The Easterlin paradox states that (1) in a given context richer people are on average happier than poorer people, but (2) over time greater national income per head does not cause greater national happiness. Statement (1) is certainly true. As a benchmark, a unit increase in log income raises wellbeing by 0.3 points (out of 10). The share of the within country variance in wellbeing explained by income inequality is 3% or less. So income is in no sense a proxy for wellbeing.

Across countries the effect of a unit change in log income per capita (other things equal) is also around 0.3 points of wellbeing. But over time the effect of economic growth on wellbeing remains unclear. Studies of individuals show that in most cases a rise in other people’s income reduces your own wellbeing. From a policy point of view, this means that, when a person decides to work harder, she imposes a cost on other people. The natural way to control this is a negative externality is by corrective taxation.

Wellbeing rises in booms and falls in slumps – partly due to unemployment but also due to loss-aversion. So economic stability is vital.

This chapter sets out the elements of multiple regression analysis. If properly designed this enables us to estimate the effect of each separate factor upon wellbeing. To find the explanatory power of the different factors, we run the equation using standardised variables, that is, the original variables minus their mean and divided by their standard deviation. The resulting coefficients – or partial correlation coefficients – reflect the explanatory power of the independent variation of each variable.

The surest way to determine a causal effect is by experiment. The best form of experiment is by random assignment. We then measure the wellbeing of the treatment and the control group before and after the experiment. The difference-in-difference measures the average treatment effect on the treated. Where random assignment is impossible, naturalistic data can be used and the outcome for the treatment group compared with a similar untreated group chosen by Propensity Score Matching.

In the traditional economic model, people have well-defined preferences and pursue them consistently and selfishly. According to this model wellbeing is efficiently promoted by the free market except for various problems, the biggest of which is ’externality’. This is the way in which people affect other people without their agreement.

However there are in fact many other problems. People often lack self-control (e.g., over drugs, alcohol, and gambling). They often do not realise how much they will adapt to change, and they put effort into new acquisitions which make less difference to them than they expect. They are hugely affected by how decisions are framed. People are hugely loss-averse which often makes desirable changes much more difficult. And, on the other side, they often help each other without expecting anything in return.

These complexities mean that government intervention or nudges are often needed to produce efficient outcomes. These arguments become even stronger when we consider the many pervasive ’externalities’ affecting our experience: We benefit if we live in a trustworthy society; we get many of our norms and tastes from society; because of rivalry we lose wellbeing if others are more successful.

Despite the importance of work for wellbeing, working turns out to be one of the least enjoyable activities we engage in on an hour-to-hour basis. To evaluate the effects of work on wellbeing researchers often rely on experience sampling methods.

Social aspects of work (such as positive working relationships (particularly with managers), work/life balance, interesting work, and purpose) often prove to be more important determinants of wellbeing than income. The relationship between working hours and wellbeing also tends to be mediated by the extent that workers are able to choose the hours they work.

Workplace wellbeing affects individual productivity and company performance. To evaluate these dynamics and make causal inferences, researchers employ a variety of analytical strategies. These include fixed-effects regressions, laboratory experiments, natural experiments, field experiments, and quasi-experiments. Each approach has its own unique advantages and disadvantages. But, taken together, the findings of these endeavours generally suggest that happiness improves performance.

There are a number of possible pathways through which wellbeing can impact productivity. These include better health and more motivation, as well as positive relationships, lower absenteeism, lower turnover, and greater ability to attract talent at the firm level.

Both government conduct and government quality are significantly related to wellbeing levels around the world. Democratic quality appears to be more important for wellbeing in high-income countries. This could suggest that residents of low-income countries are more affected by their governments provision of basic goods and services, while residents of high-income countries place a higher value on democratic influence.

It is often difficult to make reliable comparisons between countries. As a result, other researchers have looked at within-country variation in democratic processes and procedures to predict wellbeing. The results of these studies generally show that decreased opportunities for democratic involvement in politics decrease wellbeing.

While the results can vary depending on the definition, government size (measured in terms of both welfare programs and of government consumption) is generally positively associated with wellbeing. In particular, both the level of social benefits, and the ease by which citizens can access them predict higher levels of national happiness.

In terms of political orientation, right-leaning individuals are generally happier than left-leaning individuals. But residents of countries with left-leaning governments are generally happier than those living in countries with right-leaning governments.

We have had invaluable help in writing this book. We are extremely grateful to Maria Cotofan, Micah Kaats and Ekaterina Oparina for their skillful research support, and to Jo Cantlay for her brilliant management of the manuscript from beginning to end.

Being exposed to nature (trees, plants and green space) has demonstrable positive effects on our physical health, our behaviour (including crime) and our wellbeing. Quantifying this can improve the design of our lifestyle and our cities. For instance, people with longer commutes experience less wellbeing. However house price differences underestimate the wellbeing effect of green space and other aspects of the environment (like air pollution and noise).

The quantity and quality of housing has a relatively small effect on wellbeing. This is partly because people compare their houses with those of their neighbours. But being in arrears on your mortgage of rent has a really negative effect.

Climate change is a classic public good problem, since CO2 emitted anywhere affects people living everywhere. Every country has an incentive to free ride on the costs incurred by others. Only international agreement can overcome this problem. Climate change is also a clear threat to the wellbeing of future generations. The wellbeing approach invites us to value the wellbeing of future generations as much as we value our own (subject only to a very small discount rate).

Wellbeing is mainly studied by asking people questions. The most common question is about life-satisfaction and replies satisfy standard tests of reliability and validity. Using the Gallup World Poll, the World Happiness Report finds that on a scale of 0–10, 1 in 6 of the world’s population score 3 of below and 1 in 6 score 8 or above – a huge inequality in the quality of life. Another approach is to measure how people feel from moment to moment – their ‘affect’. This can be done by bleeping people in real time or asking retrospective questions about yesterday. This approach is best for measuring the effects of short-term experiences, but less so for measuring a person’s underlying wellbeing. The book rejects the third so-called ‘eudaimonic’ measure of wellbeing, on the grounds that virtue is the means to an end (and not the end itself).

People’s wellbeing is experienced by how far their needs are satisfied. This depends on what they bring to the table (their behaviour, their thoughts, and their genes) and by the social environment in which they live. This determines the structure of Parts II and III of the book. Part IV deals with the role of government.

Social connections are vital to our wellbeing, not only for practical reasons but also for mutual affection, a sense of being needed, and a source of identity. This applies not only to connections within the family and the workplace but also within the community.

More community networks raise the average wellbeing in a society. Such networks depend heavily on volunteering - which benefits both the members of the community who are served but also the volunteers themselves.

Moreover, if everyone feels they can trust the other members of society, their wellbeing increases by one whole point compared with a position of zero trust. High levels of trust benefit especially those who are more disadvantaged, so trust is a force for equalising wellbeing. Crime is a breach of trust, and therefore the prevalence of crime reduces average wellbeing.

Immigration may cause political tensions but it has no measurable impact on the wellbeing of the existing residents and it confers huge wellbeing gains on the immigrants. But political stability requires controls on immigration.

This concludes our brief initial overview of the main causes of high and low wellbeing – and of the huge variation in wellbeing in the world. All the findings are cross-sectional, with time series and experiments left to later chapters. The findings of this chapter provide the framework for the rest of Part III of the book – starting with personal factors and working outwards to those relating to whole communities.

Within a country (if it is advanced), the main factors explaining the variance of wellbeing (and the prevalence of misery) are in rough order of importance: mental illness; physical illness; having work and the quality of that work; having a partner; family income; and education.

The variation of wellbeing across countries is largely explained (in rough order of importance) by: income; health; social support; personal freedom; trusting social relations; and generosity.

Predicting whether a child will become a happy adult is not easy. But wellbeing in childhood is a better predictor of satisfaction in adult life than the child’s academic success is. And as the next chapter shows, both schools and parents have big effects on children’s wellbeing.

The wellbeing approach offers a clear solution to the basic questions in political philosophy and moral philosophy. Crucially, it provides a single overarching goal. Coherent decisions require an overarching goal, for if you have multiple goals, they may point in different directions. Aristotle recognised this but modern ’utilitarianism’ dates back to Jeremy Bentham. According to the Benthamite approach, decisions should aim to maximise the discounted sum of future wellbeing.

This is already the approach of many health policy-makers. However others believe that it is especially important to raise the wellbeing of those whose wellbeing is low. This ’prioritarian’ approach suggests looking for new policies especially in those areas which account for the most misery (on which evidence exists), and giving especial weight to the reduction of misery.

There have been many criticisms of the wellbeing approach, which the chapter discusses and tries to answer – consequentialism and rights, the experience machine, adaptation, and the nanny state. Readers who accept those criticisms are challenged to come up with an alternative philosophy that is operational.

If wellbeing is to be at the heart of policy-making, some major changes would be needed.

Every organisation would try in whatever way it could to generate the largest number of WELLBYs (appropriately discounted).

Wherever there is a budget constraint, the available funds would go to those policies which generate the most WELLBYS (discounted) per dollar of expenditure (discounted).

Where traditional cost-benefit analysis measures benefits in units of money rather than wellbeing, benefits measured in money could be readily changed into units of wellbeing by multiplying them by the marginal utility of money. But monetary cost-benefit is not able to capture more than a fraction of the benefits of public policy.

Policy makers would especially develop new policies in areas which are causing the largest numbers of people to live in misery (low wellbeing). New Zealand has followed this approach.

Thousands of experiments would be essential to evaluate possible specific policies. We would also need better models of the determinants of wellbeing over the life-course. The explanation of wellbeing would become a central aim of all the social sciences.

The way our parents behave affects our wellbeing. Affection and firm boundaries have positive effects on our wellbeing. However, individual resilience plays a role too - many children survive severe abuse without major changes to their wellbeing. The mental health of parents (and especially mothers) has a significant impact on the wellbeing of their children.

Meanwhile, schools have more effect on children’s wellbeing than is usually appreciated, and so do individual teachers. If schools wish to improve child wellbeing, they will make that a major goal of the school, and will measure it regularly. Life skills will also be taught at least weekly using evidence-based materials.

In adulthood, family life is, on average, beneficial to wellbeing. But the quality of relationships often deteriorates after the birth of the first child. This problem can be reduced if both parents take ante-natal classes covering not just childcare but the impact of the child on their own relationship. If, despite this, the mental health of the children or their parents deteriorates, it is vital that professional mental health support is available.

Causal studies on the relationship between wellbeing and political participation have produced mixed results. Happier voters are found to be more engaged in some contexts but not others. In the Arab world, low wellbeing was a strong precedent and predictor of future uprisings. This relationship appears to be slightly weaker in Western countries.

Overall, there is strong evidence that happiness predicts higher levels of support for the incumbent political party. This effect has been found in a number of countries and using a variety of different analytic methodologies, including propensity score matching techniques and natural experiments. In many cases, this effect is even stronger than standard economic models of voter preferences.

Around the world, unhappier voters are also more likely to vote for populist parties and identify with populist ideologies. However, studies performed on elections in France, the United Kingdom, and the United States have found mostly mixed results regarding the extent to which life satisfaction in particular is predictive of populist electoral victories.

If you were not you but about to be born, where would you choose to be born? This book argues that the best society is the one where people feel best about their lives – where they have the highest ’subjective wellbeing’. It shows how wellbeing can be measured and then explained.

This introductory chapter summarises some key findings about the causes and effects of wellbeing. Key personal factors explaining wellbeing include mental health, human relationships (including work) and (less important) income. Key social factors include the quality of citizens’ behaviour, of government, and of personal freedom in your country. The book shows how, using this information, people can improve their own happiness and that of others and how governments can have the wellbeing of the people as their operational goal. Governments have every incentive to do this because wellbeing affects how people vote more than the economy does, and because wellbeing is also hugely beneficial to other goals like life expectancy, educational achievement and productivity. The science of wellbeing is totally inter-disciplinary and of great value to students of psychology, social policy, economics, politics and philosophy. It is central to answering questions about sustainability and ’beyond GDP’.