Many have argued that the current crisis of social democracy is due to the lack of a vision – so where can one look for inspiration? A new academic discipline has emerged over the last years at the intersection of economics, psychology, political science and sociology: the science of happiness. Responding to criticism of Gross Domestic Product as an inadequate measure for progress and prosperity, researchers increasingly study the determinants of human well-being using survey data such as the European Social Survey, Sozio-oekonomisches Panel, or the World Values Survey. Their happiness indicators have proven valid and reliable based on correlations with other quality of life measures and neurological functioning. As a consequence, a range of important findings about the well-being of individuals and nations were brought forward recently and are starting to catch the interest of the OECD (“Measuring the Progress of Societies”), the EU (“Beyond GDP”) and even French President Sarkozy (and his “Stiglitz Commission”). So if we were to take the findings at face value, what would be the implications for public policy, in particular for social democracy?

First of all, it is apparent that designing policies based on the question “what makes people happy” is a grassroots notion that is very much in line with the social democratic tradition of Basisdemokratie. Letting the people define what is a good society using this evidence based approach to policymaking is the antidote to what used to be called Spaceship Bonn, i.e. a bunch of politicians designing policy detached from the interests of the ones they govern. Moreover, comparing the programmes of all parties currently, for example, in the German parliament, the Social Democratic Party is the one movement that seems closest to intuitively understanding the implications from modern well-being research. So overall, the SPD at this point in time seems to have the best chances of incorporating the new paradigm of well-being into public policy. Its 2009 election manifesto states that:

“Economic growth is not an end in itself. This conviction is gaining more supporters. We agree with many, with unions, churches, and many entrepreneurs. Economic success has to benefit the people. Robert Kennedy once said: GDP measures everything except that which makes life worthwhile.”

So what do the data on people’s life satisfaction tell us? Findings for instance suggest that there is a decreasing marginal utility of income, which can be seen at both the individual level, as well as between nations. This has important implications. At the individual level, people seem to gain less happiness from income the richer they are. Simply put, an extra Euro in the pocket of a poor person is worth more in terms of happiness derived from it compared to a rich person. This is a strong argument in favour of progressive taxation and of directing returns from future growth to the poorest members of our society. Such findings complement the argument that more equal countries do better in a range of dimensions from alcohol abuse to teenage pregnancy and metal illness rates (see Wilkinson & Pickett’s 2009 book The Spirit Level). In the light of such results, directing public funds towards the empowerment of underprivileged citizens and ‘supertaxing’ excessive bonuses makes (some would say: even) more sense.

At the macro-level, research has shown that the average reported happiness of nations increases as their economies develop. However, once they reach a threshold of ca. 10,000 Euros GDP per capita, further growth does not buy them more happiness. A similar dilemma is also exemplified by the ‘Easterlin paradox’. The American economist found out that material growth in Western democracies since World War II has not led to significant increases in happiness. The primary lesson learned here is that while we may acknowledge the importance of growth, we need to stop treating it as the cure-all for our miseries. Instead, we must broaden our focus to other factors.

In fact, policymakers should start to think about how we can additionally foster another kind of economy: It is what some have called the Economy of Regard (Avner Offer), the Hidden Wealth of Nations (David Halpern), or the Core Economy (New Economics Foundation). These terms have their distinct emphasis, but more or less all refer to the huge benefits of social and personal interaction and reciprocity. Indeed, we need a Wachstumsbeschleunigungsgesetz (i.e. the ‘law for increasing growth’ recently passed by the new German conservative coalition) also for the Economy of Regard. All indications from modern quality of life research suggest that this kind of economy, which operates wherever incentives are affected by personal relations, is at least as important to our subjective well-being as the ‘real economy’. Further implications from quality of life studies include a need for welfare-to-work programmes, and strengthening our societies’ social capital.

In Britain, 81% of people say that government’s primary goal should be the “greatest happiness” of the electorate, not the “greatest wealth” (according to a BBC poll). If social democrats across Europe came to realise such priorities, then their currently poor election ratings would certainly improve. In summary, the science of happiness can be a new tool for public policy. If applied correctly, it can also facilitate a true renewal and revitalisation of social democracy