Last Friday, I attended a seminar on "Informing Policy: Realizing the Potential and Benefits of Public Policy Research in Hong Kong", which was organized by the Central Policy Unit. The following day, the University of Hong Kong organized a symposium on the theme of family health, happiness, and harmony, and which reminds us of the importance of staying healthy and happy.

Given that both Premier Wen Jiabao and Chief Executive Donald Tsang have repeatedly stated that "putting people first" should be the guiding principle of their policies, promoting happiness should indeed be the final goal in all public policy. All the rest is just the means to this end. The well-being of the people should be indeed "inform policy".

This indeed is the common theme pervading two recent books. The more recent one, published this year by Oxford University Press, carries the title Well-Being for Public Policy, makes the "case for instituting measures of subjective well-being on a national basis in order to provide policy makers with information that will be valuable in formulating public legislation and regulations". The second one, published by Palgrave-Macmillan, and one I jointly edited with Yew-Kwang Ng, a renowned welfare economist, carries the title "Happiness and Public Policy". It was motivated by "the understanding that public policy should be about enhancing happiness or the welfare of the people, now and in the future" and by the prevalence of "distracting guideposts that lead to wrong directions or lead to nowhere".

By any standard, Hong Kong is an affluent society. Its per capita income is about $30,000. Its forex reserve is bigger than that of Germany's. Hong Kong's net external assets are valued at over 230 percent of its GDP. The United Nations ranked Hong Kong 22nd among 177 countries and regions in its Human Development Index in 2006. Yet Hong Kong is also recently reported to possess the greatest income disparity among mature economies. There also are signs that Hong Kong society is not as harmonious as is hoped.

The lack of harmony within the society is sometimes attributed to internal strife ("neihao"). It may well be related to the development objectives that we cherish. Perhaps it is time to remind ourselves that all of us need to put our acts together, and address some of the key issues that adversely affect societal happiness.

In 2003 HSBC acquired Household International, Inc. which at the time was very active in America's mortgage market. At the time, the business had about $150 billion of loans outstanding to 55 million people. The aggressive acquisition was to pursue profit growth, but it led to a total write-off of the investment. While investment always carries risk, the huge exposure to the subprime market was driven by the consideration that other traditional businesses could not be expected to yield very much further growth.

By the same token, Hong Kong is now at a crossroads. As a mature economy, seeking much further growth probably no longer should be Hong Kong's top priority. Nor should we fear so much the competition from Shanghai or other cities. We should of course continue to work as best we can. But perhaps putting to good use the wealth that we have already accumulated and enjoying the benefit of what we have earned is even more important than seeking new growth centers.

From the work on happiness research that the Lingnan team has done since 2005, we have learnt that happiness is based on both "physical goods" and "mental goods". "Mental goods" is just another term for "psychological well-being", which is connected to such qualities as a sense of security, self esteem, and self-actualization. A harmonious society is built on a strong sense of cohesiveness and care. For some time, the Scandinavian countries have been enjoying the highest reported happiness in the world, but they are not the fastest growing economies in the world.

A study from the National Bureau of Economic Research actually found the younger cohorts in America showing declining happiness indices, while those in Europe appear to show rising happiness indices. The US used to take pride in being more dynamic than Europe, at the same time pointing to the "Eurosclerosis" resulting from the latter's less market-oriented policies. Perhaps America's path is after all not really in the best interest of its people. President Obama is now making a revolution in healthcare, bringing security to more Americans. Perhaps Hong Kong can learn from these experiences.

The author is director of Centre for Public Policy Studies, Lingnan University

(HK Edition 11/10/2009 page1)