400 well-being researchers gathered at the European Conference Center in Kirchberg on July 22 for a week. Hosted by STATEC, the national institute of statics and economic studies, happiness researchers from the ISQUOLS (International society for quality of life studies) presented and discussed their latest studies and envisioned ways to translate their results into public policy and corporate guidelines.
The Easterlin paradox
The fashionable research on well-being started fifty years ago with a stunning empirical result published by the late Richard Easterlin (University of Southern California). He showed that economic growth, while boosting incomes, does not make people happier! The findings challenged a well-established belief that economic growth is, over time, a source of unrelenting bountiful progress. This growth-happiness disconnect is known as the “Easterlin paradox”. The paradox of decoupling income growth and happiness increase holds over time and geography, independently of data and methodological choices. The main explanation of this conundrum: keeping up with the Joneses! When the income of your reference group increases, due to economic growth, the income expansion on your own individual life satisfaction annuls.
“In the short-term, money buys happiness”
Research shows that happiness can be increased, even at low levels of GDP per capita, by policies promoting full employment, a strong social safety net and intense interactions among fellow citizens. In the short-term, money buys happiness.
Beyond GDP
Policymakers in many countries, including Luxembourg, embraced the well-being agenda, grounded on sound empirical research. They follow a comprehensive dashboard of indicators driving well-being besides GDP/head. Luxembourg has developed its own dashboard of well-being indicators known as “Pibien-être”, collapsing two concepts which are meant to be complementary: GDP and well-being. The “Pibien-être” is a dashboard developed by representatives of the “organised civil society” (mainly social partners and environmentalists).
The government tasked the National Statistics Institute (STATEC) to set up the desired dashboard and to regularly publish a report on well-being in Luxembourg. The “Pibien-être” dashboard includes indicators like real household income, inequality, poverty risk, employment, gender wage gap, work-leisure balance, trust in others, offence rate, air and water quality, noise, as well as longevity, mental illnesses, to name just a few.
Unfortunately, this dashboard has not yet gained the expected traction; it is still sidelined in policy debates. Let us see to what extent the government will translate dimensions of well-being into the 2026 General Budget, due to be submitted to Parliament in October 2025.
This article was published in the 7th edition of Forbes Luxembourg.
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