Is happiness the solution to the productivity paradox?

27th January 2017

Across the developed world, people are working longer hours and with better technology than at any time in history.

Yet their productivity is not increasing. This counter-intuitive outcome is the productivity paradox that is debated endlessly by economists, politicians and business leaders.

When it comes to possible solutions, they may all be looking in the wrong place. A growing body of evidence suggests that productivity is linked directly to people’s happiness and wellbeing. For example, a report published at the end of 2016 by economist Dr Eugenio Proto of the University of Warwick concludes that there is a direct correlation between a rise in happiness and an increase in productivity, based on the experience of a number of large companies who took part in the research.

One of the best explanations for this link between happiness and productivity is also one of the oldest and best known. Abraham Maslow first proposed his model of the hierarchy of needs in a 1943 paper called ‘A Theory of Human Motivation’. His work has been paralleled and built upon by other researchers since, but few have had the influence and longevity.

It says a lot that it still seems relevant in the 21st Century and may be the key to solving one of the economy’s most intractable conundrums.

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