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“The frontier innovation on Public Administration”
Lello Esposito, important contemporary artist from Naples, kindly donated this picture, enriched with the colours of the
Mediterranean:blue, green and yellow
•
Luigino Bruni – Seminar of 15th November 2004
The views expressed do not imply the expression of any opinion whatsoever on the part of the
United Nations and of Italian Department for Public Administration, and Formez
Luigino Bruni – Profile
Associate Professor in Political Economy.
Researcher in Political Economy in the Faculty of Economics at the Bicocca University of Milan.
Contract Professor in: History of Economic Thought at the “L.Bocconi” University of Milan;
Economics, Bicocca University of Milan, Faculty of Psychology; ‘Non-profit’ethics and economics,
Milano-Bicocca (Economics); History of Economic Thought, Milan-Bicocca; Cooperation
Economics, Catholic University-Milano.
Microeconomics: themes of rationality in economics and games theory. In recent years
research has extended to the more analytical aspects of microeconomics, particularly the more
controversial aspects of the theory of rational choice and advanced games theory.
Economic theory and happiness: The PhD I am completing at Norwich is based on the
idea of “happiness in economics”, analysed from the micro and methodological point of view.
Philosophy and ethics of economics: I have always - since graduating – had a strong
interest in ethics and philosophy in economics, which has led me in time to concentrate on choice,
trust and social capital.
History of economic thought: from Genovese to Smith to Pareto and his contemporaries:
since completing my doctorate in Florence I have always sought to concentrate on writers who
cover the entire arc of the history of economic thought.
Social and non-profit economics: I have worked for several years on the economic theory
of social economics, the non-profit sector in particular, focusing on the micro aspects: intrinsic
motivations, non-instrumental rationality, relational goods.
-
Grade two paper: “Trust and Social Capital in the work of Hume, Smith and Genovese”, (writen
with R. Sugden), published in Economics and Philosophy (Spring 2000), in the competition for
best paper of the year of the “History of Economics Society” (USA).
- Grade one paper: “Vilfredo Pareto and the epistemological foundations of choice theory”,
(written with G. Guala), published in History of Political Economy (Spring 2001), in the
competition for best paper by young students (under 35) of the “European Society of History of
Economic Thought”.
Publications
1. Vilfredo Pareto and the birth of the modern microeconomics, Elgar, Chelterham, 2002
2. Vilfredo Pareto. Alle radici della scienza economica del novecento, Collana “Economisti
Italiani”, Polistampa, Firenze, 2000
3. L’economia, la felicità e gli altri. Un’indagine su beni e benessere, Città Nuova, Roma,
2003.
4. Economia civile, con S. Zamagni, Il Mulino, Bologna 2004.
5. Economics and the Paradoxes of Happiness, Routledge, London, 2005 (in corso di
pubblicazione)
6. Economia come impegno civile (con V. Pelligra), Città Nuova, Roma, 2002.
7. Verso un agire economico “a misura di persona”, (con V. Moramarco), Vita e Pensiero,
Milano, 2000.
8. Economia di comunione: per un agire economico a più dimensioni, Città Nuova, Roma
1999. This volume has been published in English and went to second editions in Spanish
and Portuguese.
9. Felicità ed economia, con P.L. Porta, Guerini, Milano, 2004.
10. Economics and Happiness (edited by L. Bruni and PL. Porta), OUP, 2005, currently in
preparation for publication.
“The Economics of Happiness”
Luigino Bruni
“Men’s deepest, strongest yearning is to achieve
happiness ... Economics shares no less an aim, which it
serves as the means to an end. Economics cannot
therefore dwell, as some believe, on research and the
doctrine of half-measures to increase production;
rather, its concern with production is useful only in so
far as this is capable of increasing men’s opportunities
to live happily” (R. Michels).
1. In the beginning there was happiness
Happiness has a long tradition in economics. Modern economics has it origins in the
Mediterrean as the science of “public happiness”, where the adjective “public” put the accent also
on the social nature of happiness.
The Genoa born, naturalised Neapolitan writer, Paolo Mattia Doria began his Of Civil Life
(1710) with the phrase: “The first object of our desires is without doubt human happiness”. The
concern for happiness is a theme shared by Italian economists, particularly Neapolitans, since the
eighteenth century.
Antonio Genovesi (1963, 1976) is perhaps the foremost theorist on the relationship between
public happiness and civic virtues, but the theme was linked to the Italian economists, who, as the
Italian Achille Loria wrote at the end of the nineteenth century, “deal not so much with the wealth
of nations, as Adam Smith did, but rather with public happiness” (Loria, 1904, p. 85).
We find happiness in the titles of writings by Giuseppe Palmieri from Lecce (Reflections on
Public Happiness, 1787), of Ludovico Muratori (On Public Happiness, 1749), and in the work of
the Milanese Pietro Verri who insisted that “the treatise On Happiness has a very common theme,
on which many, many others have written” (Verri, 1963, p. 3).
For two centuries happiness has been overshadowed as a theme in economic thought, and its
return today is one of the most interesting aspects of the panorama of economic theory.
The rediscovery of the Neapolitan school of civil economy can be a source of inspiration in
understanding new trends in economics. The dialogue in civic life, or polis, is essential for an
understanding of the Neapolitan school.
2. The current debate
The return of happiness as a theme in economics is due to the emergence of a new fact.
Economists themselves has always known that wealth alone does not bring happiness. The often
implicit hypothesis underlying economic analysis was that even if wealth or economic well-being
did not always bring a “proportional” increase in happiness, it did not would not however entail its
diminution.
For this reason, especially in the Anglo-Saxon tradition, economics has confined its concern
to a sphere much less complicated than happiness: that of wealth or (economic) well-being –
realising of course that much of peoples’ happiness depends on non-economic factors such as
relationships and emotions, which have nothing to do with the market.
The theory of relative income offers some interesting clues as to why an absolute increase in
per capita income does not bring an increase in happiness: only if our income level increases
relative to that of others does our happiness increase.
Is this explanation enough to account for the paradox of happiness?
Another interpretation for the reason why happiness is diminishing in many “advanced”
societies, involves the classical idea of happiness, the Aristotelian eudaimonia.
3. The first thoughts
All Greek philosphy sought to make a distinction between fortune and happiness. The
mythical period, which we understand as the Greek-Classical period, has achieved a fusion of the
two words.
The expression eudaimonia originally meant “good demon”, indicating that reaching
eudaimonia meant one had a good demon, or good fortune. Happiness and fortune were two
identical concepts. This original meaning is retained in modern Anglo-Saxon languages: in German,
glück means both happiness and fortune, and in English, “happiness” comes from the verb “to
happen”.
With Socrates and then Plato and Aristotle, the word eudaimonia became laden with new
meanings and the idea gained currency that man, with his choices and his liberty, could become
happy, even against the strictures of fate. And the way to reach happiness is to lead a good life, a
virtuous life: virtue becomes the way to happiness, but the virtues cannot be instrumental, but an
end in itself, the practice of which indirectly bears the fruit of happiness. The concept of virtue
therefore constitutes the instrument that helps us to distinguish fortune from happiness.
Virtue is synonymous with a flourishing life, of human rebirth, of the man who is well and
therefore happy. Tragedy, the ethic of Plato and Aristotle, can be read as an attempt to dissociate
happiness from fortune, through the virtues.
The differences in approach between Plato and Aristotle are interesting. In order to render
happiness as something independent from fate, Plato recommends that philosophy be detached from
external circumstances, including relationships with other people, so that our happiness is not
dependent on their choices. Aristotle’s vision however, is fundamentally different. In the
Nichomachean Ethics he asserts the essentially social, relational nature of eudaimonia: it is largely
dependent on civil virtues, on intimate, non exploitative relationships: on relational goods
(Nussbaum 1986).
In Plato’s view civil life is synonymous with relational goods characterised by love/friendship
(love that does not diminish the other); by civic commitment and the citizen’s commitment to the
society of the polis.
Aristotle had a more complex vision in his Ethics, where he focused on friendship and
asserted that: by relying on others, one is not independent, but one cannot be happy in isolation. All
levels of human development, i.e. men in a state of happiness, have a need for friendship.
The common need to separate happiness from fate depends also on the choices made by
others.
The vita civil, or civic life is the place where happiness reaches a state of perfection, but at
the same we know that from the ontological point of view, the good life is fragile and vulnerable. If
the individual renounces relations with others in order to be happy, he will never attain happiness
which is paradoxical by nature anyway. In other words – and this goes against the grain of common
opinion - it is a paradox that exists at the heart of the “sincere” interpersonal relations upon which
happiness depends.
4. The Italian tradition of public happiness
Economists of the so-called classical period of economic science paid close attention to the
social and psychological factors that influence the dynamics of consumption .
However, these were rarely incorporated into theory, but confined to social or ethical discussion
(we need only think of the social and psychological analyses found in the non-economic works
of Adam Smith).
The analysis of consumption was not differentiated from social, ethical or political analysis.
The early economists a generally had a highly socialised approach to economics. Subjects were
seen to be immersed in a network of personalised relationships. Consequently, consumption was
also placed in a social and relational context , and was studied as such.
This is very true for the tradition of civil economy, a largely Italian phenomenon, even if in
the broadest sense it can also be said of most of the classical economists from Smith to J.S. Mill,
and even to Bentham.
After the classical age, and until recent times, the development of economic science can be said
to have gradually jettisoned its concern for the social and interpersonal dynamics of civic life.
Important exceptions to this rule do however exist: Malthus, Senior, Edgeworth, Marshall,
Veblen.
In 1642 Thomas Hobbes wrote De Cive, (The Citizen) in a historico-social context, where
man was defined by his fear of being killed. In fact, with Hobbes we see the death of the social
aspect and the birth of the political. There was a shift away from the civil aspect (the polis and the
civic dimension) towards the political. The elements of liberty were abandoned in favour of those of
a political character.
Alberto Bobbio suggests another reading of Hobbes by considering society as an
intermediate level; man is born, grows, is married, starts a family. Many families make up society.
Civil society, according to Bobbio, therefore becomes uniform.
However Hobbes denies fraternity, to arrive instead at equality and liberty, hoping to reach
the final destination of having free and equal people. Hobbes is therefore important for an
understanding of the current situation of civil economy.
Political economy is characteristic of English and Scottish economic thought while civil
economy, with its origins in an Italian city – Naples, has the objective of protecting the three
principles of equality, fraternity and liberty.
Enlightenment Naples cannot be avoided in any reconstruction of the relationship between
economics and happiness. The leading economist of the Neapolitan school was the Salernitan
Antonio Genovesi (1713-1769). “Civil Economy” was in fact the expression used by Genovesi to
describe a notion of economic activity where the civil virtues of reciprocity, shared trust and mutual
confidence were considered essential for the development of a nation.
This economist of the Kingdom of Naples developed an idea of economics where the role of
civil society and the informal network of interpersonal relations was central.
“Civil”economy is distinctive in comparison with both the political economy of the AngloSaxon world and the public or social economy typical of France and other Italian writers. Although
these issues may highlight the differences between the new science and domestic or private
economics, the civil economy of Genovesi and the Neapolitan tradition present some characteristics
that render it a system in its own right. At the one time there is the emphasis placed on civil, or
urban life and the Genovesian emphasis on ‘civic’ bodies, particularly the family, which constituted
the heart of the city and of the nation. “The rights of families arise out of the rights of individuals
and their various combinations; the rights of political bodies likewise come from the rights of
families”.
On the other hand, in Genovesi’s view, not only is civic life unopposed to happiness, it is
seen as the place in which happiness can be fully achieved – a process assisted also by laws,
commerce and trade, and the civic bodies in which men exercise their sociality: “If on the one side
the company of men can beget some ills it also stands as a custodian of life and property, which
brings many pleasures, unknown to men of nature” (Diceosina, p. 37).
This is a cornerstone of the traditional Italian civic vision ( (la vita civile), from Petrarch to
G.B. Alberti, from Valla to Guicciardini and many others, who, having perceptively observed in
their own towns the birth of that certain something new that would lead to modern capitalism,
wondered whether the search for gain, lucre, profit, luxury and interest was merely to be
condemned (as a certain classical-Thomist philosphy would demand), or if, under particular
conditions, it could even be encouraged for the common good.
Closer still to the thinking of Genovesi was that of his master Vico, who in New Science (third
edition 1744) wrote that the legislation and regulations of civil society, unlike philosophy, which
considers man as he “ought to be”, considers man “as he is, to make use of him for the good of
human society”.
We now move on to Genovesi’s idea of happiness, which presents important elements
overlooked in the current debate on economics and happiness. I chose this author not only because
he is the leader of the Neapolitan school, centred more than any other school on ‘public happiness’
but also because he appears to be an economist who attempted to engage the new Enlightenment
instances in the classical Greek (Aristotelian) and Latin (scholastic) tradition”, in the Italian
humanist tradition of the “civic life” , and linked them with the original thought of G.B. Vico, one
of his masters. There are no doubts surrounding the classical credentials of the thought of Genovesi:
one only has to think of his emphasis on “public faith” and the virtues, or to remember that he
taught moral philosophy in the same university faculty occupied by Saint Thomas, or that Aristotle
is by far the most quoted author in his works. Nor can the modernity of his thought be brought into
question: Galileian and Newtonian themes are present in his work, as are the Cambridge Platonists,
the French Enlightenment thinkers, Descartes and Locke. In fact, the ‘Lockist’ elements of his
philosophy and theology was the target of the fiercest criticism by the ecclesiastical authorities.
Happiness is paradoxical in nature precisely because it is constitutively social and relational.
We see Genovesi’s understanding, in keeping with the classical tradition, that a “good life” cannot
be lived if not with and because of other people (making others happy). This is why we cannot fully
control it: the completeness of a human being depends on reciprocity, but to get this requires
engaging in gratuitous or selfless actions, in the hope of reciprocal responses (Plato and other Greek
philosophers warned that this involves dangerous risks). Without this willingness, genuine
reciprocity cannot be engendered.
“All our economists”, wrote the Italian economist Achille Loria at the end of the nineteenth
century, reporting a widely circulating thesis in the Italy of that time, “Are occupied, not so much
with the Wealth of Nations, as Adam Smith was, but rather with public happiness” (Loria, 1904, p.
85).
Paolo Mattia Doria began his On Civil Life (1710), a text that became an important source
for the development of the thought of Genovesi and the Neapolitan school, with this phrase: “The
first object of our desires is without doubt human happiness”.
We find happiness in the titles of writings of several economists of the Kingdom of Naples
at that time: from Giuseppe Palmieri (Reflections on Public Happiness), to Ludovico Muratori (On
Public Happiness), or Pietro Verri who stressed that “the treatise On Happiness has a very common
theme, on which many, many others have written”.
Although the Kingdom of Naples economists and indeed much of the Italian tradition attach
great importance to public happiness, making a principal characteristic of the Italian classical school
of economics, it does not mean that the theme was the prerogative of the Italy alone. French
philosophers and economists such as Liguet, Maupertuis, Necker, Turgot, Condorcet, Sismondi, all
included happiness in their analyses.
But the fact remains that English economic thought, as developed by Smith and later
Ricardo and the other classicists, has not focused on happiness but the wealth of nations.
Vico, Galliani and Genovesi also admit the idea of providence, as defined by the Scots,
which transforms private wealth into public assets. The city of Naples is aware that providence
transforms private wealth into public assets, through the institutions (without corrupt officials or
magistrates) and the law. Therefore civil economy, the civitas is fundamental.
This is Vico and di Galiani’s a coherent theory of the heterogenesis of the objectives. We
find, however in these writers, a particular accent which is common to the Italian tradition of civil
economy: private interests do not always naturally become public virtues; it occurs only in civic
life, only within those institutions and laws that regulate civic life. (Nuccio 1995). The savage men
“the lone giants” (Vico) do not know of this spontaneous order, which is assured only by civil life.
The key-words of Genovesi
•
Market– Reciprocal help (reciprocity even in the economic market).
•
Public trust – The first natural resource of a region is trust.
According to Genovese, wherever trust occurs, the market also occurs. For the English
thinkers, the market arrived first, and trust, fidelity and fairness came afterwards. In this way trust
became an economic resource.
Culture must therefore be popular, and not like Latin, accessible only to certain social
categories. It must be available to everyone, so what is necessary is civil economics
social
capital.
•
Public trust – Economics = Happiness
Filangieri led the first Neapolitan school (1750-1799), influenced by Aristotlian thought: one
cannot be happy in isolation. One can be rich in isolation, but to be happy requires at least two
persons.
Public happiness. Public because it was still the business of the sovereign. However it
presses for the ideal conditions for welfare and social security, the reason whereby in Naples this
period coincided with the reign of Charles IV of Bourbon.
The civil economy tradition of happiness is public because it is linked to the common good,
which is the goal of government activity, of the “science of administration”, and must therefore
become the ideal of the good governance of the sovereign, “who is the supreme and independent
moderator of public happiness, - the happiness of the entire body and foe each limb”.
•
Social capital – there are three perspectives:
-
The course of development until the 1950s, which extended up until the 60s/’70s,
emphasised physical capital (machines, premises, technology). Development is
fostered by investing in technology and machinery.
-
The economic development of a country cannot rely on good machinery alone;
human resources are also necessary, especially properly trained human resources.
Physical capital must be accompanied by human capital.
-
The presence of human capital does not however automatically mean
development. It is also necessary to be able to build relations with others. The
need that emerges, therefore, is the knowledge of how to create relationships with
others.
Public trust is lacking.
Genovese stated that there was a lack of public trust, and this would explain why Naples has
not developed in a big way as Milan has done. There is a lack of reciprocity, of trust.
The society organised on the basis of public trust requires genuine and earnest conduct; as
relationships become more complicated, the affairs of the market become simpler. Customers never
demand reciprocity from the market (an intrinsic relationship). In fact this is to do with the theme of
social economy – the focus is not on profit, but on social relations.
5. The fragility of relational goods
The return of happiness as a theme in economics is due to the emergence of a new fact.
Economists themselves has always known that wealth alone does not bring happiness. The often
implicit hypothesis underlying economic analysis was that even if wealth or economic well-being
did not always bring a “proportional” increase in happiness, it did not would not however entail its
diminution.
For this reason, especially in the Anglo-Saxon tradition, economics has confined its concern
to a sphere much less complicated than happiness: wealth or (economic) well-being – while
realising of course, that much of peoples’ happiness depends on non-economic factors such as
relationships and emotions, which have nothing to do with the market.
Recently, however, a new fact has emerged: in the high income society, having a greater
income does not make us more happy, or at least makes us less happy than we would expect. This
observation has prompted economists during the last 25 years to study happiness more thoroughly
(the pioneering work was by Easterlin, 1974), and today many “believe that happiness should once
more occupy a more central place in economic science” (Dixon 1997, p. 1812).
The debate carries on, and there is much disagreement on non-secondary points. Easterlin
(2000) for example holds that “the relation between happiness and income is very complex. In a
given moment in time, those who have more money are on average, more happy than those who
have less. If however we consider the cycle of life as a whole, the average happiness level of a
group remains constant despite a considerable increase in income.” (p. 1). Synchronic analyses of
data from various countries demonstrate a positive and significant correlation between happiness
and income, while diachronic analyses performed on the same groups of people show that in the
course of time happiness remains very nearly constant and is not dependent on variation in income.
But the mere revelation of the paradox is not enough for economists: they want to explain it,
to discover the reason why the relationship between income and happiness should progress so
differently to the way that common sense would suggest, and differently to what social scientists
have always hypothesised.
There are many explanations, but one idea runs through all the different theories: in
concentrating on its variable focal points, (income, wealth, consumption…) economic science
neglects something more important which reflects on people’s happiness or well-being.
While it is true that economists have only recently begun to look at happiness, psychologists
have on the other hand been analysing it for fifty years with the result that the study of happiness is
now a very fertile field of interdisciplinary research.
In 1971, two psychologists carried out a study on the relations between income and
happiness of certain subjects; by way of example, one outcome of the research suggested that
winning the lottery left people less happy than before.
There are at least three theories in the field of psychology that seek to explain the relationship
between wealth and happiness. They are described thus: (a) Comparative perspective, (b) Goal
attainment and (c) Hedonic approach. Proponents of the comparative perspective argue that
happiness derives from the comparison of one’s own economic position and that of a reference
group. The, goal attainment perspective regards wealth as a potential source of well-being because
it places people in conditions where they can fulfil the objectives that come before them. Finally,
the hedonic perspective considers wealth as a means that permits the individual to live in a more
satisfying way.
Richard Easterlin made a study in 1974 on the daily life of Americans– family, work,
friends, leisure, etc.
Chart 1 : Pro-capita income and happiness relation
‘very happy’ index
income per capita
per capita
20.000
7,8
15.000
7,6
7,4
10.000
7,2
7
5.000
6,8
0
1940
1950
1960
1970
1980
1990
Source: Lane 2 000
The analysis of these results leads to the conclusion that there is no direct relationship
between income and happiness, so economic satisfaction does not bring happiness. One’s personal
well-being does not depend on one’s income.
Robert Putnam, who did much to launch the theory of social capital, identifies the
diminution of happiness in American society as arising from the diminution of the civil virtues and
its associative civil life. Lane and Putnam do not go much further than asking why happiness
depends on the associative life, or as Lane says, on companionship.
To say something more in this direction we must introduce the concept of relational goods,
closely linked to the theory of happiness as eudaimonia.
Relational goods can be defined as relation-specific local public assets, produced through
“encounters” in which the identity, the attitude and the motivations of the subjects involved are
essential elements in the creation of and in the value of the goods.
The paradox of Easterlin is identified with the fact that income increases by 5,000 dollars to
5,000 dollars per capita, and does not coincide with an increase in happiness. There are three
psychological reasons to explain this phenomenon, known as set-point theory:
1. Psychological theory – people’s capacity for satisfaction.
Each person has a base level of satisfaction (humans have a strong ability to
adapt to external circumstances).
2. Sociological theory – The happiness of a person can be defined as the relation
between themselves and the means they possess.
means
F=
aspirations
3.Economic theory – procedural equity.
Well-being is a function of the income of person A against that of his
colleague B. What counts, therefore is directorship position, promotion,
professional career. A must possess as much as B or the next door neighbour
(latest model cellphone, a second house by the sea or in the mountains, more
luxurious car. etc). More and more energy is invested in the acquisition of
more wealth.
Consumption is also a means for making social distinctions (Genovese
himself had once said this).
B
A
(The relationed asset has another).
B consumes and pollutes A; this is a negative relationship. We could say that
this is a good explanation of unhappiness – people have more but are more
unhappy.
4. Relational theory– “civic” idea of Genovese
The happiness of A depends on the accumulation of wealth, on his
relationship with others and on relational goods.
Pollution is just an external geographical fact; the effort made to have more goods pollutes
relations with others and reduces time for love and friendship – obviously this behaviour is neither
intentional nor conscious. By polluting, one worsens one’s relationships with others.
A theory of happiness like eudaimonia helps us to dig deeper into this paradox. If the effort
to increase income (absolute or relative) systematically produces negative effects on the quality and
quantity of our personal relations (it causes a decrease in the happiness we draw from the
“consumption” of relational goods), then the overall effect of an income increase on happiness
(Marshall reminds us that it may not have direct negative effects: think of countries with low levels
of income), as an outcome of the negative indirect consequences it has on relationships, can be
negative. It is reasonable to suppose that the overall effect of income on happiness is positive for
low income levels, but when they rise above a certain point the effect becomes negative. The
individual with a very low level of income can gain an improvement in relations from an increase in
income (for the very poor, an income increase can help in cultivating friendships: in extreme
poverty gratuitous behaviour is threatened).
6. Relational goods and the civil economy
Through the stability pact, politics can have a fundamental role in the civil economy.
Increasing taxes on consumer goods inhibits the consumption of these goods. So, according to this
theory, people would consume less (e.g. in the case of energy). The civil society must regulate the
consumption of everyone.
B.
A.
50
150
Increase in income (A) / increase in well-being (B)= satisfaction of the country.
The public administrations ought to consider how to create more place for relational goods
and less space for consumption. This is not a problem for the individual, but for civil society.
The scarce assets in western countries are no longer the physical ones, but are the relational
goods – child nurseries, schools, public gardens, old people’s homes, meeting places. It is therefore
important to develop policies that support relational goods and not positional goods.
Standard economic goods and relational goods are complementary and self generating;
however there is a critical point where a reciprocal rupture occurs in their relationship.
The birth of the civil economy in Naples, a city characterised by strong personal relations
and meeting places, perhaps explains the innate vocation of the Mediterranean– the existence and
persistence of relational goods