What would make life better?

Andrew Sissons
7 min readMay 19, 2022

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Why growth needs to be about more than productivity

Front cover of The Economist. “The great innovation debate”, Jan 12th 2013

Does economic growth make life better? Ask someone who lives in a slum, or in rural poverty, or anytime before about the year 1960, and it’s a stupid question. Would more food, household goods, access to health and education, a better home make your life better? Of course it would. But is that answer so obvious to someone who’s reasonably well off in one of today’s richer economies? I’m not sure it is obvious, and I think we need to ask the question: is the way we are getting richer making our lives better?

This question is prompted by two problems we have in modern, prosperous societies. First, the rate of economic growth has slowed down dramatically in the last decade or two, and we’re not sure why. Second, many more people are asking whether economic growth is even a good thing, and are having some success in thwarting it. The two problems may be connected.

I’ve always been of the view that growth is good because it makes more things possible in our society. It gives us more choices about what we want to do, whether that’s to fund the health service or to spend more on cigarettes. We may not make the right choices, but at least growth lets us make them.

But what if I’m wrong, what if the new things in our economy are no longer improving our lives? What is the point of economic growth if it doesn’t make our lives better? If we’re not doing more things that make our life better, why would we expect the economy to grow at all?

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Linking growth to an improvement in our lives is not a radical thought — it’s long been embedded at the heart of economics. Gross Domestic Product, the sometimes maligned measure we use to gauge the size of our economy, is basically just a measure of all the value we create (it has a near-identical twin measure called Gross Value Added). Value is a human-centric thing. It’s what things are worth to us, how much we value them. GDP is not a measure of how many resources we consume or how much financial capital we accumulate — it is a measure of how much valuable stuff we produce and consume. If things aren’t valuable to us, they shouldn’t make the economy bigger.

But economics isn’t always very good at keeping value in mind. First problem: we aren’t very good at measuring value. We generally use market prices as an approximation, on the basis that everything is worth what its purchaser will pay for it. That means we undervalue some priceless things (like air and water), it ignores non-market goods (like parks and street trees) and it may overvalue some goods in uncompetitive markets. And what if we get tricked into paying for things we don’t really want?

Second problem: economists aren’t always very good at thinking about value anyway (honourable exception for environmental economists here). Long-term growth in economics is all about productivity, which in turn is all about how efficiently we can produce things. But that is only half the story — the things you produce have got to be valuable to people as well. The numerator in the productivity equation is output, and we measure output by the value it creates.

This leads us to the famous Robert Gordon argument — that none of our recent inventions are anything like as valuable to us as a flushing toilet. There is no doubt that growing your home from one room to two, or introducing running water, or an oven and dishwasher make your life better. But does this apply to recent innovations? Does moving from a basic mobile phone to a smartphone really make your life better? Does increasing the size of your car really make your life better — especially taking into account the negative effect it has on other people?

This is an inherently subjective question — the whole concept of value is. But I have to concede, reluctantly, that I think Gordon has a point. I’m not convinced that the innovations of the last 20 years have made my life, and others like mine, substantially better. And if that is true, it seems a reasonable explanation for why economic growth has slowed down. After all, what hope is there for economic growth if the new things we produce don’t really make our lives better?

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But this is not a counsel of despair. Even if we conclude growth hasn’t been making our lives better, it doesn’t mean it can’t make our lives better in the future. What if we’ve been looking in the wrong place?

My hypothesis is this: there are many ways we could make our lives better, but most either involve collective action problems or require significant public policy changes. Markets and private enterprise still have a major role to play in achieving them, but they won’t happen without significant state or community action.

What sort of things do I mean? Well, a healthier, longer life for one. The great period of economic growth from the 1860s onwards coincided with a steady but remarkable increase in life expectancy, from around 40 to well over 70. That increase has begun to slow dramatically over the last decade, with the Covid pandemic reducing life expectancy back to the levels of a decade ago. Most of us want to live long lives, but even more importantly we want to live healthy lives too. This is, by its nature, a public policy problem. The market can play a huge role in helping, but it’s unlikely to happen without some impetus from public policy.

A better environment in the places we live is another wish. To give one example, cars make my life a lot worse. The same is true for most people who live in cities. The automobile is a totemic triumph of the market, but it has turned into something which makes many people’s lives worse. Alongside the demise of the car, I’m adding cleaner air, better spaces for recreation and a connection to nature to my wish list.

How about making it easier to be a responsible adult, and easing the mid-life despair that seems to be so common? The burden of life’s responsibilities — caring for children and elderly parents, managing paperwork, maintaining a home and so on — disproportionately falls on those aged between 30 and 60, and it affects their lives. If we are looking for innovation to improve our lives, easing the administrative and caring burden of those in the middle of their lives ought to be fertile territory.

Leisure time and the consumption of creative content is another, more market-oriented area on my list. We have generally gained more leisure time over the decades of economic growth, though more of it occurs after retirement age than Keynes imagined in his “15 hours” prediction. Some of that is filled with food, travel, sport and television streaming. But there is so much more scope for accessing and producing creative content that the market does not reward. Think of all the writers, journalists, musicians who could be doing brilliant work but can’t get paid for it, of all the people producing content on the internet for free. This is a source of life-enhancing untapped economic growth that the market cannot currently support.

There are plenty of other things I could add to the wish list. Why aren’t our houses getting bigger as we get richer? Why do we have so many people doing mundane or insecure jobs?

What all of these wishes have in common is that they require both private and public sector action. They all need new technologies, innovation, new business models provided by the private sector. But they won’t be provided by the private sector alone. And that probably makes them harder to achieve. They need a degree of enlightened political consensus around solutions which are complicated and sometimes counter-intuitive. They may be difficult to achieve, but the pay-off — in terms of both economic growth and well-being — would be significant.

I think my wish list is a decent manifesto for making life better, though I’m sure there are plenty of other, better ideas out there. What I’m confident of, though, is that these things would improve life more than many of the standout innovations of the last twenty years.

Smart phones that suck in your attention, can affect your sleep and hurt your neck? Useful, no doubt — especially maps with GPS — but not always life-enhancing. Social networks that manipulate your emotions? I love Twitter, but I’m not sure it’s good for me. Subscriptions that try to lock you in and make it very hard to leave? Expensive and annoying.

Obviously I am making subjective judgements — I don’t think there is a good way to aggregate preferences on the question of whether something makes your life better. But what many of these things have in common is that they put the needs of a business — to keep your attention, to make more money from you — over your own needs. Sometimes, they do that because the market for their product or service doesn’t work especially well, so they have to go to great lengths to make money.

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I hope to make this the start of a series looking in detail at how we could improve our lives and what we’d need to do to make it happen. If my analysis is right — and frankly I haven’t offered much analysis yet — it means the state probably needs to take a greater direct interest in the sources of economic growth. Not as a controller of the economy but as a guiding hand, which helps improve markets and unlock activities that improve people’s lives. There are a host of ways we could and should make life better, but they’re not going to happen by magic.

The other pieces in this series so far are:

2. Markets and deciding what the good life is

3. Taking the cars out of the cities

4. A longer, healthier version of the good life

5. Making the most of the land

6. Easing mid-life misery

7. Solving the multi-benefit problem

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Andrew Sissons

I’m an economist and policy wonk who’s worked in a range of different fields. I mostly write about economic growth and climate change, and sometimes both.