Is Happiness Cost Effective? A Conversation with Michael Plant, Founder of the Happier Lives Institute.

Is Happiness Cost Effective? A Conversation with Michael Plant, Founder of the Happier Lives Institute.

Michael Plant is a philosopher and global happiness researcher. He is the Founder and Research Director of the Happier Lives Institute (HLI) and a Post-Doctoral Research Fellow at the Wellbeing Research Centre at the University of Oxford.

In 2019, Michael founded HLI to address the lack of rigorous research on the impact of charities on people’s happiness. Using hundreds of academic studies and subjective wellbeing data, HLI assesses the impact and cost-effectiveness of interventions, measured in Wellbeing Life-Years (WELLBYs), a method endorsed by the UK Treasury in 2021. HLI’s findings so far have highlighted the significant impact of treating depression at scale in Sub-Saharan Africa, with their work discussed in Vox and Devex, among other outlets.

Michael’s philosophical research extends to the nature and measurement of wellbeing, effective giving, moral uncertainty, and population ethics. His current project, Taking Happiness Seriously, is a book that aims to modernise J.S. Mill’s Utilitarianism with contemporary empirical insights. Michael has written articles for the Guardian, the New Statesman, Project Syndicate, the Huffington Post and The Conversation, and has been featured in The Times, The Economist, BBC1 and BBC Radio 4.

Michael earned his D. Phil. in Philosophy from the University of Oxford under the supervision of Peter Singer and Hilary Greaves. His thesis, “Doing Good Badly? Philosophical Issues Related to Effective Altruism”, critiques and develops views within the effective altruism movement. Additionally, Michael holds a first-class degree in philosophy from St Andrews and studied at the London School of Economics, where he was one mark short of a distinction – something he says he is definitely, absolutely, not still bitter about.

Q: What is happiness?

[Dr. Michael Plant]: Well, I can give you a long answer and a short answer. The short answer is that  happiness is a feeling of overall pleasure or enjoyment.

Here’s the longer answer. I’m a philosopher by background (for my sins), and philosophers distinguish ‘happiness’ from ‘wellbeing’. ‘Wellbeing’ refers to whatever makes your life go well overall. But “well‑being” is just a placeholder; we then ask, what is well‑being? There are three main answers. One is happiness—how good or bad you feel. Second is having your desires satisfied; in economics, well‑being often means that. The third is the objective‑list view, which says that subjective feelings matter, but so do things like achievements, love, and knowledge.

So, should we think the good life for us is the happy life – or is it one of the other two options? That question used to obsess me as a student. But as I’ve grown older (and less wise), I don’t think it matters enormously. The question is simply whether happiness is the only thing that matters or just one of several things that matter. I often have odd conversations where people say, “Should we take happiness seriously?” And I pause and ask, “How do you feel about misery and suffering—are those not bad? Do they not matter at all?” Then they admit, “Oh yeah”. I then ask “so, don’t you think it’s good if people enjoy their lives?” And they  say, “I suppose so.” So, everyone agrees happiness matters to some extent – but we often forget this and need to bring it to the surface.

Q: Why do we feel less happy these days?

[Dr. Michael Plant]: I’ll say a couple of things on that. The trend in average country happiness comes from the World Happiness Report—the famous annual ranking that’s crowned Finland the happiest country eight of the twelve years it’s run. So yeah, that’s a good place to live. If you look at the UK, we’ve been drifting down slightly since records began in 2012: from about 6.9 to roughly 6.7 on the 0–10 life‑satisfaction scale. The US has suffered a more pronounced drop—about twice the size of ours. It’s unfashionable to talk about “the West” these days (we say global North and South), but here “the West” really fits: life satisfaction is falling in North America, Western Europe, Australia, and New Zealand. Meanwhile, places like Central and Eastern Europe, parts of Asia, and Central America are seeing rises.

Perhaps I should add: there are two main ways to measure “happiness.” There’s life satisfaction—how you rate your life overall—and there’s “happiness, happiness,” or experentialhappiness: how good or bad you feel moment to moment. Most research uses life satisfaction, so the World Happiness Report is really the World Life Satisfaction Report. If you want a caricature, life satisfaction is your self‑smugness rating—how smug you feel about your life. Western smugness has definitely slid over the past ten years. Why? It’s a mix of factors: reductions in prosociality and trust; lingering recoil from the 2007 global financial crash (especially among young people); and declining youth life satisfaction regardless of whether reported mental‑health rises reflect awareness or reality. You can tell a smartphone story about why life satisfaction has gone down  but you can also explain it as a labour‑market issue: coming of age in precarious financial circumstances, seeing your parents richer than you. Young people are really feeling the life satisfaction pinch.

Q: How do you measure happiness? How has happiness science developed over time?  

[Dr. Michael Plant]: So, the idea that we should care about people’s happiness—their suffering and their joy—goes back to Jeremy Bentham’s Principles of Morals and Legislation in 1789. Of course, the science wasn’t there yet: no steam engine, no Industrial Revolution, no mass literacy—the world as we know it simply didn’t exist.

Fast‑forward, and the focus on happiness cost‑effectiveness – or  “value for money” – which is what my team and I at the Happier Lives Institute have been pioneering, could only take off once the underlying tools were in place. The first national wellbeing surveys began in 1972 with the US General Social Survey (interestingly, the same year Bhutan started its own happiness measurements—though I know less about how that’s gone). From there the science built up, culminating in the World Happiness Report in 2012..

I first started thinking about applying happiness metrics to charities during my PhD at Oxford in 2015. I saw that the growth of effective altruism movement – which has now veered off in odd directions – and its focus on finding the best charities. But no one has tried to measure charity impact in terms of happiness, so that seemed like the obvious thing to look at. I think that most of us, when we give to charity, hope that we ultimately help people live happier, less miserable lives. So we should measure what we care about.

Measuring wellbeing solves two big problems: it tells us what truly matters (not just income or health metrics), and it lets us compare different types of charities—poverty relief, education, the arts—by how much happiness they generate. We move from vibes‑based giving to data‑driven giving. To quantify it, we use a standardized measure that the UK Treasury now adopts, called the Wellbeing‑Year or “WELLBY.” It’s simple: ask someone to rate their life satisfaction 0–10. If you’re at 7 today and you’re at 8 for a whole year, that’s one WELLBY.

Economists have long looked at the relationship between things like happiness and income and unemployed, but only in the last six years have we used WELLBYs to compare actions and outcomes directly: “If you support this charity, or implement this policy, how many WELLBYs do you gain per pound spent?” That, to me, is taking happiness seriously.

Q: How do you meaningfully the happiness approach to assess charities?

[Dr. Michael Plant]: I’ll give you an  concrete examples. As no one had done this before, we had to start somewhere. So, where do we start digging for altruistic gold? Our first target was unconditional cash transfers to very poor families in sub‑Saharan Africa—think GiveDirectly’s model of sending $1,000 (roughly £800) per household. The development‑economics literature is rich with randomized controlled trials that examine not only monetary outcomes but also life‑satisfaction and standardized mental‑health measures. So you can use that to make the comparison. You recruit a control group that receives no cash and a treatment group that gets the transfer, then follow both over time. You compare their life‑satisfaction scores—just like comparing recovery rates in a medical trial to test a new drug. That’s how you quantify how much extra happiness is produced by what the charity does. Then you kind of go from there, look at the costs and the alternative things you could donate to.

Q: What’s the business case for focussing on happiness?

[Dr. Michael Plant]: We think that happiness in itself matters, so we don’t worry too much about the business case. But if you’d like a case for the knock-on effects of having a happier society, you can see it in the Oval Office. Why’s that? In the US, life satisfaction has been falling. New research from my co‑authors in the latest World Happiness Report examines life satisfaction, trust, and populism: who votes for populists? People with lower life satisfaction tend to vote for them—that makes sense: they want change. But trust moderates this. If you’re low happiness and low trust, you vote for right‑wing populists—everyone’s a bad egg; let’s try something new. If you’re low happiness but high trust, you vote for left‑wing populists—Bernie Sanders, Mélenchon—thinking, we’re in a tough spot but we can trust each other. So Donald Trump is both a cause of further misery and mistrust and a symptom of it. People feeling their lives are failing, society is polarized, and nobody can be trusted are exactly the feelings that drive votes for him, which then cause more problems. If you think happiness is too ‘fluffy’ to care about, well, I don’t think the consequences of Donald Trump are fluffy at all.

Why should we care about happiness and not just GDP? I think, at a broad level, wellbeing data lets you put the human back into the picture. I don’t want to sound like a “live, laugh, love” poster, but that’s exactly it. GDP tracks economic activity, but it misses the soul—it overlooks the quality of human relationships. Are people lonely? Do they have friends? Do they enjoy their jobs? Do they feel secure in their health and confident the state will support them if things go wrong?

Q: Should we therefore be looking at happiness generation and not wealth generation, particularly when it comes to charities?

[Dr. Michael Plant]: We’ve argued that treating depression among those in global poverty is more cost-effective than direct cash transfers. Lots of people are baffled by this: if people are very poor – whether or not they are mentally unwell – shouldn’t we just focus on poverty? But the claim that targeting poverty is the best way to improve happiness is an empirical question, and we shouldn’t just assume we know the answer. It’s testable, and we looked at it.

To test it, we did a large systematic review and meta‑analysis of both interventions, pitting unconditional cash transfers against depression treatment—mainly six‑week group‑therapy courses run by trained volunteers rather than psychiatrists. We found that treating depression is about six to seven times more cost‑effective than cash transfers. It costs roughly $50 (about £40) for a course of therapy, versus about $1,200 to deliver a $1,000 cash transfer.

If you’re offered $50 worth of therapy, or a $1,000 cash transfer, you should take the cash transfer – our data shows the cash transfer does have a larger effect per person. But then, you can treat twenty people for depression for the cost of one cash transfer. So, from the social impact perspective, the therapy is the better choice: it brings about the larger increase in happiness per dollar.

By comparing these interventions with wellbeing data, we uncover surprising results and, as philanthropists who genuinely care, we can give confidently, knowing we’re making the greatest possible difference.

Q: What are the limitations of the wellbeing approach? Can you capture knock-on effects that helping one person has to the rest of society ?

[Dr. Michael Plant]: So what you’re talking about with the knock‑on societal effects are what we call spillovers, and yes, you can measure and capture those too. The challenge is that the further you move from direct data, the more you’re peering into darkness—beyond the light of day, you’re largely speculating. Still, you can try to make sense of these things. I’ll give you another concrete example. We evaluated a programme called NEPI in Liberia, which combines cognitive‑behavioural therapy with cash transfers for men at risk of, or already involved in, criminal activity. One clear advantage is that you can directly measure changes in participants’ mental health and wellbeing. Depending on your politics, you might think, “I don’t care about criminals,” or, “We should help people exit crime.” But you can also capture societal benefits: by digging into data and studies, you can estimate the wellbeing impact of reduced crime—avoiding a mugging or a home break‑in, for instance. You have to hoover up the info, but it’s doable. In this case, we estimate about 80% of the benefit comes from these spillovers. And as we often say: if it’s worth doing, it’s worth doing with rough numbers—you’d be surprised how much clarity that can bring.

I’d encourage your readers and listeners to check out work from the London School of Economics by Richard Layard, Christian Krekel, and others. In 2024 they published a major report—the first substantial attempt to assess policies by their value for money in improving wellbeing. For instance, they argue that in the UK, investing more in mental health would not only boost wellbeing significantly but actually save the government money, since healthier people can work more. This new exchequer‑perspective cost–benefit analysis monetises wellbeing impacts, combining wellbeing and financial effects into a single metric—it’s truly cutting‑edge. I don’t know how many of your listeners are UK‑based, but they might be amused to learn the UK is the world leader in happiness research—perhaps all thanks to Jeremy Bentham, dead but not forgotten. All the wellbeing cost‑effectiveness work—call it WELLBYs Wellbeing Priority Research—has come from the UK: Bristol, London, Oxford. These are the people putting numbers on this and pushing the field forward. A real UK success story, from the UK to the world.

Q: Why did you choose this field of study to focus your career?

[Dr. Michael Plant]: I studied philosophy at 16, and that instantaneously changed my view of the world. I did a lesson on ethics and came across this idea called utilitarianism, thinking that what we ought to do is maximise happiness. And I figured I don’t know if that’s the whole truth, but it seems like much of the truth, and I’ve sort of pursued it ever since. The challenge is that, even if you know what, in principle, to do, that doesn’t tell you what you should actually do? You then apply evidence to work it out. So my career so far has been, in large part, finding and following the evidence. I think it’s very exciting—what we’re doing at the Happier Lives Institute is so new. It’s only six years since we or anyone else has trying to do happiness cost-effectiveness – ‘bang for buck’ in terms of wellbeing – and we’d very much like philanthropists to support us. It’s a fresh approach to understanding how we make a difference: we can focus on what matters and use some evidence.

And, because I haven’t said it already, I should mention that in our World Happiness Report analysis we found that some charities are hundreds or even thousands of times more effective than others—so it’s not like you’re getting just a bit more for your money. If you were talking to an investor and said you could get 1,000× returns, they’d think you’re crazy—but actually, that’s the weird state of the world.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.