This is the fourth briefing paper in the Global Perspectives series, a collaboration between the Social Market Foundation and the University of Warwick’s Centre for Competitive Advantage in the Global Economy (CAGE).
Happiness is now an accepted and important policy objective for governments alongside big aggregate targets such as economic growth or unemployment. However, there is surprisingly little work on the importance of happiness as an input to economic processes or measures such as productivity; usually it is considered only as an output or consequence of higher growth or income and not just an output.
This paper draws on experimental work linking happiness to productivity, by Andrew Oswald, Eugenio Proto and Daniel Sgroi undertaken at the University of Warwick involving over 700 participants.
- In three different styles of experiment, randomly selected individuals are made happier either through the use of a short (10 minute) comedy clip or through the provision of drinks and snacks. We check that these methods make the subjects happier (they do) and then go on to show that these individuals have approximately 12% greater productivity than a control group.
- A fourth experiment studies major real-world shocks (bereavement and family illness) and the impact this has on current productivity. Lower happiness is systematically associated with lower productivity. This effect lasts for approximately 2 years. These different forms of evidence, with complementary strengths and weaknesses, are consistent with the existence of a causal link between human well-being and human performance.
- The productivity measure we employ allows us to differentiate between productivity that comes through effort and ability. We find that the main route from happiness to productivity is through increased effort by workers.
- Private sector firms cannot ignore potential productivity gains in the current economic climate, and this might help public sector departments to offset the negative impact of spending cuts. Our findings help to illuminate what sort of policies might work and which sort of workers will benefit most. Having scientific support for generating happiness-productivity cycles within the workforce should also help managers to justify work-practices aimed at boosting happiness on productivity grounds.