Happiness and Productivity. Eugenio Proto & Daniel Sgroi University of Warwick Department of Economics and CAGE
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1 Happiness and Productivity Eugenio Proto & Daniel Sgroi University of Warwick Department of Economics and CAGE
2 Main question Does happiness induce better intrinsic motivation in employees? Or, on the contrary, promote careless and superficial behaviour?
3 Wellbeing at work At Google, we know that health, family and wellbeing are an important aspect of Googlers lives. We have also noticed that employees who are happy... demonstrate increased motivation Lara Harding, People Programs Manager,
4 Stress-relieving perks at at Free breakfast, lunch, and dinner. The organic food is chefprepared Free health and dental Free haircuts Free dry cleaning Subsidized massages Gyms and swimming pools Hybrid car subsidies Nap pods Video games, ping pong On-site physicians Death benefits
5 Happy nnvironment at t
6 Descriptive empirical evidence Happier individuals are (often) richer
7 Descriptive empirical evidence Happier companies have higher returns
8 But what is the direction of causality? OR
9 Or neither?
10 A Laboratory Experiment on Happiness and Productivity (A. Oswald, E. Proto, D. Sgroi; Journal of Labor Economics, 2015)
11 Watching comedy increases happiness Untreated Treated Happiness after the clip Happiness Happiness Male Happiness at the Female after the clip after the clip end
12 Watching comedy increases productivity Untreated 14 Treated Additions Additions Male Additions Female Attempts This increase is only due to more effort and not to more precision!
13 What about outside the laboratory?
14 Effect of happiness in the long run No BLE BLE Happiness Happiness Female Happiness Male Individuals with a recent Bad Life Event (BLE) report lower happiness [Here a bad life event is bereavement or family illness.]
15 Effect of a BLE on productivity No BLE BLE Additions Additions Female Additions Male Attempts Individuals with a recent Bad Life Event (BLE) have lower productivity
16 Summary so far Google s culture of wellbeing Happier individuals Have higher wages (more productive?) Happier organizations have higher returns on investments Laboratory experiment to test the relation of causality from happiness to productivity
17 POLICY RAMIFICATIONS For firms, for industry, for government
18 Firm policy Workers happiness should matter not just for moral reasons if it boosts productivity, it boosts profit! Anything free (nudge) should be done Costly policies might be worth it too
19 Industry Boosting productivity is effectively cutting costs (efficiency) Since this generates competitive advantage once one firm starts boosting happiness in this way, others should follow Potentially working through the entire industry.
20 Government Supply-side, industrial policy educate firms & industries on the benefits, fund research (!) and provide leadership by example through (well-advertised) public sector schemes. Productivity-boosting policies in government departments can help compensate for the current environment of spending cuts It is not happiness vs profit (life satisfaction vs economic growth) both can and should move together.
21 In Practice Find tasks for which effort is key these will work best. Workers across the distribution benefit, so no need to focus any happiness policies on certain employees. Useful to be able to measure happiness and productivity (not trivial!). Can be overcome in novel ways (time vs quality).
22 In Practice The next step is to experiment with different policies in real workplaces to see what works best. Short-run (one-off shocks ) vs long-run (environment, relationships) Cheap ( nudge, feedback) vs expensive (environment).
23 Thank You! Have a happy-productive day!
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Original citation: Oswald, Andrew J., Proto, Eugenio and Sgroi, Daniel (2013) Happiness and productivity. Working Paper. Coventry, UK: Department of Economics, University of Warwick. (CAGE Online Working
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