(Material) Well-Being in Economics: Beyond GDP

Abstract

This chapter examines the current notion of well-being utilized in the mainstream economics, which is based on the utilitarian philosophy. The analysis focuses on the alternative proposals to expand beyond the existing framework, such as Easterlin’s paradox, multidimensional indexes of well-being, capabilities approach, and the cosmovision of the indigenous traditions. The chapter first explores the main definition of happiness and equilibrium of ancient Greek philosophers. Secondly, the chapter investigates the mainstream corpus of Economics with the Utilitarianism as a moral core. Many contradictions and inconsistencies in the implementation of the notion of well-being are unfolded. Thirdly, key proposals to revolutionize the notion are introduced. Given the sociological and environmental problems the Anthropocene has caused, and these ideas could lead to original and inspiring solutions.

1. Introduction

The fact that the endless acquisition of wealth has been hailed as the surest path to happiness does not raise many eyebrows, especially among economists. Usually, if economic growth is a problem, it is because there is not enough of it: the more, the better. The blindness pursuit of economic growth—operacionalized through the Gross Domestic Product (GDP)— aims for the production of goods and services, despite their qualitative characteristics, at large scale, which is “automatically” converted into well-being, and therefore, a “better” country/state.

However, paradoxically, the growth-centered economy made us witness the world changing for the ecological worse with the onslaught on nature reaching an unprecedented intensity, not to mention socio-democratic aspects of it.

Therefore, dismantling the idea of endless material growth as an axiomatic necessity of countries has reached exceptional significance. The beating heart of this change lies in alternative pathways to well-being in Economics, beyond its material aspects, which is the primary concern of this chapter. It is fundamental to question what the word “well-being” implies for current states and policy-makers. All in all, if the well-being of the people is one of the fundamental objectives of every political economy, then it is necessary to unfold what this construct embeds to understand the current state of affairs of our states nowadays.

This chapter is organized as follows. Section 2 introduces the first notion of happiness available in the literature: the concept of eudaimonia by the ancient Greeks philosophers, that it has been completely forgotten inside the mainstream corpus of Economics with the arrival of the Utilitarianism, which is presented in Section 3. Also, this section presented the consequences of using this moral theory as the dominant informational base, leading to the pursuit of growth as a main objective of every state, monitored by the GDP. Finally, Section 4 shows and discusses recent and alternative proposals that expand the notion of material well-being (and the utilitarian philosophy): the Easterlin’s paradox, which demonstrates that more income does not imply more happiness; the existence and development of multidimensional indexes of well-being that consider subjective components; the Amartya Sen’s capabilities approach that embeds a higher notion including education and health beyond the material; and the cosmovision of Buen Vivir, a Latinamerican indigenous tradition that understands well-being as the harmony with nature.

2. Eudaimonia: the base of happiness in ancient Greek Philosophy

The word “happiness” has been present in the field of Economics since the thoughts of the ancient Greeks. With the concept of eudaimonia, they refer to happiness as a balanced state, as a form or art of living, as a lasting and prolonged enjoyment, and not as a mere succession of fleeting and intermittent moments of satisfaction [1]. This art of living was the daily practice of the activities that belong to the soul, that, when doing so, humans experimented the highest state of happiness.

Aristotle distinguished two types of value: value-of-use and value-of-change, a dichotomy later explained entirely by Smith. The former referred to the intrinsic aptitude of a good to satisfy a need, and the latter depended on the relative scarcity or abundance of the good. In other words, the use-value of a precise object consists of its particular contribution to well-being. For example, wine provides food and friendship, two fundamental human needs, so it possesses use-value. Cocaine, on the contrary, which does not provide neither food nor friendship nor any other fundamental component of well-being, does not have use-value. The fact that “I prefer crack to wine does not alter this fact; it simply shows me to have corrupt taste” [2]. This is an important differentiation for understanding the preference satisfaction theory, which asses the value of goods regarding its preference or election, nor its intrinsic added-value to fundamental components of well-being. In this sense, crack has more value than wine simply to the fact that the person prefers it. As it can be deducted, this implies dangerous assumptions: is an alcoholic the best judge to asses value to alcohol? For this reason, use-values, as we have seen, should have a controlling end: the good life, and “to pursue them beyond this point should be senseless” [2]. However, this implies to define what it means a good life, an issue solved for Oikonomics,¹ but completely put aside on the discussions of Economics.

According to Aristotle, there were external goods and internal goods, which were respectively divided between goods of the body and goods of the soul. Each one, in its own way, would help a person to “become happy” or, put differently, contribute to increase well-being. The external goods would grant material well-being (physical goods), the goods of the body would increase well-being of the physique (health and beauty), and the goods of the soul would bring internal well-being. Given this classification, he considered that the only desirable well-being by itself would be the last of the three, the well-being of the soul. It could not be obtained by the simple sum of the first two. Inherent to the reason of the human being, the well-being of the soul became known as eudaimonia [1].

Eudaimonia is the most valuable well-being and the one that belongs to one’s own soul: eudaimonia is that characteristic that is particular to human beings. Only activities in accordance with reason, to the peculiar activity of man and woman, is what would lead them to it [3]. In this sense, true well-being is enjoyed naturally, since people cannot control or manipulate it [4]. This complex construct introduced “refer to a state of mind at all, but to an admirable and desirable state of being. It is a matter of public appraisal, not private awareness” [2].

In turn, the Greek philosopher considered that the only way to achieve this state of inner well-being was through the virtuous practice of reason. In other words, choosing what is truly desirable, that is, what reason and not appetite presents as desirable [1], is how one achieves well-being. For this reason, the Aristotelian perspective to well-being is considered as subjective.

However, Aristotle differentiates the concept of ephemeral pleasure with that of eudemonia (a differentiation that has not been made in the subjective approach to well-being of the utilitarianism and preference satisfaction theory). While the ephemeral pleasures are satisfied with external goods and are motivated by appetite, the eudemonia is motivated by reason—as mentioned above, the activity peculiar to humans—and is not sought for the pleasure that its realization entails, but rather because it is desirable by itself [1]. In this regard, reference [2] adds that the good life is not simply one satisfied desire; it indicates the proper goal of desire. And desire is to be cultivated, directed to the truly desirable.

Well-being, therefore, is a stable, lasting mental quality, a person’s way of being, a set of virtues that accompanies them throughout their life [5]. And the virtues, for Aristotle, are those habits or human activities that humans perform in the different spheres of their lives. The virtuous human will have the desire to perform good and noble actions, those that respond to their desires and that will always be pleasant or “delightful” because the actions adjusted to virtue are delightful for the virtuous and delightful in themselves. In other words, well-being required the various excellences of the intellect, such as courage, moderation, generosity, and wisdom.

However, worth to mention, Aristotle pointed out that some “external goods” (thus material) were necessary to achieve the practice of the virtues inherent to human beings. These essential material goods, according to the Greek philosopher, were considered the universal needs, and according to various authors [2, 3, 6] they were land, housing, clothes, and furniture. In this sense, the “just and temperate person’ should accumulate those things in a minimum amount and then stop [2]. In other words, a person should get the external goods of a house, clothes, bed, and shoes and then dedicate their life to develop the internal and spiritual well-being. This is why the Aristotelian proposal is considered not only subjective but also objective. In this sense, it has the advantage of appreciating the inherent complexity of well-being in its external and internal components [1]. As pointed out by [7], there is non-interchangeability in the subjective and objective components of well-being. In this sense, every approach to measure well-being should consider both perspectives.

Finally, this objective approach to well-being implies a fundamental notion inside the thought of ancient Greeks: the limit. They believed that, as well there is a minimum level of external goods necessary to achieve the good life, there should also be an upper limit in this threshold. This limit to the material growth was necessary, and they believe, to not hinder the growth of other kinds, such as the spiritual one. This distinction between material and spiritual was very clear for ancient Greeks: they believed that the limits to economic/material growth should be the satisfaction of the universal/objective needs mentioned before. The excessive material growth without any limit was an obstacle for spiritual progress and will lead to a society of “pigs,” in the words of the philosopher Plato. Pursuing material growth, thus, will hinder the progress of reflection, enjoyment, and spiritual growth.² This consists of a powerful idea that is lacking in the field of Welfare Economics (see Section below), where “the more is the better.” This undermines not only the qualitative distinction between material and spiritual growth but also a just distribution of the material.

3. Utility: the definition of happiness in modern economics

Despite the multidimensionality of the Greek definition of well-being, mainstream normative economics (the field known as Welfare Economics) focuses on well-being as “preference satisfaction” [10], the informational moral base of which is utilitarianism. Revealed-preference theory identifies preferences with choices or hypothetical choices.³ For orthodox economists, “preferences” and “demand” are sufficient for the purposes of understanding human needs, and therefore there is no need for a deeper discussion in this regard [11]. Reference [12] argues that the notion of well-being⁴ for neoclassical welfare-economists cannot be measured directly, and therefore the option is to take what is chosen as evidence. This election explains the “quantity” of well-being people define for the goods, being expressed on how much “they are willing to pay.” In this sense, well-being is associated with market choices, serving as a justification to validate the market as a social institution.

As mentioned before, the concept of utility relies on the normative theory of moral philosophy called Utilitarianism, and it was developed by Bentham in 1789. The term utility within the approach is considered synonymous with pleasure. Goods and actions, from this view, are not considered as useful or instruments with an end, but, on the contrary, they possess the intrinsic capacity of satisfying needs themselves and, in this way, produce well-being [15].

This intrinsic capacity was called utility. This term solved in a simple way the controversial relation between use-value to exchange-value. If use-value is just the utility it brings through consumption, and exchange-value is just the exchange of utilities, then the two terms are just different forms of a single general phenomenon of value. This ingenious application was allowed thank to the (again, mainstream) notion of individual self-interest:⁵ the idea of the social good as a collective achievement disappeared. It became a result of individuals pursuing their self-interest in the market. As authors in Ref. [2] argue, the discussion of human beings as what they “really are,” rather than as what they “ought to be,” was turned into an unassailable fortress of mathematics, logical x-y graphs, and analytics.

According to Sen [16], the requirements of utilitarianism can be divided into three components:

1. Consequentialism: all choices, whether they are acts, rules, or institutions, must be judged based on their consequences, on the results they generate;

2. Welfare: restricts the evaluation of situations to the utilities of the respective situations and does not pay attention to some things such as the recognition or violation of rights, obligations, and opportunities;

3. Order based on the sum: the utilities of the people are added to find an aggregate merit, disregarding how they are distributed.

The combination of 1, 2, and 3 is what is known as the classic formula that involves judging each choice based on the total sum of the utilities generated by that decision. And maximization occurs when “the greatest utility for the greatest number of people” is achieved, which attempted to be measured by the “hedonometer” proposal of Edgeworth. The teleological ethic defined by utilitarianism is characterized by understanding what is good regardless of what is just. In this sense, it is considered just as a subordinate concept, only as that which maximizes what is good.

Thus, this philosophical doctrine establishes utility as the barometer to evaluate actions according to whether they maximize pleasure and minimize pain, assigning crucial importance to hedonic experiences [4]. In this way, in contrast to the Aristotelian subjective conception of well-being associated with an art of living, reached by the practice of specific virtues values because there are desirable conditions of being, the utilitarian philosophy is associated with the predominance of sensations of satisfaction and pleasure. The implicit assumption is that individuals (consumers) have a coherent and rational set of preferences that they reveal in their behavior. It does not matter, from this point of view, whether people are altruists, egoists, hedonists, masochists, or anything else: all that matters is that they have certain preferences and act according to them [2].

This view understands well-being in only one of its dimensions, namely the material. Under this conception, at the macroeconomic level, the higher the Gross Domestic Product (GDP),⁶ the greater the flow of goods and services, the greater the economic activity, which translates into greater well-being. In this sense and as its definition stresses, the GDP focuses on only one dimension of the complex concept of well-being, i.e. its monetary component, undermining its multidimensional characteristic [19].

Reference [19] provides a summary of critics to the principles in which orthodox welfare economics rely on. First, the idea that individuals are the best judges of “the correctness” of their preferences or wants—what in [11] is called “the subjective conception of interests”— is not true because people face imperfect information. The range of the things we have access to are constrained by the productive sphere and by the context. In the current state of affairs, it has been augmented by digital and surveillance capitalism that constraints and catalogs our everyday choices. In this regard, Kahneman [20] has demonstrated multiple ways in which people act and decide irrationally, particularly when they face uncertainty

Second, if preferences, tastes, and values are shaped by institutions—such as markets—where individuals take part, then preferences cannot be exogenous to peoples’ beliefs and actions, who are part of these institutions. In other words, “what is being evaluated defines the criterion by which it is being evaluated” [21]. The principle of private sovereignty [11], this is, that what is to be produced, how it is to be produced, and how it is to be distributed is determined by the private consumption and work preferences of individuals but falls off to consider the individual’s subjective influence on these dynamics. There is no objective standpoint from which to evaluate these preferences, as they constitute outcomes from complex interactions between institutions and the processes of exchanges. How values, power, beliefs, and thus choices are influenced by social institutions or even by the economic exchange itself is not part of the theory.

Third, the imaginary construct of a homo economicus only incentivized by its own self-interest undermines completely the notion of the other. As reference [10] emphasizes, “people are sometimes altruistic and all too often malevolent. People sometimes sacrifice their own well-being to benefit others or to do harm to those they hate.” In other words, behavior can also be motivated by concern for others. Neoclassical economics assumes that individuals are autonomous. Furthermore, it assumes that each person is faced with a preexisting “set of choices” that can be hierarchically (and rationally) arranged by them. This objectivity of choices relies on the concept of the rational economic man. As regards this, Max Neef [22] argues that the modern dominant styles of development have tremendous obstacles in making personal development compatible with social development. Both the dynamics of the exercise of power and the effects of exclusionary ideologies tend to dissolve people into mass archetypes, or to sacrifice the masses for archetypes of “an individual.” The current models, therefore, postpone social development in the name of consumer sovereignty, in circumstances that reduce a person to the mere category of consumer. This can only put limits to personal development.

Fourth, the neoclassical theory of consumption explains that needs, preferences, and desires are unlimited.⁷ In this regard, reference [2] argued that this definition on the orthodox corpus of economics had condemned us to scarcity, and not because of a lack of resources, but because of the extravagance of our appetites. It is paradoxical that while the main domain of economics is the study of efficient means to ends, the economist has nothing to say about those ends [2]. There are no limits to satisfaction nor utility, as every consumption of more and different goods only increases it: a larger bundle of goods and services is always preferable to a smaller one. However, are the production and consumption of more guns preferable? Unlike ancient Greeks, orthodox economics presupposes that needs are an open-ended and elastic concept.

Fifth, for mainstream economic analysis, everything is a preference. Both, the wish of a little baby for water and the wish of a homeless person for a secure place for sleeping. As Housman [10] points out, every action is considered a preference; and every preference is measured in the same way, regarding their willingness to pay.

Finally, reference [19] highlights that preference satisfaction theory does not take into account the preferences of future generations. Its intricate nature cannot be revealed through the choices and behavior of present generations, and, as pointed out by ecologists, they are completely undermined.

The conclusion of [19] is that preference satisfaction theory cannot provide a logical, neither ethical nor practical conception and measurement of human well-being—especially, on an inter-generational scale. But, as [10] indicates, accepting the connection between preferences and well-being have permitted economists to avoid offering a real and deep philosophical theory of well-being. Or, in the words of Doyal & Gough, while numerous criticisms have been made to the principles of satisfaction theory over the last century, “they still form the normative basis for the inattention paid to the concept of need by neoclassical economics” [11]. For all the mentioned reasons, we consider that this approach is not sustainable, and our science should be focusing on the creation of new tools to analyze the complex human well-being.

Furthermore, this set of limitations can lead to decisions that exacerbate—and in a way justify—injustice and deepen inequality [24]. Therefore, the public information that can be obtained based on the utilitarian metric can thus generate a distortion in the design and elaboration of public policies [1]. In this sense, the organization of the society relies on the private wants of individuals (who are only considered as consumers), and, as Skidelsky & Skidelsky [2] state, the good life is only “a marginal concern, an affair of eccentrics and enthusiasts.” The construct of well-being therefore is reduced to a measurable unconditional set of goods. The sources of well-being, its components, and its complex multidimensionality are completely disregarded: “all that matter is whether you have more or less stuff.”

For this reason, and in agreement with [22], we believe that to the economic logic—heir to the instrumental reason that permeates modern culture—it is necessary to oppose an ethic of well-being. The fetishism of numbers must be opposed with the notion of human development. Vertical management by the State and the exploitation of some groups by others must be opposed to the gestation of social wills that aspire to participation, autonomy, and a more equitable use of available resources.

4. Recent proposals of innovative conceptualization of happiness

Despite the dominance of the utilitarian philosophy and its widespread study through Economic study plans around the globe, there has been a series of alternative proposals to expand the notion of well-being, as we will see in the next sections.

However, this direct relationship and the reduction of well-being to a mere monetary dimension has been questioned by scholars and a series of alternative contributions began to proliferate since the 1970s. In this chapter, we will summarize the different contributions and proposals that contribute to its operationalization (a, b) and widen its conceptualization (c, d), as to know:

1. The controversial relationship between income and happiness as the result of Easterlin’s paradox [25], who presented empirical evidence that refutes the direct relationship between income level and happiness, opening up a literature discussion that is still ongoing.

2. A revision of a set of multidimensional indexes of well-being, as to know: the Human Development Index (HDI), which boosted a series of proposals of indexes of well-being that we will shortly describe, as to know: the Social Progress Index (SPI), the Prosperity Index (PI), Happy Planet Index (HPI), the World Happiness Report (WHR), the Integral Human Development Index (HDIi), and the Gross National Happiness (GNH).

3. Amartya Sen’s [26] capabilities approach, which seeks to evaluate well-being and its attainment from a broader consequentialism

4. The cosmovision of the indigenous traditions of Buen Vivir as “retro-progressive utopias” that connects the values of the communities to the currents of contemporary critical thoughts, widen the discussion of well-being not only as a construct but as a proposal of alternative development.

4.1 The relationship between income and well-being: Easterlin Paradox

There has been a vast literature studying the relationship between income and subjective well-being since the publication of the work of Easterlin [25] from where the notion of Easterlin Paradox was created [27, 28, 29, 30, 31, 32, 33]. This author arrived at the empirical conclusion that the increase in a country’s income does not necessarily entail an increase in the level of subjective well-being of its inhabitants. His aim was to understand whether there is sufficient empirical evidence to consider that the increase in GDP per capita is an indicator of the improvement in people’s well-being, understood in terms of happiness [25]. To verify this, the author collected data for 19 countries and reached the following three conclusions, summarized as follows:

1. Within a given country and at a given time, the correlation between income level and happiness exists and is strong;

2. When comparing countries, it does not seem so clear that rich ones report higher levels of well-being than poorer ones, and, within the rich countries, from a certain level of income, successive increases in income do not entail substantial increases of happiness. This situation can be seen in countries such as Indonesia, Mexico, or Costa Rica, in which individuals report similar and high levels of satisfaction, despite not being considered among the richest countries in terms of income—see [25]. In other words, it suggests that although the economic factor is necessary, it is not sufficient, given that once a certain threshold of hypothetical wealth is crossed, the relationship between it and the level of happiness becomes complex and less harmonious;

3. While the income of the US population has grown significantly over a period of time (between 1946 and 1970), the level of reported happiness has not shown a consistent trend of change. In this way, he observes that while the GDP per capita of this country grew systematically and significantly during this period, the level average happiness declared of its inhabitants did not show a homogeneous trend of change, given that in some periods a decreasing tendency while in some other increasing ones was observed.

Since its publication, a series of studies have emerged presenting evidence for or against the paradox. Reference [34] analyzes these investigations and highlights that some authors find a positive and robust relationship between the level of subjective well-being and the product of the countries, proclaiming themselves against the paradox. However, other authors—including Easterlin, McVey, Switek, Sawangfa—argue that this relationship is only robust when comparing countries cross-sectionally, given that the analysis of time evolution yields an opposite result [34].

On the other hand, some researchers defend the existence of the link between income and well-being in those countries whose basic needs have not been met, but alleging that beyond a certain income threshold—satiation point—, this relationship becomes insignificant. For example, Diener and Seligman [35] gathered empirical evidence on countries with average income above 10,000 dollars in annual PPP and tested the correlation between satisfaction with life and GDP. They find that the correlation is insignificant in most of these countries, thus confirming the paradox.

Layard [36, 37] states that income provides well-being in countries with low levels of development, but once the threshold is reached—around USD 10,000 PPP—, the average income level in a country has little or no effect on well-being average subjective. In this way, from certain levels of income, the successive increases in it do not entail substantial increases in the levels of happiness.

There are also Latin-American studies contributing to this discussion. For example, see [38], where authors have proven that life satisfaction that is related to the relational domains (satisfaction with the couple, satisfaction with children, satisfaction with friends, and satisfaction with family) reports greater levels than the income satisfaction. They also point out that health satisfaction and the satisfaction of free time are also important for these societies.

Hence, the Easterlin paradox that bears his name calls into question the relationship that is assumed to be direct between income and happiness for a given country. In addition, it shows that economic growth, operationalized through GDP, is a partial and incomplete indicator of true social welfare. If the increase in income does not guarantee happiness, then there are important policy implications. Reference [6] suggests that the State should promote the factors that positively influence happiness levels, trying to reduce or eliminate those that negatively influence them. Which are the drivers that boost human well-being is one of the questions this thesis wants to contribute.

4.2 The revision of the multidimensional indexes of well-being

The movement of social indicators was boosted by the creation of the concept of the Human Development Index (HDI) —prepared by the United Nations Development Program (UNDP), following Sen’s capabilities approach—that it is internationally recognized. The HDI is the most used indicator to make comparisons of international rankings [6]. It arose from an initiative between Mahbuh ul Haq and Amartya Sen and has been calculated since 1990 by the United Nations Development Program [39].

The human development paradigm considers the increase in the range of options, choices, and opportunities among which human beings can choose. Its purpose is the expansion of the range of opportunities that human beings have, understanding as fundamental the following ones: being able to enjoy a healthy and lasting existence, access to knowledge, have sufficient material resources, and have the opportunity to participate in community life [40]. It incorporates three components that contain a total of four indicators: (i) having a long and healthy life—measured life expectancy at birth; (ii) acquiring knowledge—measured by average years of schooling and expected years of schooling; and (iii) enjoying a decent standard of living—measured GDP per capita [41]. Regarding the third component, as we express before, there exist several limitations of this direct relationship. The standardization method used by the HDI is the Linear Scaling Technique (LST), developed in [42]. For the weighting, the method of equi-proportionality is used, that is, equal weight is given to the three dimensions. This decision is based on the normative assumption of equality in the dimensions, that is, it considers that all human beings value the three dimensions equally.

It is a merely objective index, which ignores the categories that the subjects themselves make about their situation and, therefore, only offers a partial view of well-being. In this sense, even though this has constituted an advance, the index falls to incorporate the subjective dimension of well-being that, as we will argue, it is fundamental when building the concept of well-being [42, 43]. Manfredi & Actis Di Pasquale [7] had incorporated subjective indicators to the components of income, health, and education of the IDH, developing an index called “Integral HDI” (HDIi) and showing there is non-interchangeability of these dimensions, pointing out the necessity to incorporate the subjective measures and therefore criticizing the use of HDI as a replacement of GDP. In fact, and not by surprise, the ranking of HDI does not present big differences to the raking provided by the GDP.

However, the importance of the HDI cannot be understated: it has boosted the creation of multiple proposals of multidimensional indicators across the globe that, even their limitations, has broadened the spectrum to study the construct. Since then, it has been accepted that well-being is composed of more than one component, the monetary. On the one hand, the HDI proposes a multicomponent but objective perspective to measure well-being, whereas, on the other hand, indicators just as Life Satisfaction measures only the subjective part. However, there have been developed multidimensional and multi component indexes across the globe. Among them the different proposals of indexes we can mention: Social Progress Index (SPI), Prosperity Index (PI), World Happiness Report (WHR), Happy Planet Index (HPI), and the Integral Human Development Index (IDHi).

A deep study of each of the indexes is not going to be provided in this thesis because it is not the aim of it. A table summarizing the different components (and the specification if they take them in their subjective or objective perspective) and indicator each one uses is provided here in order to show the acceptance on the use of both dimensions and multiple components (Table 1).

Indexes	IDH		SPI		PI		WHR		HPI		IDHi
Dimension	Obj	Subj	Obj	Subj	Obj	Subj	Obj	Subj	Obj	Subj	Obj	Subj
Health	1		5		8		1		1		1	1
Education	2		4		10	2					2	1
Income	1				9	4	1				1	1
Social capital					1	9	1
Community							1
Subjective well-being								3		1
Environment			3		8	1			1
Governance					6	7	1
Housing			3
Security			4		7	4
Access to basic knowledge			4
Access to information			3
Freedom			2		7	5
Temperance and respect
Business opportunities					7	5
Nutrition and health assistance			6
Water and sanitation			3
Personal rights			2	3
Total of components	3		3 (12)		9		9		3		3
Objective indicators	4		39		63		6		2		4
Subjective indicators	0		14		41		3		1		3
Total indicators	4		53		106		9		3		7

Table 1.

Multidimensional indexes of well-being and its components.

*IDH: Índice de Desarrollo Humano or Human Development Index (IDH, HDI); *SPI: Social Progress Index, https://www.socialprogress.org/; *PI: Prosperity Index, https://www.prosperity.com/; *WHR: World Happiness Report, https://worldhappiness.report/; *Happy Planet Index, https://happyplanetindex.org/; *IDHi: Índice de Desarrollo Humano Integral or Integral Human Development index (IDHi, HDIi), http://uhu.es/publicaciones/ojs/index.php/REM/article/view/4648.

Source: own elaboration.

The HDI is the only indicator that only uses an objective perspective. The other proposals use a bidimensional perspective, showing the general acceptance of their non-interchangeability. However, they do not combine objective and subjective indicators for all the components they embed, except from the Integral Human Development Index (HDIi). The decision to include a brief summary of these indexes (and not include new ones, as these proposals are still proliferating) is to point out just the conclusion that comes out after their analysis:⁸ These proposals come mainly from developed nations, in which the values, traditions, culture, socioeconomic, and geographic realities are not taken into account. In [6], the rankings—the outcomes of each one of these indicators—for the Latin-American countries differ substantially, as the correlations of Tau B Kendall and Rho Spearman resulted in very low coefficients. This dispersion of results raises doubts about the reliability of these rankings: is their use appropriate? Which indicator is better? Why do they ponder the components in this way? Does a researcher in England understand “business opportunities” in the same manner as in Bolivia? Moreover, the notion of social ties, or importance of the family, or personal rights, do they make the same sense for Latin American countries? Most of the proposals came from international institutions located in the Global North, where the fundamental components of well-being might be different, as they depend on the values and culture of each society. The conclusion of [6], stressed in [7], is what we want to stress in this subsection: the importance of building well-being policies (rather than indicators) regionally, locally. The idea of creating an homogenous universal measure of well-being in order to compare (and I may ask, compare for what?) would lead us to commit the same mistake—the blindly and restlessly pursuing of the increment of an indicator that we believe can be used as a proxy of well-being. This notion implies that policy makers should focus on regional variables in order to create their own well-being policies and measurements.

4.2.1 A note on the notion of Gross National Happiness (GNH): Bhutan

An index that has embedded the need for regional well-being is the so-called Gross National Happiness (GNH) of Bhutan. This concept was proposed by Jigme Singye Wangchuck, King of Bhutan, in 1974, as opposed to the Gross National Product. It measures quality of life in more holistic and psychological terms than GDP [45] and serves to remind the values lost in the modern world, questioning the purpose and validity of the development of the measurement process, based solely on economic growth. The GNH offers a perspective from nine dimensions, as to know: Subjective well-being, Use of time, Community vitality, Cultural diversity, Ecology, Resilience and pollution, Health, Education, Good governance and Quality of life, involving a total of 33 indicators.

In each of its components, it combines both objective and subjective indicators. It is an index made by and for Bhutanese citizens. It constitutes the first national initiative to define, measure, and monitor the social well-being of a country considering the components according to its own conception, taking into account its values, traditions, and culture. In other words, the composition of the index takes into account the reality of the country together with the perceptions and opinions of civil society. And although in Bhutan the well-being of the society is understood as spiritual and not material development, due to its explicitly Buddhist values, it consists of a paradigm shift regarding the measurement of well-being and a proposal to be taken into account.

Kliksberg [46], in his report on Bhutan, asserts that the GNH serves to remind us of the priorities that we have forgotten in the modern world, questioning the notion of happiness and validity in regard to how we measure our progress. He argues that it has come the time to put an end to the misleading calculations of human progress based on economic growth. For progress to be valid, it must have its axis in the citizens, equitably distributed among its inhabitants, and must be socially.

4.3 Sen’s capability approach

Sen’s capabilities approach marks a paradigm shift in the conceptualization of well-being [47]. The theory of functions and capabilities is presented as an alternative to the utilitarian metric. It is based on the evaluation of well-being and obtaining freedom from a broader point of view of the individual, no longer restricted to their level of income or the goods or resources that they possess or have access to but, rather, what they can do with what they have, that is, what they manage to do or be. Sen departs from a broader and pluralist consequentialism than utilitarianism, whereby he recognizes that freedom and rights are intrinsically important in people’s lives [48].

The approach considers that a person’s life is a variety of “beings and doings” whose constituent elements are what he calls functionings. A functioning is an achievement of a person: something that she/he has managed to do or be, and they are integral parts of his state [49]. On the other hand, and linked to this concept, the approach also considers the effective possibility that the person has to perform (or not) the different types of functioning. These are the capabilities, which represent the alternative combinations of functionings that a person can do or be while living [50].

The functionings that can be achieved represent the well-being of a person, and the ability to achieve the functionings constitute the positive freedom of that person, that is, their real opportunities to obtain well-being and lead a valuable life, giving rise to self-determination [49]. The notion of functionings offers an overview of what the life of the person is like, which is necessary for them, and this is the right assessment ford judging their freedom and their well-being [51].

Sen has not managed to enunciate in any of his works a complete list of capabilities or functionings, ⁹ although he distinguishes, in general terms, between elementary and complex functionings. The former includes avoiding morbidity and mortality, being adequately nourished, and having mobility. The second ones involve the achievement of self-respect, achievement of self-dignity, social integration, and the possibility to appear in public without shyness and be happy [52]. That is, while the elementals are objective conditions of well-being, the complexes include both objective and subjective aspects.

Sen distinguishes between different types of evaluative spaces that allow him to value economically and socially a wide variety of information categories: goods, characteristics of goods, functionings and capacities. To understand them, we will expose the case of riding a bicycle as an example, since it is the most used by Sen [49, 52, 53].

A bicycle, first of all, is a good that has certain properties. However, suppose it only has one: function as a means of transportation (a). Secondly, the effects caused by using the bicycle are varied, in the sense that it can be used for fun, for sport, or because it is the only alternative to get around although a car would be preferred, etc. (b). Thirdly, the bicycle as a good requires that the person that the owner is in physical conditions to be able to ride it, that she/he knows how to ride it and that she/he does not have any disease that does not allow her/him to use it (c).

In this sense, the question is: which of these three aspects (a, b, or c) is the most appropriate to represent the contribution of a bicycle to the well-being of a person? The first aspect (a) fails to assess well-being precisely because the bicycle is simply an object, and the mere possession of an external good is not the same as being able to use and enjoy it. In other words, it is important to distinguish between the good in itself—bicycle—, the activity that it allows—riding a bicycle—and the mental state or satisfaction that entails. On the other hand, if well-being were evaluated taking into account the second aspect (b), only the usefulness of the bike would be evaluated. This pleasure is variable and influenced by individual tastes, fashions, traditions, and culture; therefore, it is not an adequate type of information to capture well-being.

Finally, to capture the real well-being is pertinent to evaluate the activity that the bicycle allows; that is, riding a bike. It is the last aspect (c) that, in fact, demands attention according to this approach. The most appropriate path then is to determine what the person does with the good she/he owns, and in general what she/he manages to do with all the goods that are under her/his control. And this, that is the functioning, will vary depending on the person being evaluated, either if it is a child, an elderly person, a sick person, an athlete, or a paralytic [51].

Therefore, capabilities are the notion that allows two people to be compared to find out which one has a greater range of opportunities that will allow them to access a higher level of well-being. However, as capabilities are potentialities, it is not feasible to measure them or carry out a direct evaluation of them. On the contrary, the functionings, as reflected by the achievements, are measurable since they are a constitutive part of the person. In short, the evaluation through the set of capabilities only remains in the theoretical model, while in practice it is the functions achieved that allow measuring well-being (Urquijo Angarita, 2007).

In other words, to assess individual well-being, Sen considers that the resources possessed by the person do not provide enough information since their effective use varies according to personal circumstances, such as age, health, class, education, social capital, and among others. For example, an elderly person will surely need more resources than a young person so that both are equally capable of being healthy; a person with basic knowledge about health and hygiene will be more capable of being healthy, with the same resources, than someone who lacks such knowledge [51]. However, this does not imply that in practice the level of income and access to some basic or essential goods are totally ignored. Even Sen himself in [16] recognizes that if some corrections are made to the monetary variable to account for differences in people’s circumstances, income level can be a useful complementary tool in well-being assessments. In this sense, Sen’s vision coincides with that of Aristotle, since they consider that having access to certain goods is essential to achieve well-being, although it is not sufficient.

In short, the Senian conception of well-being has the advantage of focusing not only on what people do but also on what they can do. In this way, it is a notion that covers both the subjective and objective aspects, since in order to do things, the person needs, on the one hand, access to certain goods. On the other hand, by doing and acting, the person enjoys an inner satisfaction by fulfilling the desires or aspirations that motivated that action. In addition, by holding that the level of well-being depends on the available set of capacities to function, it is closely related to the ethical notion of the good life, unlike what happens in the standard economic theories of development and well-being [1]. The notion of what a person can do with what they have is an important advancement in the study of well-being, because it connects the categories in which this is realized: the being, the having, and the doing, which connects this theory with the one developed in [22].

4.4 Buen Vivir

Buen Vivir (in English, loosely translates as “good living” or “well living”) has emerged as a political concept in Latin America during the 2000s, but its principles are far older [54], as they belong to the cosmovision of the indigenous communities of South America. One of the main precursors of the movement in Ecuador, Alberto Acosta, well-being cannot be reduced to the occidental notion and needs to be based open up, relying on indigenous cosmologies and interpretations.

Moreover, and as in [55, 56, 57, 58], we believe that this approach offers an alternative in the mode of development, rather than only a discussion on how to measure well-being. Ziai [54] when studying post-development alternatives have compared Buen Vivir, Ubuntu,¹⁰ and Degrowth proposals, concluding that Buen Vivir is the only initiative that constitutes a real post-development strategy. In general, it can be said that both Buen Vivir and Ubuntu constitute “retro-progressive utopias” that connect the values of the old communities to the currents of contemporary critical thoughts, looking toward emancipatory, socio-ecologically, and sustainable futures.

The notion of Buen Vivir implies a bigger change in the way we run our economies, and it fulfills the lacking connection between well-being and development, also covered by the Chilean Max Neef in [22]. As reference [59] points out, Buen Vivir must be understood as “concept in construction that is taking place in a wide variety of contexts and that is characterized precisely because of its plurality.” The term must be contextualized in its environment understanding the Andine culture and the peasant-indigenous-native cosmovision.¹¹

An important distinctive characteristic about these approaches needs to be made. Nowadays, as we have seen, multiple proposals and initiatives are emerging across the globe to challenge the hegemonic power asking to the “ancestral culture” (the “vernacular culture”) of the world of our ancestors to recreate and redefine what it means to “live well” in our century. As it is explained in [60], the initiatives in the North of “Slow movement”¹² and “Transition”¹³ has been popularized and it’s not a new concept. However, Buen Vivir is present on the collective memory of the pleasent-indigenous-native of the Global South for sicles. What is new is that from this perspective a new platform for the political economy has opened [56]. Acknowledged this stating that while in Ecuador and Bolivia it is already a political and constitutional discussion, in countries like Argentina, Colombia, Chile, and Mexico its importance in the political discourse is increasing. As it is pointed out in [61], everyday there are more and more voices being raised in the world that are in some way in tune with this indigenous vision [61].

Ecuador and Bolivia recognize constitutionally, for the first time, the principles of Buen Vivir in Ecuador (sumak kawsay in Kichwa) and Vivir Bien in Bolivia (suma qamaña in Aymara) [62]. Both seek to return to the ancestral principles of their indigenous cultures, which can be generally summarized as the notion of living in harmony with nature. The visions of Buen Vivir seek a greater harmony of the human being in three dimensions: with her/himself, with their congeners/comrades, and with nature. In this sense, Buen Vivir involves the achieving of internal harmony (with one self), harmony with the community and between communities (with the other), and harmony with nature (with pachamama).

Internal harmony implies that people can develop their full human potential, and that everything they can “be” (ser and estar, explained later on) and “do”, and they do so in a framework of freedom. It is related to the extended reproduction of life and human rights; it requires having—especially— good physical and mental health. It considers the supremacy of work over capital and contemplates that the economy must be at the service of the people. It also includes the balance in the allocation of time between paid work, unpaid work, and leisure. This notion of time from these approaches is fundamental for this thesis. As it is pointed out in [63], modern capitalism, in its way, has ensured that the unavoidable leisure time is associated with unemployment, so it causes misery instead of being a universal source of happiness.

Harmony with the community and between communities means that people live together as equals, and that they have the will to live together well. It is related to strengthening social relationships, interactions and cooperative ties, relationships of solidarity, reciprocity, fraternity, sorority, and respecting diversity. It covers inclusion, cohesion, social capital, participation, and interculturality. It requires promoting equality and reducing disparities. In addition, it understands the economic system as social and solidarity.¹⁴ Harmony with nature implies that people, companies, and society respect the natural environment, which is the source of the reproduction of life. It understands the economy as a subsystem of a larger system called the biosphere and that environmental conditions directly or indirectly affect people’s lives, just as human activities affect the environment. It is related to the rights of nature, intergenerational justice, and environmental sustainability.

Vivir Bien in Ecuador emphasizes the protection of the environment and the display of solidarity and is built on the historical experience of indigenous communities that have lived in harmony with nature [64]. Buen Vivir in Bolivia, on the other hand, recognizes the ethos of the indigenous communities including and promoting the following principles: prioritize life, respect differences, live in complementarity, reach consensus between agreements, balance and harmony with nature, defend the identity, accept the differences, prioritize cosmic rights, know how to eat, know how to drink, know how to dance, know how to work, know how to communicate, come back to the abya laya, protect the seeds, respect women, and “live well, not better” [60].

From the vast literature analyzing the cosmovision of Buen Vivir, we will explain the five basic principles of the theory that are fundamental for the development of this thesis. They are:

1. El todo es la Pacha (Everything is Mother Nature¹⁵). This principle involves two facts. First, there is no separation between human and nature. Second, that time is cyclic and not linear.

2. Multipolarity. Our being stands in a constant contradiction between the “ser” and “estar.” Buen Vivir is not about not ‘to be’ (ser), but to learn how to be (estar), and this can be achieved by fostering a harmonic relationship with our living surroundings, breaking the dichotomy that separates us from nature and coming back to our senses to recover our animal side. The discussion between “ser” and “estar” is fundamental for our thesis, but complex to expand in English. The stress on the notion of “ser” answers to the question “who am I?” which inevitably implies the use of categories through (usually dichotomic, closed, and outdated) labels, such as: “I am a woman, I am Argentinian, I am an economist,” as this is a process that our mind (and its predefined categories) does. On the contrary, the “estar” answers the question “how am I?” and, instead of using “mind” mechanisms to answer, uses the instincts and senses. In other words, instead of using mental artifacts to answer or to realize the being, one must “come back to the body,” feel her/himself and in that present moment realize her/his being.¹⁶ Using the senses will allow us to come back to a wider notion of the being, understanding the immaterial nonrational and spiritual part of the construct, which is crucial for this thesis.¹⁷

3. Equilibrium as a dynamic place in between to resolve the contradictory parts. The first contradiction we need to solve is the relationship between nature and humans. They believe that the equilibrium is a dynamic state (disruptive as in mainstream Economics we consider equilibrium as static), a place in between that can connect both things without prioritizing one upon the other one. They consider that there is no eternal equilibrium, but a continuation of dynamic equilibrium in an infinite circular time. Even if abstract, this is an important notion about how to overcome contradictions. Is not the structure nor the superstructure that will boost the change, but both [13]. It is not patriarchy nor matriarchy the solution, but both. Accepting that the equilibrium can be reached in an infinite dynamic is a philosophical aspect of Buen Vivir and challenges our reductionist way of thinking inside Economics.¹⁸

4. Complementarity. They strongly believe in cooperation. The only possible way to reach equilibrium is through complementarity and never competition. They believe in the complementarity of the opposites, as a way to solve dichotomous contradictions.

5. De-colonization: This approach implies a counter-hegemonic alternative, the dismantling of the political, economic, social, cultural, and mental systems that do not allow us to see the whole.

Buen Vivir presupposes that there is free time for both contemplation and emancipation, and it is needed for the freedoms, opportunities, and capabilities of people to increase.

Far from an economy overdetermined by mercantile relations, Buen Vivir aims to build dynamic and constructive relations between the market, society, and the State. It seeks to build a society with a diversity of different types of markets, so as not to have a market society, that is, a commodified society.

In sum, Buen Vivir encompasses a set of ideas that are being forged as a reaction and alternative to conventional concepts of development. Under the concept, there are various reflections that, with great intensity, explore new creative perspectives both in the plane of ideas as in practices. Reference [57] argues that there are a lot of specific practical strategies that are being held, such as the introduction of environmental accounting, tax reforms, the dematerialization of economies, and alternative integration in regions in South America.

4.4.1 Four existential categories of well-being: doing, having, being… & being?

In the studies of well-being exists—either explicitly or implicitl—the recognition of four existential categories in which the well-being is realized. These categories have been used in the frameworks of human needs and well-being explicitly [22, 65] and implicitly [11, 66]. The four categories and their differences are emphasized by the Buen Vivir scholars. In English, however, the categories are reduced to three, as the verb to be has no distinction as in other languages. For instance, distinct verbs, such as “ser” and “estar” (in Spanish), or “essere” and “stare” (in Italian) are translated as “to be” in English. The four categories, thus, are: “ser” (to be), “estar” (to be), “hacer” (to do), “tener” (to have).

Reference [67] has provided arguments for the differentiation inside the verb to be (not from a Buen Vivir perspective, but from a psychological perspective), arguing that while “estar” is a temporal state, “ser” is immutable and infinite and therefore more accurate to be related with happiness. However, the perspective of Buen Vivir, as mentioned before, stresses that the exercise of humans to live a complete life is to “stay” (permanecer) in a constant present moment, in a state of permanent awareness that we are here, in between the infinite dynamics of our world, and through this practice, realize our whole being. This is why, for example, the word Ñasa in jñatjo¹⁹ language (one of the cosmovision of Buen Vivir) means “look up to the sky” and consists on a fundamental activity for these societies, as devoting time of the day just to look at the sky allows us to “stay” (permanecer in Spanish) and “estar” (being), living the present moment [68]. For this approach, the notion of being is reached through the deepest connection of oneself with the Pachamama—mother earth or Gaia [61, 66, 69, 70]. The differential approach to welfare made in [70] also associates the “being” to the possibility to live in harmony with nature. In this sense, both approaches would integrate the relationship with nature in the core of the concept of “being.” In this line, we will argue then that the notion of “estar” is not related to the hedonist pleasure defined before, as argued in [67], but it is a challenge to feel the senses in order to increase our immaterial well-being. Thus, the notion of “ser”—still fundamental for the well-being, we are not undermining, but differentiating—, it is more “contaminated” by modernity and therefore its connection with the immaterial is not as straightforward as it is with “estar.” Both “ser” and “estar,” however, correspond to the notion of being. Their common characteristic is that the needs of the being are realized by internal incentives and stimulus, and not external. Unlike the having and the doing, which imply the existence of an external source, the being does not.

5. Conclusion

Within the existing utilitarian framework, “there can be no overconsumption of goods of any kind, since by definition a good is simply something a consumer wants to buy” (see [2]) because it gives them well-being: the more, the better. On a macro-level, this philosophy has been translated that more GDP brings more well-being, happiness, or welfare. This has led us to the current state we are in now: nation states with more unequal societies, that only pursue the paradigm of growth, with not attention to its distribution, and leading to excessive overconsumption patterns that are hurting our planet and putting in risk the lives of future generation.

The literature seen has showed us the necessity to overcome the automatic and positive relationship between growth and well-being and oblies us to reconfigure the way we measure well-being in our societies. Since the Easterlin Paradox published in 1974, where it was proven that up to a certain level more income it is not translated into more happiness, the corpus of Economics should focus on building a wider notion of happiness or well-being, accepting it involves more components than the material. Initiatives such as the Gross National Happiness (GNH) in Bhutan or the cosmovision of Buen Vivir in Latin America are an example of this large path the economic field needs to begin. The construct of well-being cannot be more associated with material growth: the good life and the human development as a whole is a much more complex phenomena that needs urgent attention.

The idea of human development must be opposed to the fetishism of numbers in order to resolve this challenge. The emergence of social wills that strive for participation, autonomy, and a fairer distribution of the available resources must be opposed to vertical management by the State and the exploitation of some groups by others. Hence, the implementation of alternative pathways to well-being in Economics, mentioned in this chapter, have gained unprecedented significance.