Time Out with Nick Cohen

Poets and novelists have often tried to describe happiness. Andrew Oswald has found a way of countin

I quickly learned that it was pointless to invite Andrew Oswald to engage in fanciful speculation. He is an economist to his bones, who believes in what he can count - and little else. I saw him at Warwick University, and it felt fitting that he should have found a professorship in a monument to the modernism of the mid-1960s. Warwick's blocks show only straight lines; no place here for the decorative. In Oswald's bright, white office there are few individual touches and no unnecessary clutter. Oswald is at home: a numbers man in a suit and tie with nothing to distract him from his calculations.

Yet this meticulous academic, cooped up in a machine for learning, has released a shockingly hippie version of economics into his dry discipline. When Labour's female politicians worry that the party will lose the next election if it doesn't think about the strains on families, when Iain Duncan Smith talks about the importance of marriage and David Cameron says it is time we looked at general well-being as well as gross domestic product index, they are unconsciously passing on ideas that Oswald developed in the early 1990s.

Novelists, poets and psychologists have always thought about happiness. Oswald has found a way of counting it. And this miserabilist approach, this calculus of contentment whose utilitarianism seems against all the spontaneity we associate with happiness, may be a great intellectual breakthrough, precisely because it translates feelings into figures.

If the political interest and the sales of popular "happiness economics" books are a guide, Oswald has provided a tool that will change the way people think, as his once sceptical colleagues are beginning to realise.

"I just have to click on the internet now, and every week there are new papers on happiness written by people I've never met, never heard of," he says. "It has reached some take-off point, so that if someone were to tell me that economists had taken a random sample of 10,000 Koreans and asked them about happiness and mental health, I could bet you that marriage will come through with the same positive coefficient in Korea as in France and the United States. Edu cation will be as important there as here, and the Koreans' happiness will follow a U-shape through life, with a greater chance of unhappiness in people's thirties, just as it does in every country. Human beings are very similar. We're uncovering something deep about them."

Oswald speaks without bravado. He is too good-natured to brag, even though he has every right to be pleased with himself. His is the classic story of the independent-minded researcher with a new idea, who finally forces his indifferent colleagues to take notice.

He is the son of an academic family - his father taught psychiatry at Edinburgh University - whose intellectual life was determined by the crisis of the early 1970s. "I was very committed in my youth to improving the world. I remember sitting on a train reading in the Guardian about stagflation when I was very young, and thinking: 'Yes, I'm going to work on this. I'm going to solve this problem.'" At the time, the decisive response came from Milton Friedman and the free-market right. One aspect of Friedman's work, which was more of an assumption than a detailed argument, profoundly unsettled Oswald and stayed with him for years. In common with most other economists, Friedman supposed that people were rational. In his work on unemployment that was to win him the Nobel Prize, he took it for granted that inflation made sensible people choose unemployment over work - they simply calculated that more leisure compensated for the loss of income, and went on the dole.

The idea that joblessness was voluntary was incredibly useful for Conservatives presiding over the mass unemployment of the 1980s. Norman Tebbit told the 1981 Conservative party conference: "I grew up in the 1930s with an unemployed father. He did not riot. He got on his bike and looked for work, and he kept on looking until he had found it." By implication, the unemployed who didn't get on their bikes wanted to stay at home and riot, and nothing could be done for them.

Disproportionate misery

Oswald thought Friedman and his acolytes were talking nonsense, but how to prove it? His conceptual breakthrough was to use the statistical technique of regression analysis to isolate and measure the happiness and misery of people's lives. Put simply, regression analysis involves assigning values to variables. For instance, suppose you are asked how happy you are on a scale of one to ten and you say "five". The next year your pay doubles from £20,000 to £40,000 and you say you now feel at "six". If you are fired a year later and your happiness falls to two, the price a statistician can assign to your unhappiness is huge: £80,000. As Oswald and his colleagues found when they did slightly more sophisticated calculations than mine, the effect of unemployment is irrational, out of all proportion to the actual loss of income. People weren't sitting on the dole coolly weighing the benefits of more spare time against loss of wages. They were wracked by a disproportionate misery.

As with unemployment, so with marriage, divorce, being placed under an airport flight path . . . any event or pheno menon that can impact for good or ill. Nor was it hard to find raw data. Most governments in the rich world produced vast surveys of their citizens' contentment. Oswald and his colleagues ran them though their equations and began to churn out figures. A good marriage was far more important than the liberal-minded imagined, they found. Getting married brought happiness equivalent to additional income of £70,000 per year. Good health was hugely important, as might be expected. Widowhood brought a degree of unhappiness that would take, on average, an extra £170,000 per annum to offset. Maybe that was not too surprising. But many of their results were unexpected. Long-distance commuting was like unemployment, for instance, and imposed far more stress than outsiders realised.

As Oswald went through his figures, I made the romantic objection that he was trying to monetise the human condition: to turn its joy and despair into pounds and pence.

Many others have said that to him. And although he tried to take my objection to pricing seriously, it clearly baffled him. "It may be because of my training that monetary units come to mind, but they don't have to. I could say that having your partner die is the same as being unemployed for 17 years. But that would be even stranger than saying a marriage is worth £70,000 in happiness terms. I'm not making a moral judgement about money. I just need to get some units."

Growing prosperity

His colleagues were worried not by the vulgarity of his work, but by the fact of his doing it at all. Economists didn't ask people how they felt, because they weren't concerned with happiness. It took Oswald five years to get a paper published by the American Economic Review, the world's most respected economics journal. The editors sent it back for revision seven times, and, Oswald suspects, published him only when other economists began to replicate his results.

There was a second reason for their suspicion. Oswald was not the first economist to look at happiness. In 1974, Richard Easterlin, a California economist, had examined studies that asked Americans how happy they were and found not a shred of evidence that America's growing prosperity had made Americans happier since 1945. His colleagues dismissed or ignored his work at the time, and a dispirited Easterlin gave up. Everyone knew that the business of governments was to increase national wealth. An oddball's insistence that the effort was futile was not something economists and politicians wanted to hear. Oswald helped rescue Easterlin's reputation, and today "Easterlin's paradox" is a vital issue for the social sciences - the vital issue, according to Oswald.

He thinks there is no way out of it. Once you have removed the fear of famine and thirst and provided security and shelter, increases in the gross domestic product have no effect on contentment, because man is a social animal who compares himself with other members of the species. Oswald's favourite cartoon encapsulates his point. It shows an employee bellowing at his boss: "I was so happy when you gave me a pay rise, then you spoiled it by giving one to everyone else."

"There's only so much rank in society to go around," he explains. "We can look at a society in 1900 and there's just this amount of rank, and look at it now and there's the same amount of rank. The way to happiness is to lower our aspirations and concentrate on our relationships."

If the work that Oswald and now hundreds of other economists are producing sounds warmly green and co-operative, it can be like that, but there is no necessity that happiness economics and vaguely leftish sentiments will always march in step. It still makes sense for individuals to seek status and reward, even though if everyone in their group does it, most are likely to end up forlorn. Equally, happiness economics has all the philosophical flaws of utilitarianism. If the Serb residents of a Balkan town say that they would be far happier if the police put the Muslim minority in a concentration camp, the utilitarian who believes in the greatest happiness of the greatest number has no way of objecting to the outrage.

The American economist Paul Krugman pointed out that happiness economics might lead you to advocate government policies that slow down the rat race, impose high taxes on the wealthy, and grant generous benefits, long holidays and short working weeks to everyone else. France has all of these policies, and its unemployment rate is more than twice as high as America's as a result. As happiness economists say that unemployment is a great social evil, which hits people with disproportionate force, conservatives could argue back that their market policies bring greater happiness.

As I thought about the objections, I felt the temptation to shrug my shoulders and conclude that all that the happiness economists have done is to recast the old arguments between left and right without settling them. But that isn't fair. New ways of thinking produce new results. If the government goes ahead with the planned expansion of airports, protesters will now be able to put an exact figure on how much distress living under a flight path will cause - just as those who object to new commuter towns will be able to say that regular long-distance travel is a good route to mental distress.

In the past, economists counted growth figures and household incomes and assumed that if they went up, society's contentment went up with them. Professor Oswald and his colleagues have blown that idea out of the water and forced them to look elsewhere. We are ruled by statistics; by changing what is counted, Oswald is also changing what will count.