feel encouraged to maintain a level of indifference toward GDP while observing wellbeing as the primary measure of their legislative success. A new range of policies will become available to them, and citizens will likely become more satisfied as a result.
Samantha Kagan from LSE with a distinction in Inequalities and Social Science. This blog summarises the findings of her dissertation: “Satisfied citizens: how GDP growth and wellbeing expansion relate to government satisfaction”
 Robertson, G. (2019) ‘Budget Speech’. New Zealand Government. Available at: https://www.budget.govt.nz/budget/pdfs/speech/b19-speech.pdf (Accessed: 25 June 2019).
 Smith, A. (1976) The Theory of Moral Sentiments. Oxford University Press.
 WEGo: Wellbeing Economy Governments (2019). Available at: http://wellbeingeconomygovs.org/ (Accessed: 7 July 2019).
 Partington, R. (2019) ‘Wellbeing should replace growth as “main aim of UK spending”’, The Guardian, 24 May. Available at: https://www.theguardian.com/politics/2019/may/24/wellbeing-should-replace-growth-as-main-aim-of-uk-spending (Accessed: 7 August 2019).