Keynote Speech at The Inaugral Wellbeing Research and Policy Concerence - July 8th 2022

Good afternoon, leadies and gentlemen

As it is definitely an honour to be here, I would like to  thank the organizers for their invitation.

In addition, I welcome the opportunity offered by the new research centre at this historic university to be part of today's critical discussions and share with you my political views on this subject. It is particularly gratifying to participate in a discussion of big ideas that takes both a broader and longer view on society for, as a politician, I find that the time horizon of such debate is all too often curtailed by the election cycle.

Today we face urgent tasks and long-term challenges that require the attention of both scholars and politicians and, not least, more cross-sectoral discussion and collaboration.

I would like to share with you how my country is endeavouring to implement the concept of the wellbeing economy – an economy that pursues human and ecological wellbeing instead of simply material growth – and how we aim to establish this as an effective policy paradigm to develop and assess social and economic progress.

In recent years, Iceland has been at the forefront of international cooperation in developing policies on wellbeing. We have joined a group of smaller countries in the Wellbeing Economy Governments project, working toward wellbeing for all within the context of the UN 2030 Agenda. The project entails an analysis of the shortcomings of traditional economic theory and policy together with a commitment to build an alternative future, focusing on the wellbeing of current and future generations. We are committed to a vision in which economic policies support collective wellbeing by focusing on, how happy and healthy a population is. This approach allows us to examine the quality of life above and beyond monetary measures such as GDP and to take advantage of scientific knowledge to follow a sustainability agenda where no one is left behind.

In 1972 Tibor Scitovsky lamented that “we eat, not what is good, but what is good for us”. While, as a responsible politician, I can’t possibly object to people following a healthy diet, Scitovsky was making the broader point that welfare had been equated with the quantity of consumption while consumption varies not only in quantity but also in quality. He maintained that it is possible for societies with fewer resources to attain higher quality consumption than many more affluent societies who, in his view, tended to prioritize quantity over quality, thus taking the joy out of many activities for the sake of efficiency, productivity and profit.

Around the same time another economist, Fred Hirsch, observed that there were social as well as ecological limits to growth. For me his key insight was that some goods are inherently positional, in that the pleasure we derive from them stems in large part from their scarcity. If societies become richer and a greater range of goods become widely available the competition for positional goods persists, leaving people richer but less happy on account of social comparisons.

Both Scitovsky and Hirsch thus gave us reasons to doubt that increasing production and quantitative consumption would increase social welfare. Yet since the mid 20th century we have tended to measure social progress in monetary terms, with GDP being the predominant indicator, though it should be noted that Simon Kuznets was at pains to point out that the GDP was simply a measure of the volume of an economy and should not be used as an indicator of social welfare. Obviously human beings are more than producers and consumers of goods and any approach to individual and social welfare must reflect this. Human wellbeing, to borrow from the Finnish sociologist Erik Allardt, consists not only of having but also of loving and being.

Our objective, then, isto raise people’s quality of life. That doesn’t mean we dispense withwealth but rather that economic growth is desirable insofar as it can be harnessed to increase wellbeing without devastating ecological consequences. That growth is not a goal in and of itself.

The 2008 financial crisis that hit Iceland exceptionally hard, and resulted in both economic and political crises, served as a watershed moment and the impetus for adopting a wellbeing economy framework. It sparked mass protests, and the general public demanded changes and increased accountability from the administration.The shake-up of wiedspread assumptions opended up a broader spectrum of ideas, triggering an energetic rethinking of our objectives as a society.

The concept of wellbeing became more prominent in political debate – I served as Minister for Education, Research and Culture in the left-wing government that was in power between 2009 and 2013. One of my projects involved forming and implementing a new curriculum which included education on equality, democracy and sustainability – and actually education on health and welfare. Another key project during that period was to build a bridge between the education system and the unemployment system, trying to motivate those who had lost their jobs to seek education or retrain. Several thousand people went through that program and after meeting a few of them personally I see it as one of my most rewarding efforts: because it showed me how social policy actually can impact  people´s everday lives. When I returned to government in 2017, then as Prime Minister heading a very different government, a three party coalition form the left to the right, I wanted to continue the work on wellbeing and create a new framework around it.

In 2019 my government introduced 39 indicators to track the progress of a wellbeing economy. The indicators include economic, environmental, labour market, and social factors and are compatible with wellbeing indicators published in other countries and by international organizations like the OECD.  Preparation of those indicators was pan-political and included an opinion poll, asking the population what they valued most in their private life and in society. Health was at the top of both lists.

Six wellbeing priorities have been integrated into the government’s five-year fiscal strategy, utilizing the expertise from gender budgeting introduced by statute into state budgeting in 2015.

The six priorities are:

• Mental health, where we have among other things doubled the number of psychologists working in public healthcare;
• Secure housing: In 2020 and 2021 one-third of all new homes built were supported by public social initiatives;
• A better work-life balance: we extended parental leave (from 9 months to 12 months, shared equally between parents) and we in Iceland shortened work week;
• A programme for a carbon-neutral future, which introduced new taxes and lifted other ones to accelerate energy transition;
• Innovation growth, where we have increased research and development funding and seen export revenues from innovation grow substantially;
• And strengthen information and communication to the public: including increased emphasis on public consultation when preparing legislation. I could also mention our information strategy during the pandemic where we kept the public informed at all times. The approach resulted in strong confidence in government actions during the pandemic and high vaccination rates At the same time it limited the spread of disinformation.

Statistics Iceland monitors the wellbeing aspects of people's lives on an ongoing basis through a set of indicators, providing policy makers with a systematic assessment of the impacts expected or achieved by policies.  

The global COVID-19 pandemic and the following economic crisis have brought the wellbeing framework's importance into even sharper relief. In 1976 the historian William H. McNeill argued in his seminal book Plagues and People that health crises often serves as a mirror of the society. The truth of this is becoming even more evident in the current post-covid times, where we continue to struggle with one of the worst recessions  of our times.

While traditions, cultures, and norms have shaped policy responses to the pandemic's socio-economic challenges, those responses reveal the capacity of different societies to cope with challenges, learn from experiences and build resilience against future shocks. Moreover, the pandemic and related crises point to the urgent need for transformative programmes to counter the climate crisis. It was a reality check for everyone to realise that environmental degradation, biodiversity loss, and pollution could lead to more epidemics impacting our health and economies. In that context, we can allow ourselves to see the post-covid phase as a window of opportunity for systemic change with transformative and evidence-based policies, something that is increasingly demanded by public.

It is too early to predict the extent of the socio-economic damage caused by COVID-19, and uncertainties related to new virus variants may furtherchallenge our economies' capacity to cope with long-term pandemics. According to recent research by international organizations like the OECD, Iceland, like the other Nordic countries, has, by international comparison, shown strong resilience in withstanding the threats of the pandemic and is well situated to make a steady long-term recovery. The strength of our economy, a robust welfare system, and a high level of public trust allowed the government to introduce economic and financial support packages that helped limit the damage of the pandemic. The government was able to act on expert advice and take specific measures to reduce the social and health consequences. Not only did active labour market policies and investment in general social measures have the effect that average household incomes did not decline due to the pandemic, we also ensured that elementary schools and preschools stayed open throughout almost the entire pandemic – which was important both for the social and educational wellbeing of children and for gender equality. 

A new report from the Nordic statistical offices confirms that while births in most countries worldwide have declined since the onset of COVID, birth rates increased in all the Nordic countries in both 2020 and 2021. The fact that young people trusted the public sector to compensate for the loss of income due to childbirth, despite the deep economic downturn, reflects the Nordic model's resilience. 

For more than a decade, the Nordic countries have attracted international attention for their high level of happiness. Iceland has for 12 years ranked number one in the World Economic Forum's Gender Gap Index.Research repeatedly confirms that more equal and inclusive societies have more robust economies and better businesses.

It should be noted that adopting a wellbeing framework is but one, early milestone on a longer journey and solves nothing in and of itself. Rather, it allows us a broader view, that reveals issues that have previously been neglected. Shifting the policy focus to act on this does not happen quickly, as old habits die hard. The state is a ship that turns very slowly. Which means we face a great many challenges, many of which have been brought to the forefront through adopting a wider perspective.

It has, for example, been a challenge to have an impact on the gendered structures of the labour market, where female-dominated sectors are systematically paid less and more women than men work part-time, reflecting women's larger share in unpaid work. Women also tend to leave the labour force earlier than men, relying on early retirement, rehabilitation, or disability benefits.

This is not least true for women who work in care and education, emotionally and physically demanding jobs that are becoming more complex by the day. This negatively affects their income, carrier development, and future pensions. And since we are discussing the prospects for the future, we need to include these in our analysis. Care work, as an example, has been defined as one of the areas that artificial intelligence will struggle to take over, especially the emotionally charged labour associated with paid and unpaid care.

To work as long hours or as many years as men is hardly the aim of most women – we would probably all benefit from working a bit less. Yet, ensuring a gender balance in employment is essential for women's financial independence and, therefore a key element in ending gender inequalities, including violence against women. But to  achieve a better balance by  increasing women‘s participation in the labour market, we need to create conditions under which they can do so. The Nordic countries have made major contributions on this front. Two public policies are particularly worth mentioning: universal childcare and wellfunded, shared parental leave – with a use-it-or-lose-it portion for fathers. These policies have transformed our societies and contributed significantly to the Nordic countries' high levels of prosperity and quality of life. Icelandic research, lead by professor Guðný Björk Eydal at the University of Iceland, indicates that fathers who avail themselves of paternity leave contribute more to housework, have a stronger attachment to their children and, as a consequence, enjoy a higher quality of life. The evidence suggests that these effects are lasting. Flexible work arrangements and gender equality in leadership have also helped form a more inclusive labour market. This infrastructure enables women to participate in public life and political decision-making. 

Another positive aspect, and among the most remarkable changes witnessed during the pandemic, is the increase in benevolence between people. At the same time, COVID-19 demonstrated the crucial importance of trust for human wellbeing. According to the newly published World Happiness Report, deaths from COVID-19 in 2020 and 2021 have been significantly lower in countries with a high level of trust in public institutions and where social inequality is lower.

However, in line with the global trend, the crisis has had asymmetric health and social impacts across different groups in Iceland, unveiling existing societal inequalities. Those who were hit the hardest were vulnerable groups whose lives were negatively affected by closures of public services and unemployment.

The results of national studies on the long-term effects of COVID-19 on mental health underscore warnings from the World Health Organization that societal traumas generally affect the mental health of individuals. These long-term effects are likely to appear in the coming years in the growing incidence of mental health challenges.

As has been pointed out is that the pandemic's consequences are far from being gender-neutral. In the Nordic countries, deaths from infections were significantly higher among men than women. As the virus spread, women working in the public sector formed the front line sercives protecting the most vulnerable, resulting in a very noticeable increase in exhaustion among workers and flight from health care professions. In addition, the reduced school, sports, and leisure activities increased the pressure on households, where women are still more likely than men to carry a greater load. We also witnessed a significant increase in violence against women and children, especially domestic violence. Gender-based violence has also increased outside the home, for example, by an increased frequency of child pornography, digital sexual violence, and gender-based hate speech.

In the wake of the pandemic, authorities need to continue to monitor its effects, especially on the most vulnerable groups in society, and ensure access to mental health services.

The paradigm provided by the wellbeing economy is well suited to address many of the above-mentioned challenging issues, for example, strategies for improving mental health, secure housing, better life-work balance, effective policies to ensure gender equality, efforts to ensure trust towards public institutions and benevolence between citizens, not to mention the urgency of climate change action.

To add to the economic challenges of the post-covid time, we face the crisis caused by armed conflict in Europe and an unprecedented humanitarian crisis with millions of people urgently needing aid and assistance. The global consequences threaten food and energy security, negatively affecting prospects for expanding and developing the wellbeing economy framework globally.

Even if covid-related problems now seem a distant concern for many of us, we might do well to bear Scitovsky’s thinking in mind and focus on raising the quality of our consumption and lives more generally, that is to do more with less. 

The recent years have been challenging – both domestically and internationally. The COVID pandemic has brought complex societal challenges, and other crises will follow, as the recent agression on European soil has demonstrated.

The greatest challenge of our era remains the climate crisis – in the end, it is the story of deeply flawed economic policy where the more affluent countries have contributed most to the problem but tend to be the least affected by it.

Climate change also poses one of the greatest threats to human rights we have ever collectively faced. It directly threatens the lives and wellbeing of individuals and communities around the globe, with vulnerable and marginalized groups disproportionally affected.

When it comes to addressing the global climate emergency and improving the wellbeing of current and future generations, it is especially pressing to envision a different leadership approach. The climate crisis is forcing us to rethink our way of life, our modes of consumption, production, and transportation, and how these might threaten our future. Averting a climate crisis may come at a considerable economic cost. But that cost does not have to translate into a decrease in wellbeing. Moving from a narrow focus on volumes of production and consumption to a broader view of wellbeing may enable us to preserve the overall quality of people‘s lives through better use of resources, by emphasising human needs over economic growth.

Much remains unclear about what that entails. A great deal depends on research on wellbeing, an exciting and useful field that has come into its own since Hirsch and Scitovsky made their seminal contributions. It has taught us a great deal about human motivation, how people’s preferences are shaped by social comparisons, and how these adapt and change along with people’s circumstances. It has produced actionable findings that can be used to shape policy in a wide range of areas. One such example is Professor Lord Layard’s suggestion that tax policy should be used to provide people with incentives to attain a healthy work-life balance, something I would like to hear more about.

May I conclude by reiterating my pleasure at being here with you today. I look forward to following future developments in wellbeing research and towards a fruitful collaboration between scholars and policy-makers in this field.

Thank you.