Economic Policies In The Light Of Happiness Studies With Reference To Singapore

Recent happiness studies show that income explains only 2% of the variance in happiness. Quality-of-life indicators also correlate less with income but more with advances in knowledge at the world level. Individuals and nations still engage in the rat race for higher incomes due to the competition for relative standing, the ignoring of the environmental disruption effects, our accumulation instinct, the influence of advertising and peer pressure, and the inadequate recognition of the habituation effect. In addition, economists over-estimate the costs of public spending, emphasising the excess burden of taxation, ignoring the negative excess burden in the public spending side and ignoring the grosser inefficiency of private consumption. These considerations suggest that more public spending in the right areas like education, research, and environmental protection may be much more welfare-improving despite some unavoidable inefficiencies. The restriction of private cars in Singapore may be desirable despite being excessive in accordance to the narrower economic analysis. It may also be appropriate to emphasise non-income factors important for welfare, including freedom and democracy.