People are happier in more equal societies. Here’s the evidence

On World Happiness Day we should be talking about inequality


Today is Word Happiness Day, and interest in what makes us happy has never been greater. The ‘science of happiness’ is a growing field.

Even the government has taken note in recent years: the Office of National Statistics has researched the topic extensively and now publishes regular updates about the happiness, or subjective wellbeing as economists prefer, of the UK’s population.

General wellbeing studies at the national level tend to focus upon non-material causes of happiness, such as family and friends, healthy life expectancy and community safety.

Unlike international studies, few confront the chief underlying cause of unhappiness in societies – material inequality.

Richard Layard among others has noted how happiness has stalled in many developed countries, despite considerable improvements in living standards over the last fifty years to so.

Studies comparing richer countries point to the importance of equality as a determinant of aggregate happiness. Countries with relatively narrow inequalities, such as Sweden, tend to express higher levels of happiness than those with wider inequalities, like the UK.

Reducing inequality of wealth and income, especially linked to tenure and housing affordability, is the primary mechanism to improve a society’s aggregate happiness.

Since the UK is one of the world’s most unequal societies, and has one of the most lop-sided housing systems, with home ownership promoted as the ‘natural’ tenure of choice, then any strategy to close the wealth gap has to begin in the housing field.

Tenure in the UK today is a metaphor for inequality with the growing gap between home owners and social tenants well-documented in the ONS Wealth and Assets Surveys.

Despite home ownership being in decline as a proportion of the total housing system, and variability within tenures, what sort of home you live is the most credible predicator of household prosperity.

Housing wealth in the UK is around £4 trillion, which equates to about four fifths of the £9 trillion in total wealth. Yet the majority of social tenants have comparatively few assets.

According to HCI’s research, the average social tenant has just £500 in savings. Our estimate of other assets held by tenants suggests that the total wealth in the social housing sector is probably not more than £50 billion, or a little over one per cent of the equity held by home owners.

Other linkages between housing and happiness are emerging from a range of studies. Intrinsic housing and community issues can reduce general levels of wellbeing; especially those associated with poor housing, and rundown estates, more prevalent in social housing.

Our research also points to home owners receiving additional benefits to social renters with a psychological ‘lift’ from the act of ownership itself, irrespective of housing quality and location.

This is called the ‘asset effect’. The opposite holds true for social tenants, who are often portrayed negatively.

The accumulation of assets has positive effects on happiness and wellbeing, as well as self-esteem, security, health, educational attainment, employment, and life chances.

Controlling assets tends to change thinking and behaviour.  It can lead to beneficial effects that are not achieved to the same extent by an equivalent amount of regular income.

Since not everyone can get on the property ladder, social housing must pursue other forms of ownership and control by tenants and communities.

We advocate a ‘New Deal for Tenants’ where social housing’s attractiveness is bolstered by narrowing the growing wealth divide between home owners and social tenants.

An ‘asset-owning democracy’ would be brought a step closer by the creation of a Tenants’ Mutual, to provide asset accounts to social tenants, and which would invest in social housing and communities, while supporting the creation of tenant and community-controlled housing.

This would not only enable social tenants to have a greater say in the management of their homes and communities, while ‘nudging’ the benefits of the ‘asset effect’ into the social housing sector, but also narrow wealth inequality and enhance the esteem of tenants in wider society. The pursuit of happiness indeed.

Kevin Gulliver is Director of Birmingham-based research charity the Human City Institute, writing in a personal capacity. Follow him on Twitter @kevingulliver

See: The baby boomers didn’t betray their children – they let down their parents

Comments are closed.