Happiness Matters Too: Ben Bernanke
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Federal Reserve Chairman Ben Bernanke has called for compassion for the average American, arguing that economic indicators fail to reflect the suffering of individual citizens. US unemployment in July remained stubbornly high at 8.3 percent, with an estimated 12.8 million Americans out of work.
Speaking via a prerecorded video at the International Association for Research in Income and Wealth, Bernanke urged economists and researchers to look for better ways to measure well-being so they can make stronger and more effective policy decisions.
Federal Reserve Chairman Ben Bernanke has called for compassion for the average American, arguing that economic indicators fail to reflect the suffering of individual citizens. US unemployment in July remained stubbornly high at 8.3 percent, with an estimated 12.8 million Americans out of work.
Speaking via a prerecorded video at the International Association for Research in Income and Wealth, Bernanke urged economists and researchers to look for better ways to measure well-being so they can make stronger and more effective policy decisions.
Bernanke explained:
[quote] Even though some key aggregate metrics — including consumer spending, disposable income, household net worth, and debt service payments — have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and financial conditions. [/quote]
The 58-year-old former Princeton professor, added economists should “increase the attention paid to microeconomic data, which better capture the diversity of experience across households and firms” while seeking “better and more-direct measurements of economic well-being, the ultimate objective of our policy decisions.”
Bernanke and Fed policymakers typically reports on hiring and consumer spending to make policy decisions on the world’s largest economy. The Fed’s dual mandate is to maintain low inflation and full employment. While inflation has remained relatively stable, unemployment has eased from double-digit highs in 2009 to settle around 8.2 percent this year.
That is equivalent to almost 12.8 million unemployed Americans.
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[quote] Making reference to what he calls the “economics of happiness”, Bernanke said “income and wealth do contribute to self-reported happiness, but the relationship is more complex and context-dependent than standard utility theory would suggest.” [/quote]
Bernanke said there have been interesting developments in the field of the measurement of economic well-being. He cited the Himalayan kingdom of Bhutan’s Gross National Happiness index, as well as the Organisation for Economic Cooperation and Development’s Better Life Initiative as alternative models.
Such measures “incorporate elements such as psychological wellness, the level of education, physical health and safety, community vitality and the strength of family and social ties, and time spent in leisure activities,” he said.
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