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For leaders of businesses, cities, and countries who want tounderstand their constituencies—and ultimately to knowwhether those constituencies are thriving—using traditionaleconomic measures just isn't sufficient. Those leaders should also know their constituencies' wellbeing. Infact, economists are starting to care more about wellbeing and tostudy it, as Justin Wolfers, Ph.D., and Betsey Stevenson, Ph.D.,would attest. Both Harvard-trained economists with a library of published workbetween them, Dr. Wolfers and Dr. Stevenson are on the faculty ofthe Business, Economics, and Public Policy Department at theUniversity of Pennsylvania's Wharton School. Dr. Stevenson just ended a stint as chief economist at theU.S. Department of Labor, and Dr. Wolfers is a Gallup senior scientist. Leaders looking to make a positive impact should hear what thesetwo economists have to say about the importance of measuringsocietal wellbeing, the relationship between GDP and wellbeing, andthe problem of global inequality. Leaders should take note of the connections Drs. Wolfers andStevenson make between what happens in families and the effect thathas on businesses and the economy—because what happens infamilies affects the way people make economic decisions. Gallup Business Journal: You both are economists. Why are youresearching wellbeing? Betsey Stevenson, Ph.D.: Ultimately, what all economists care about is the welfare ofcitizens and society. Historically, economists have emphasizedmeasures like Gross Domestic Product [GDP], but why do they careabout it? It's because we want to improve human welfare. We'velearned that GDP, while useful, is an imperfect measure, and sowe're turning to surveys asking people about their wellbeing. Alleconomic issues ultimately boil down to assessing whether peopleare better or worse off, and wellbeing research can help answerthose questions. And can you do that by just asking people how well they're doing? Dr. Stevenson: We used to think that it wasn't useful to simply ask people totell us how they were doing overall. But over decades of research,we've learned that we can get really reliable answers from people'ssubjective assessments of their lives. And more recently, we havelearned that people's self-reported wellbeing grows with growth inGDP per capita, so economists' focus on economic growth has beengood for their ultimate goal of making people better off. Is it fair to say that dollars are one way of keeping score, but soare points on a scale of wellbeing? Dr. Stevenson: Absolutely—and it turns out that those things aren't asdifferent as some people would like to claim they are, and that'sone of the things that Gallup data has shown. If you look at thecorrelation between GDP per capita across countries and the averagescore on the wellbeing scale, we see that those two things have acorrelation of 0.82. That's just about as correlated as any twothings I've ever seen. Are consumption and wellbeing related? Dr. Stevenson: We do find that richer countries have higher average wellbeing.But it's not clear that it is directly due to consumption. In fact,the Gallup data lets us look at other very specific metrics ofwellbeing. What you see is that in richer countries, people areless likely to experience pain in their day. That may be because ofconsumption; they may be consuming more aspirin. But it may also bebecause they have a choice as to whether to do more or lessbackbreaking work, and economic progress gives them a greaterability to pursue lives that will incur less pain. You also see that in richer countries, people are more likely tohave choice over how they spend their day. They're more likely tosay that they're treated with respect in their day. Also, thelikelihood of people saying that they had good-tasting food to eatrises steeply with income in the country. So the basics of everydaylife seem also to be correlated—it isn't just "the richer Iam, the more shoes I own." That kind of consumption doesn'tnecessarily correlate with wellbeing. It may, but it's not thewhole story. What role does income inequality play in wellbeing? Justin Wolfers, Ph.D.: We just started a project at Gallup on income inequality. One ofthe amazing things the Gallup World Poll does is give us a snapshot of the world's population with a degreeof precision and depth that is just unheard of ever before forsocial scientists. We're looking to see whether countries with highincome inequality have lower levels of wellbeing. First, we need to understand what levels of income inequality are in every country around the world, and the World Poll allows us todo that. Then we can figure out how much of the globe's inequalityof income is differences between rich people and poor people withina country versus differences between rich countries and poorcountries. Nearly all the income inequality on planet Earth is dueto differences between rich and poor countries. This is one ofthose findings that's obvious the moment you figure it out, but itwasn't obvious 10 minutes before we ran the numbers. Only a tinyproportion of global inequality is due to differences between richand poor people within a given country. So if you're the sort of person who cares a lot about inequality,you should be most interested in developing the world's poorestnations—countries like Burundi. That has an enormously biggereffect in reducing inequality than, for instance, trying to lift upthe poor people in rich countries because the poor in richcountries are—relative to the rest of theglobe—reasonably well-off. If you're without work in theUnited States, you still may get to eat three meals a day, youstill can afford shelter, you're very unlikely to lose a babyduring childbirth. It's also true that if you look at wellbeing,most of the world's misery is concentrated in poor countries, notamong relatively poor people in rich countries. Your other areas of research focus include marriage, divorce, andfamily. Why would these areas interest economists? Or businessleaders? Dr. Stevenson: Economics is about how people make decisions optimally, given thatthey're facing constraints. That framework can be applied anywhere,not just to things that are about dollars and cents and theeconomy. Families and labor markets are intimately connected, andto understand one, it's helpful to understand the other. That'sbecause decisions about labor force participation and about whatkinds of jobs to take and what kind of hours to keep are madewithin the context of family lives. What happens in familiesaffects the way people make those kinds of decisions. And whathappens in labor markets affects the decisions people make aboutfamilies. Economists are also interested in families because wehave come to realize that there are many parallels between familyand labor markets. Dr. Wolfers: The first place that people notice the similarities between familyand economics is in what some have called the marriage market,which looks a whole lot like the labor market. People search forpartners the same way they search for jobs. When you find a spouseor a job that looks like a good fit, you take it. And you must makea decision about how much time to spend searching for the perfectspouse or the perfect job before accepting a job or a spouse. Is that part of the reason why people who wait until they're olderto get married have a lower divorce rate? Because, being betterexperienced, they have more insight into the marriage market? Dr. Stevenson: That's a great question. And it's a fact that the divorce rate ismuch lower among people who marry when they're older. What isharder to know is whether the types of people who wait are thetypes of people who are less likely to divorce or whether the actof waiting reduces your chance of divorce. But the differences indivorce rates of people who marry in their early 20s versus peoplewho marry in their early 30s is quite large. These are much biggerdifferences than the differences in the divorce rate acrossgenerations. One reason might be that those people who marry later have spent alonger time searching, which means that they're not willing tosettle until they have a higher quality match in the marriagemarket, which in turn means that marriage is less likely todissolve. The other possibility is that we're not static; whenwe're in our 20s, we're not good at projecting what we'll want inour 30s and 40s and 50s. It may be that we have better informationwhen we're older than when we're younger about what we're lookingfor in a partner. You do see some data that suggests that whatpeople in their 20s say are important qualities in a mate aredifferent from what people in their 30s look for. By the same token, you look for different skills and attitudes inan entry-level employee than you do in an executive employee. Dr. Stevenson: Yes. And just like most entry-level employees will not become theCEO or a senior executive, I can tell you I was pretty certain mostof my boyfriends weren't going to make the cut. Not all dating isabout trying to find a spouse. There is a difference between whatyou might want in a date on a Saturday night when you're 19 andwhat you might be looking for in someone to spend the rest of yourlife with. Has anything in your research into family structures or themarriage market surprised you? Dr. Wolfers: Yes. Betsey, think about the first paper we wrote together. Dr. Stevenson: It was a paper that looked at whether unilateral divorce laws,which sometimes people call no-fault divorce laws, had an effect onthe likelihood that you would commit suicide, murder your spouse,or be a victim of domestic violence. Dr. Wolfers: The reason we wrote the paper is we were having an argument onenight over dinner about what we thought the effects would be. Ithought that as states moved to no-fault divorce, people would bemore likely to become violent within their relationships becausethe courts would no longer force your spouse to stay with you. Sopeople would use violence as a way of enforcing what they thoughtof as their property rights—their right to keep their spousearound. Betsey was of the view that once women could leave a badmarriage and get on with their lives, being able to escape wouldreduce the amount of violence. So we did what any nerdy economist couple would do: We collectedthe data on homicide by spouse and crunched the numbers. It turnedout that Betsey was right: Unilateral divorce laws led to a largedecrease in violence against women and a large decrease in thenumber of women committing suicide as well. Dr. Stevenson: Justin was surprised by the results, but I wasn't. I'm moresurprised by a different fact about families—that marriagerates in the last few decades have increased so significantly forhighly-educated women. This is something you must think throughcarefully. If you go back to the 1960s, women who went to collegeweren't very likely to get married compared with women who didn'tgo to college. That was because marriage was largely about womenstaying home and taking care of the family, while men were in thelabor market bringing home the cash. Women who were trained withskills that would be useful in the labor market were notnecessarily better spouses. In many ways they were worse spousesbecause they were spending four years in college instead oflearning how to cook. So these women were the least likely of allwomen to marry. In the ensuing decades, that has completely reversed; nowcollege-educated women are becoming the most likely to marry. We'vealso seen marriages shift from that 1950s model—where the manspecializes in labor market production and the wife specializes inhome production and the household is more efficient because of thatspecialization—to marriages where the benefits come fromshared consumption rather than that shared production. We've seen ashift from the old model of opposites attract to one in whichcouples thrive when they have similar tastes and similarpreferences in leisure activities, consumption, and how they dividetheir time between work and play. Doctors used to marry nurses and now doctors marry doctors. Dr. Stevenson: Exactly. That's a real example of that. In fact, you see that inthe data—there's an increase in couples marrying who havesimilar educational backgrounds. I can see how this finding might be especially relevant tobusinesses, especially in recruiting. If you're looking for a newCFO, for example, you should carefully consider what thecandidates' spouses do, because an executive is more likely to bemarried to another executive than to a gardener. Dr. Stevenson: Yes, that's an important issue. If you're trying to recruitsomebody who needs to move locations, they're most likely to have aspouse who works. The majority of people in marriages have spouseswho work. So that couple must decide whether or not the opportunityfor the wife, for example, is worth the husband leaving his currentjob. The more a firm can do to lessen the cost, the more likelythey are to successfully recruit the person. It's something thatmust become an increasing concern to firms that want to recruitpeople across locations. The e-commerce company in China offers quality products such as LED Wall Washer Lights Manufacturer , LED Flat Panel Lights Manufacturer, and more. 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