Want to Boost the Economy and People’s Happiness? Invest in Creativity.
The Union Budget 2018 announced by the Finance Minister recently was notable in its focus on skill development and providing tax concessions to small and medium enterprises. These industries, along with recent policies such as Startup India, are meant to foster innovation and encourage creative industries, whose effects may go beyond those measured by traditional measures of economic development such as the Gross Domestic Product. Which is why going forward, in order to truly understand the impacts of governmental plans and budgets at an individual, cultural, and national level, it is important to look beyond GDP and other one-dimensional measures of growth. Instead, a good barometer of economic health is the health of the country’s creative industries.
In pure numbers, creative industries are a larger segment of many economies than many may realize. Creative economies and creative/cultural industries represent parts of the economy contributing output in the form of novel and implementable ideas, supplementing more traditional manufacturing and services-related output. Over the last few decades economic geographers have shifted attention from manufacturing to cultural industries, such as fashion, media, design, and tourism. Additionally, scientific, artistic, and cultural creative outputs are also being identified as contributing value in creative economies. A 2015 analysis of the global representation of creative and cultural industries by Ernst and Young indicated that such industries generated USD 2,250 billion in revenue and employed 1% of the world’s population by generating 29.5 million jobs worldwide. Moreover, the Asia-Pacific region was found to contribute the most revenue to these industries as well as generate the most jobs.
But just as critically, these creative economies contribute to levels of subjective well-being in a way other industries do not. As an indicator of human development, subjective well-being assesses the overall quality of life. Studies have found association between creativity (and its output – innovation) and subjective well-being, suggesting a link potentially mediated through economic growth; a study by my colleagues at Monk Prayogshala has found linear correlations between creativity and subjective well-being. Compiling secondary data from 130 different countries, we found parameters such as creative occupations, citable documents, number of feature films produced, printing and publishing, royalty fees from licenses, and cultural and creative services exports to be associated with higher subjective well-being. Additionally, two out of three monetized variables of the study were also found to positively predict subjective well-being. Given that the monetization parameters are highly associated with income (or in some cases measured as a fraction of total GDP), these findings support the argument of overall increases in income stemming from creative industries, which furthers subjective well-being still.
All of this feeds into the economy as well. Indeed, extensive research has associated higher economic growth with increases in subjective well-being. In contemporary development studies, there is a popular a shift away from relying on quantitative measures of economic well-being toward broader measures, such as subjective well-being. This is due to identifiable shortfalls of relying on a monetized measure of development that does not reflect changes in other aspects of human development. In 2009, the Stiglitz Commission highlighted the importance of subjective well-being in determining the social and economic progress of a society by recommending the use of subjective measures of quality-of-life to supplement existing objective measures such as per capita GDP.
Even if maximising people’s happiness or well-being aren’t explicit policy goals, governments play a central role in establishing the societal conditions that enable individuals to be happy. There is increasing evidence to suggest that policy can and does affect people’s subjective well-being, as well as their livelihoods, whether intended by the policy-makers or not. This is largely because government policies have direct impacts on critical drivers of subjective well-being, including health, material conditions, employment status, and how people spend their time. The Budget indeed focused on a few of these aspects, as outlined by the Finance Minister, shifting policies from just the “ease of doing business” to the “ease of living.” Schemes introduced include the Health Protection Scheme, greater infrastructure spending, and employment generations schemes complemented with skill development programmes. But given the association between creative industries and subjective well-being, and the association between subjective well-being and economic growth of a country, it is important to give greater consideration to policy impacts on creative economies; these may be truer indicators of policy success or failure.