When economic growth improves subjective well-being

This paper provides updated evidence on the possibility of a virtuous cycle that, by prioritizing subjective well-being in decision making, would lead to socially and environmentally sustainable economies where individuals can thrive. We first argue that economic growth does not guarantee better lives for individuals. Our policy efforts should instead concentrate on promoting well-being directly and establishing conditions that allow economic growth to enhance well-being. We then introduce neo-humanism, a framework to prioritize well-being in decision making, and review the key evidence linking social relations, sustainability, and economic performance. In addition, we provide new evidence on defensive consumption, introduce a new measure of performance - well-being productivity, and provide some examples of policies targeting subjective well-being directly. The main implication is that public policy should prioritize well-being in decision making, rather than focusing on growth in the hope that its benefits will eventually trickle down onto people.