Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 677

Has 100 years of growth made us any happier?

Recently, I was fascinated to read that the United Arab Emirates (UAE) has a Ministry of Happiness. And I thought, “how appropriate”, when it is something we are continually striving for in life. Yet most nations, including Australia, tend to measure progress and wellbeing using proxy measures such as GDP per capita. And I couldn’t help thinking, are we barking up the wrong tree?

The UAE created the Ministry in 2016, signalling that governments should not just seek to optimise economic output, but also life satisfaction. The responsibility of the Minister of State for Happiness and Wellbeing is to “align and drive government policy to create social good and satisfaction”.

Being quantifiable and available, GDP has long been a proxy for progress and, by extension, wellbeing. But it is more a measure of production than lived experience.

Robert F. Kennedy once said in 1968 that GDP measures everything “except that which makes life worthwhile”, drawing a distinction between production and the wellbeing of citizens. And while strong GDP growth might be considered a prerequisite for happiness, in reality it can provide a basis for it, but doesn’t guarantee it.

Happiness is a subjective experience that typically involves a positive effect. It makes us feel good, content. We don’t fully understand the mechanism, but there appears to be a biological grounding, evidenced by neurochemical processes involving substances such as serotonin and endorphins, when we ‘feel’ happy.

There is also the set-point theory of happiness that suggests people have a baseline level of subjective wellbeing, influenced by genetics. Major life events may move us from our individual position on a spectrum with, say, a lottery win or a serious health setback, but we then trend back to our baseline with time. While no single ‘happiness gene’ has been identified, many genes do influence temperament which can shape long-term wellbeing.

This doesn’t mean that public policy has no role to play in influencing happiness, but rather that it must factor in biological underpinnings.

Estimates suggest that around 30% to 50% of the variation in long-term wellbeing may be attributable to genetic factors, with the remainder influenced by environment, culture, and life experiences. So there is certainly scope to lift a population up with strong economic and social institutions, even if individual variance persists due to biology.

Returning to the economic question, American economist Richard Easterlin observed in the 1970s that as countries grow richer over time, average happiness does not rise proportionally. If so, economic growth may not matter as much to average wellbeing as is often assumed. For example, in the last 100 years, GDP per capita has increased dramatically in modern economies, but I often wonder, are we as a people that much happier than we were 100 years ago?

Consider technological advances over the last century. In the 1920s, we didn't have a lot of life's luxuries of today, like air conditioning in homes, and it is easy to look back and think people of yesteryear had it so tough, they couldn't possibly be as happy as we are today. But in reality, people don't ruminate on what has not been imagined. 100 years ago, people would have accepted heat as normal. They were probably just as content with their lives in the moment as we are today with technology that didn’t exist back then. I wonder what things people in 2126 will be referring to when they say, “How did they possibly live without that back in 2026?”

That’s not to say technological advances add zero to wellbeing, rather that gains may be temporary before a new normal is settled into. Technology can raise living standards, but happiness may not necessarily rise by as much. GDP is therefore not the be-all and end-all.

This is partly due to happiness depending not just on current conditions, but also future expectations. We spend much of our lives in pursuit of upgrading our existence, whether it be the next job promotion, a bigger house, or better health. Yet when we attain our goals, the hit is short-lived as we then switch focus to the next ‘big thing’. Happiness is not everlasting, and in fact the relentless pursuit of it can actually make us unhappy.

This is where Buddhist teachings step into the discussion. They suggest that to break the cycle of misery, the chasing of happiness must be emptied from our minds. I often watch my little grandchildren playing and am struck by how happy they are living in the moment, oblivious to what their future might hold. Their minds are more accepting of current conditions and are far less focused on future expectations.

Therein lies a tension in the pursuit of happiness. Can we achieve better wellbeing by going down a path of an ever-expanding supply of comforts via eternal upgrades in technology, health, and wealth? Or do we subdue demand for future upgrades by emptying our minds of the pursuit of happiness? The answer probably lies somewhere in between. In that sense, GDP growth is not necessarily the wrong focus, just an incomplete one. And that the UAE is probably onto something.

 

Tony Dillon is a freelance writer and former actuary. This article is general information and does not consider the circumstances of any investor.

 

  •   26 August 2026
  • 8
  •      
  •   
8 Comments
Rod in Oz
August 27, 2026

Personally I'd rate Social Connections very highly.
However I live alone and don't see my children or grandchildren very often.
What do others find ?

1
Margaret Wright
August 27, 2026

It would be interesting to know whether Bhutan’s ‘score’ has gone up and what they attribute that to. Great article
Thanks

3
Mike
August 27, 2026

I have advised a number of very wealthy people over the years and have come to the conclusion that I seem to be a lot happier than that many are. The reason being I had something they didn’t have - enough.

3
OldbutSane
August 27, 2026

Good article. Happiness has very little to do with GDP (or possessions either) and Bhutan has has a Gross National Happiness indicator since 2008.

2
dauf
August 27, 2026

I’m sure its also an assessment of relative possession/expectations to others in the current time period…like now we clearly live in an era in which the politics of envy are being used to justify ideological positions (also see Cameron Murrays article in this edition)

1
Rick D
August 30, 2026

I feel if you are trying to identify that illusive measure of happiness, one way to do it is to think about envy. It feels like an inverse relationship - the less you experience envy, the happier you are likely to be.

1
john
August 30, 2026

United Arab Emirates (UAE) Ministry of Happiness is only for the elite privileged people in UAE. Others that live there have a miserable life. It an Qatar are dystopian sort of places

 

Leave a Comment:

RELATED ARTICLES

Gross National Happiness?

Wealth is more than a number

Housing is a major issue for older people too

banner

Most viewed in recent weeks

Why have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Latest Updates

SMSF strategies

Red flags to watch out for when considering an SMSF

Thinking about an SMSF? Before you sign anything, learn how to spot the difference between genuine advice and a sales pitch, understand the real costs, and avoid the compliance mistakes that attract ATO attention.

Shares

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

Investment strategies

Making a case for the 40 year mortgage

The housing debate tends to focus on prices, interest rates and deposits. Yet an overlooked feature of the mortgage itself could help buyers enter the market sooner without abandoning prudent lending standards.

Investment strategies

The market paid for change, not comfort

Reporting season has delivered a clear message: the market is no longer paying simply for quality, resilience or an earnings beat. It is paying for change in earnings expectations and the outlook ahead.

Investment strategies

Not all income is created equal

Market conditions are shifting as familiar yield sources quietly lose momentum. Australian public credit may be the most compelling source of income in today's market but many investors haven't noticed the shift. 

Investment strategies

Will AI destroy investor capital?

Some of history's most important innovations changed the world while leaving investors much poorer. As trillions pour into AI, a familiar pattern may be emerging, one that rewards society far more generously than capital.

ASX reporting season: Signals, surprises, stock stories

August reporting season delivered strong earnings and bigger-than-expected dividends, but beneath this, a more nuanced story emerged. First Sentier Investors’ David Wilson and Christian Guerra unpack the key trends.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.