UK workers would take 10% pay cut for ‘above average’ happiness, study finds

What price happiness? The answer might be £3,360 a year, as the average UK worker would take a 10.5% pay cut to work for an employer where staff enjoy “above average” levels of happiness, a study has shown.

The research, which examined 23 million jobseekers across the UK, US and Canada, comes amid a growing push for companies and governments to quantify the costs and benefits of wellbeing alongside cash measures of economic output.

George Ward, an academic at the MIT Sloan Institute for Work and Employment Research, observed how jobseekers on the Indeed recruitment website screened out “unhappy firms” from their job search. He concluded that companies should “invest in organisational and management practices that are conducive to worker happiness”.

Ward used data from Indeed, who asked millions of employees if they “feel happy at work most of the time”, to generate a “work happiness score”. It was displayed on job adverts from those firms for 10 months.

In the US, the probability of a jobseeker applying for a post went up 14% if a firm had an average rather than low happiness score. On average, younger people showed greater taste for happier workplaces while richer respondents were willing to take larger pay cuts to work at happier firms.

In the UK, jobseekers surveyed by Ward said they were willing to trade a 10.5% pay cut to work for a company with an above average happiness score of 75 out of 100, rather than 65 which was average. For a worker on an average UK income of £32,000, that is equivalent to a £3,360 cut.

“Executives say happiness is hugely important but when you ask them if they do anything, it is only about 25% that are doing anything,” he said. “This is tangible evidence they have incentives to improve the happiness of their workforce.”

When workers were asked what they meant by a happy workplace they talked about work-life balance, “team” and social relationships, enjoyment and a sense of purpose, in that order. Pay and benefits contributed, but less so.

A group of leading employers including S&P Global (which ranks companies), Unilever, BT and Cisco have launched a new “world wellbeing movement” alongside Oxford University’s Wellbeing Research Centre and other organisations.

One of its goals is to promote a standard measure of wellbeing so it can be included in companies’ reporting of their social impact, which investors can weigh up. Wellbeing indicators at work have historically focused on injury, infirmity and disease, but there are growing calls to include leading indicators such as stress and despair.

“More than at any time in my lifetime we need more detail on feelings, human resentment, frustration and anger,” said Andrew Oswald, a professor of economics and behavioural science at Warwick University, in a conference presentation that showed rising levels of discontent, particularly in the US. “We have not been paying attention. If we had been tracking feelings data, our democracies would not be in the danger they are now in.”

Gus O’Donnell, the former cabinet secretary, this week issued a manifesto with others including Richard Layard, a labour economist and pioneer of happiness research. They are calling on governments to routinely measure policies’ impact on wellbeing.

“When departmental ministers ask the finance minister for money, the finance minister should say how much extra wellbeing will this proposal generate from each dollar of expenditure,” the manifesto states. “That is the proper concept of the bang for the buck.”

For the last decade the Office for National Statistics has measured personal and economic wellbeing in the UK by asking questions such as “To what extent do you feel that the things you do in your life are worthwhile?” and “Overall, how satisfied are you with your life nowadays?”. Life satisfaction peaked at 7.71 out of 10 in 2018-19 but fell relatively sharply to 7.39 in 2020-21. Over the same period scores for “How anxious did you feel yesterday” rose from 2.87 out of 10 to 3.31.