Ben Bernanke wants to know if Americans are happy.
The Federal Reserve chairman said Monday that gauging happiness can be asimportant for measuring economic progress as determining whether inflation islow or unemployment high. Economics isn't just about money and materialbenefits, Bernanke said. It is also about understanding and promoting "theenhancement of well-being."
Bernanke and Fed policymakers rely on reports on hiring, consumer spending andother economic data when making high-stakes decisions about the $15 trillionU.S. economy. The Fed's dual mandate is to maintain low inflation and fullemployment.
"We should seek better and more-direct measurements of economicwell-being," Bernanke said Monday in a video-taped speech shown to aconference of economists and statisticians in Cambridge, Massachusetts. Afterall, promoting well-being is "the ultimate objective of our policydecisions."
Bernanke acknowledged that many people aren't too happy right now. Unemploymentrose in July to 8.3 percent, and economic growth has slowed sharply from thestart of the year. He called the recovery "frustratingly slow" whenhe testified to Congress on July 17.
Aggregate statistics can mask important information about how individualAmericans are faring, Bernanke says.
His speech Monday was the latest foray into a relatively new specialty ineconomics known as "happiness studies." Bernanke attracted widespreadnotice when he spoke about the economics of happiness in a May 2010commencement address at the University of South Carolina.
In that speech, he said research has found that once basic material needs aremet, more wealth doesn't necessarily make people happier.
"Or, as your parents always said, money doesn't buy happiness,"Bernanke said then. "Well, an economist might reply, at least not byitself."
In his remarks Monday, Bernanke turned to the more practical — and difficult —task of measuring a subjective emotion. So far, most efforts have involvedsurveys in which people are asked about whether they are happy and whatcontributes to their happiness.
Those surveys have found some consistent answers: physical and mental health,the strength of family and community ties, a sense of control over one's life,and opportunities for leisure activity.
The Kingdom of Bhutan has been tracking happiness for four decades. The tinyHimalayan nation stopped tracking gross national product in 1972 and insteadswitched to measuring Gross National Happiness.
Bernanke on Monday sketched out a few other questions he would like to know:How secure do Americans feel in their jobs? How confident are Americans intheir future job prospects? How prepared are families for financial shocks?
These indicators "could be useful in measuring economic progress orsetbacks as well as in explaining economic decision-making," Bernankesaid.
It's safe to say that Bernanke wouldn't expect a great deal of optimism ifthose questions were asked now.
The Fed has said it plans to keep its key short-term interest rate near zerountil late 2014, an indication that it expects the economy to stay weak foranother two and a half years. And Fed policymakers appeared to signal after itstwo-day meeting last week a growing inclination to take further steps to liftthe economy out of its slump.
Bernanke's own definition of happiness might baffle some. He called it a"short-term state of awareness that depends on a person's perceptions ofone's immediate reality, as well as on immediate external circumstances andoutcomes."
It's not exactly how the classic comic strip Peanuts described it when it said,"Happiness is a warm puppy." But perhaps Bernanke's version can bemeasured more easily in surveys.