The starting point for this book is the finding that, for at least 30 years, there has been a widening gap between average Gross Domestic Product (GDP) per head and measurements of happiness in affluent countries. This divergence was first commented on by Easterlin in 1974, but it has continued to grow ever since; as income follows an upward trajectory, ‘well-being’ (whether counted in terms of current contentment or overall satisfaction with life) remains stubbornly flat (Easterlin, 1974, 2005).

The availability of decades of comparable individual ‘happiness data’ from countries all over the world (Veenhoven, 1989, 1999) is now recognised as both an opportunity and a challenge for social scientists and philosophers. It has already provoked some questioning of the basic assumptions of economics (Frey and Stutzer, 2002; Bruni and Porta, 2005; Layard, 2005). Because of the dominance of the economic model in social scientific theory and government policy, this has fed through to every other field of enquiry, from politics to social work (Jordan, 2006a, 2006b, 2007).

This is not surprising, given that all theorising about the basis for and distribution of happiness among utility-maximising and interdependent populations had come (in the 20th century) to accept the idea that interpersonal comparisons were impossible. Since each individual's preferences over sources of satisfaction were different, and the subjective outcomes of their choices could not be measured, the abstract concept of ‘utility’ had, mainly through its proxy (money), to stand in as such a yardstick. This in turn allowed economists, starting with Pareto (1909) and Pigou (1920), and continuing with Robbins (1932) and Samuelson (1954), to develop models in which the trade-offs between efficiency and equity in the allocation of all kinds of material resources could be analysed.

Within these, there was a fundamental distinction between those goods and services that were privately exchanged between individuals, and those that, because of the potential external costs imposed by some on others, or external gains from others’ action, required collective measures for the sake of optimum outcomes (Buchanan and Tullock, 1962). It was the capacity of ‘welfare economics’ to handle production and exchange in markets within the same framework as taxation, transfers and the provision of public services that gave it a decisive edge as a tool of government planning, and made its analyses so influential on those of the other social sciences.