In Pursuit of Happiness: The Economics of Enough

Posted on: August 26th, 2011 by bobmorris

Illustration by Leigh Wells

Here is an excerpt from David K. Hurst’s review of The Economics of Enough, written by Diane Coyle and published by Princeton University Press, 2011. 
To read the complete review and c heck out other resources provided by strategy+business magazine online, please click here.

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Economist Diane Coyle, a visiting professor at the University of Manchester and former advisor to the British government, sees the recent worldwide financial crisis as a valuable opportunity to grapple with fundamental shortcomings in the creation and measurement of economic policy. In The Economics of Enough: How to Run the Economy as if the Future Matters, she identifies and addresses what she regards as the two root causes of the crash of 2008: the failure of macroeconomics to frame and measure policy objectives and the chronic inability of politicians to make policy decisions that are in the best long-term interest of their constituents (i.e., that address the “trilemma” of efficiency, equity, and liberty).

Coyle divides the book into three unequal parts that cover the challenges (about 60 percent of the book) and the obstacles (25 percent) to better economic policy, and a manifesto for achieving it (15 percent). As this proportion suggests, the book is long on problem identification, but rather short on solutions. Nevertheless, it is helpful for the targets it identifies. For instance, Coyle tackles the current monopoly of GDP growth as a measure of collective happiness. Like most economists, she thinks that growth and happiness are causally connected, but cites evidence showing that maximizing growth isn’t always appropriate when the future is taken into account. This is the central dilemma of “enough”: that we need enough growth to make us happy, but not so much as to make future generations unhappy. 


Coyle’s adoption of the intangible objective of happiness, with its dependency on multiple, complex phenomena, underlines the inadequacy of GDP as a metric. Measurements of GDP are already seen as deeply flawed in their failure to discriminate among differences in quality and to capture the value of unpaid work, such as parental care and volunteer activities. In addition, GDP’s focus on the flow of value versus its accumulation allows nations to enhance their output at the expense of their balance sheets.

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To read the complete review, please click here.

David K. Hurst is a contributing editor of strategy+business. His writing has also appeared in Harvard Business Review, the Financial Times, and other leading business publications. Hurst is the author of Crisis & Renewal: Meeting the Challenge of Organizational Change (Harvard Business School Press, 2002).


 

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