According to the recent World Happiness Report 2017, Georgia ranks 125th among 155 countries with respect to peoples’ happiness. On a 0-10 happiness scale, the country scores only 4.29. Figure 1 below presents rankings and happiness scores for Georgia and its neighbors, as well as for the world’s best and worst performers. The top five countries – Norway, Denmark, Iceland, Switzerland, and Finland – are clustered so tightly that the differences among them are not statistically significant; they could be merged in a single “top-performing cluster” with respect to happiness. As for Georgia, our country is lagging behind all of its neighbors.

Figure 1. Ranking of Happiness selected countries

Nowadays, happiness is at the center of a paradigm change in economics. It is increasingly considered to be the proper measure of social progress, and an ideal focus for public policies. In a recent speech, the head of the UN Development Program (UNDP) spoke against what she called the “tyranny of GDP,” arguing that “paying more attention to happiness should be part of our efforts to achieve both human and sustainable development.” Some skeptics may argue that happiness is not the right measure of social progress; we should not bother about it too much, and instead should focus on conventional measures like GDP per capita, economic growth, human capital, etc. To counter this argument and highlight the relevance of happiness as a measure of social progress, we decided to present some very interesting findings from the economic literature. Today we will focus on the role of economic variables, in particular those related to labor markets. In the future, we plan to extend the discussion to other variables as well, such as social factors, including education, family life, and health, both mental and physical.

SO, WHAT ROLE DOES HAPPINESS PLAY IN THE LABOR MARKET?

The OECD Guidelines on Measuring Subjective Wellbeing (2013) define happiness as “subjective enjoyment of one’s life as-a-whole” and asserts that this can be measured using self-reports. Since the majority of people spend at least 8 hours per day – 5 days a week – at work, it is vital to understand how the working environment affects individuals’ wellbeing, and how it affects work outcomes. The World Happiness Report analyses data looking at how the working environment affects individual well-being. The main results of the study are presented below:

i) Employment is one of the major determinants of happiness all over the world - people with a job evaluate the quality of their lives much more favorably than those who are unemployed. The importance of having a job seems to extend far beyond the salary attached to it, and non-pecuniary aspects of employment, such as social status and social relations, are highly valued.

ii) Symmetrically, unhappiness is associated with being unemployed. Data shows that high unemployment rates have negative spillover effects, and decrease the subjective wellbeing of even those who are employed.

iii) Types of jobs seem to determine levels of happiness, with blue-collar labor being systematically associated with lower levels of happiness. All labor-intensive industries, such as construction, mining, manufacturing, transport, farming, fishing, and forestry, are usually associated with lower levels of subjective wellbeing.

iv) When job-related characteristics are analyzed, well-paid jobs are typically associated with higher happiness levels, but other factors also are very important in determining overall happiness. In particular, work-life balance, job variety and the need to learn new things, and the level of individual autonomy enjoyed by the employee are valued. Job security and a good social environment contribute to higher happiness levels as well.

It is even more interesting that the level of individual happiness can have significant effects on the economy as a whole, as recent labor market studies have demonstrated. Here are some of the reasons:

i) Happy workers are more productive workers. Recent experimental laboratory studies and real-world evidence, both, validate gains to companies from paying attention to employees’ wellbeing. Both a temporary increase in happiness and long-term changes in baseline happiness are associated with greater productivity. More and more companies worldwide are paying increasing attention to their workers’ happiness. Google is a very good example of this. The company has a unique culture focused on making its employees happy (Proto, E. 2016).

ii) Happy workers are more creative and their capacity to innovate is higher. Several studies show that a positive mood induces subjects to spend more of their time doing creative tasks (Proto, E. 2016; Isen, A. M., and J. Reeve. 2005; etc.).

Some economists describe the low performance of transition countries, including Georgia, by referring to the so-called “happiness gap.” By referring to the “happiness gap” in transition countries, scholars mean the difference in average happiness levels between the populations of transition and non-transition economies (controlling for other observable characteristics such as per capita income level). The argument is that the transition process through which these populations had to go after the break-up of the Soviet Union was a very painful experience. Over the years, the gap seems to be closing, but at a slower pace than the process of economic convergence. Rising income levels in post-Communist countries have not yet compensated for the fall in well-being during the process of transition. Economic and political stability still have a stronger influence on life satisfaction than economic growth in transition countries. These arguments may partially explain why Georgia is only at 125th place in the world happiness ranking. As all of us know, the transformation was especially painful for Georgia, which has gone through dramatic political transformation and civil wars, as well as a violent military coup d’état and the recent 2008 war with Russia. This political turmoil, added to the “shock therapy” of economic transformation, resulted in Georgia having the largest drop in economic activity during the transition years, compared to other post-Soviet countries.

Perceptions of the importance of happiness in the workplace, and of job satisfaction perceptions, seem to be different in Georgia than in other European countries I have visited. In a country like Georgia, which has been characterized by double-digit unemployment for a long time (not to mention the high level of underemployment), those who have “real” full-time jobs work day and night, typically more than 40 hours a week. We have discussed this overworking problem in a previous blog. In addition, only a few companies give flexibility to their employees, and/or care about fostering a happy working environment. This makes it hard to achieve a work-life balance. Sometimes, even talking about happiness in professional circles provokes some irony, and the speaker may be viewed as a lazy person. Contemporary Georgian society needs to re-learn that happiness and work are not two mutually exclusive concepts; it is ok to feel happy at work, and moreover, this may lead to increased productivity and creativity.

In conclusion, I would like to share a particularly inspiring example, recalling my personal experience while visiting my friend (who has a Ph.D. in Computational Biophysics from Heidelberg University) in London last year. At the end of her working day, we ended up at the Action for Happiness Movement, where top professionals in their fields gathered in order to make a change and build a happier society. In these meetings, leading experts from the fields of psychology, education, economics, social innovation, and beyond shared the latest scientific research on happiness, and are helping to build a happier and more caring society. I was sitting there and instead of listening to the speeches, I was staring at the audience with surprise. I can assure you (I have double-checked with my friend), that the audience was full of successful professionals who, after the working day had ended, came together to think and take action to help cultivate and spread happiness. That was amazing for me, and I believe it is an example that should be followed.

What we learned from the happiness studies we discussed today is that post-transition societies should start caring more about happiness in working places. This will lead to a closing of the “happiness gap,” and simultaneously will contribute to speeding up the economic convergence process by stimulating (to some extent) economic growth in the country.