‘Happiness’ in the Post-WWII
Japanese Economic Development
― In Search of the New Goals of Development ―
August 2011
Shigeru T. Otsubo & Yumeka Hirano
GSID, Nagoya University
(http://www.gsid.nagoya-u.ac.jp/sotsubo/)
1
Four Phases of Japanese Economic Development
Phase I
Phase IV
(1945-1960s)
Political Regime Change,
3.11 and Beyond
Catching-up Process
1. Post-war Rehabilitation
& Economic Reforms
(1945-mid 1950s)
2. High Economic Growth
Period
(mid 1950s – early 1970s)
Democratization
Common Goals
Socio-Economic
Outcome (-1970-)
Environmental Issues
Social Dimensions
NNW(1973)
(2009-)
Phase II
(1970s-1980s)
Failure to Reform
& “Bubble” Economy
1. End of Catch-up Process
& Need to Change
(1970s1980s)
2. Overcoming Oil Crises
(1970s )
3. ‘Bubble’ (latter ½ of 1980s)
No More Common Goals
Autonomous Actions
1. First Regime Change
through Election
LDP+  DP+ (2009)
2. 3.11 & Fukushima
In Search of New Goals
Phase III
(1990s-2009)
Long Stagnation
& Koizuminomics
1. Bubble Burst (1990)
& Long Stagnation
(1990s-2000s)
2. Koizuminomics
Supply-Side Policies
& Widening Inequality
(2001-2006-)
2
Phase I
(1945-1960s)
Catching-up Process
1. Post-war Rehabilitation
& Economic Reforms
(1945-mid 1950s)
2. High Economic Growth
Period
(mid 1950s – early 1970s)
Democratization
Common Goals
Part I.2: High Economic Growth Period
(mid 1950s – early 1970s)
3
Entering Virtuous Cycle
Period of rapid growth (1955--1970)
Average real
growth rate
4.9
Source: National Accounts
2001-2005
1.5 1.0 1.4
1996-2000
3.3
1981-85
1976-80
1971-75
1966-70
1961-65
1956-60
4.5 4.4
1991-95
11.1
1986-90
8.8 9.2
Dual structure -- lower productivity and poorer working conditions
in small businesses, consumption-goods and service sectors4
National consensus -- trickle-down strategy
3 Sacred Treasures in the latter half of 1950s
1956 Economic White Paper “We have come out of the post-war rehabilitation.”
Drive to Material
Happiness/Affluence
3 Cs in the High-growth period of 1960s
1964 : Tokyo Olympic Game, OECD Membership, IMF Article 8 Country
TOYOTA Corolla (1966-) vs.
1000cc
1100cc affluence of plus 100cc
NISSAN Sunny (1966-)
1000cc
1200cc neighbor’s car looks smaller
5
Negative Outcome of the Rapid Growth
(2) Environmental degradation
Atmospheric polution
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0
SO2(ppm)
2004
2000
1995
1990
1985
1980
1975
1970
1965
NO2(ppm)
Source: Ministry of Environment
Sulfur Dioxide (SO2)
Yokkaichi-city
Asthma
6
Water pollution
100
80% of attaining environmental standard
Rivers
60
40
Lakes
2004
2000
1995
1990
1985
1980
1975
20
Source: Ministry of Environment
7
3,000
2,500
2,000
1,500
1,000
500
0
2005
2000
1995
1990
1985
1980
1975
1970
Number of patients
100,000
Atmospheric pollution
90,000
80,000
related disease (left)
70,000
60,000 Minamata
50,000
disease
40,000
(right)
30,000
20,000
10,000
0
Source: Ministry of Environment
Minamata Disease
caused by mercury poisoning
8
Japan’s Indicators for Well-being
First Wave of Well-being Metrics in the 1970s
1973
1
Net National Welfare (NNW) 国民純福祉
NNW = GNP + Monetary Value of Leisure Hours
+ Monetary Value of Housework
- Costs of Preserving Environment
- Imputed Damage by Pollution
- Losses due to Urbanization
(traffic accidents, longer commuting hours)
NNW ナニガナンダカワカラナイ
Not Understood. Not Accepted. Disappeared in a few years.
9
Japan’s Indicators for Well-being
First Wave of Well-being Metrics in the 1970s
1974 Social Indicators (SI)
2
社会指標
10 Social Objectives
1. Health
2. Education/Learning
3. Employment and the Quality of Working Life
4. Leisure
5. Income/Consumption
6. Material Wealth/Stock 7. Crime and Law Enforcement
8. Family
9. Quality of Community Life
10. Social Class and Inter-class Mobility
1979
Social Indicators (SI)
新版社会指標
Few adjustments over the 1974 social indicators. For example,
secure supply of Energy and Water is added as a subcategory under item 6.
10
Phase II
(1970s-1980s)
Failure to Reform
& “Bubble” Economy
1. End of Catch-up Process
& Need to Change
(1970s1980s)
2. Overcoming Oil Crises
(1970s )
3. ‘Bubble’ (latter ½ of 1980s)
No More Common Goals
Autonomous Actions
Phase II: End of Catching-Up Process
Bubble Economy
(1970s – 1980s)
11
Bubble Creation & Bubble Burst
Financial Affluence
-- Mirage ?12
Phase III
(1990s-2009)
Long Stagnation
& Koizuminomics
1. Bubble Burst (1990)
& Long Stagnation
(1990s-2000s)
2. Koizuminomics
Supply-Side Policies
& Widening Inequality
(2001-2006-)
Phase III.1: Lost Decades
(1990s – 2000s)
13
Burst of Bubble and the ‘Lost Decade(s)’
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
10 %
GDP
growth
rate
6.8 5.3 5.2
8
3.4 Nominal growth
6
Real growth
4
2.9
2.6
2.6
1.9 1.4
1.0
1.8 2.3
1.1
2
0.4
0.2
0.1
0
-0.2
-2
-1.8
-4
Average annual
growth rate
1956～60
8.8%
1961～65
9.2%
1966～70
11.1%
1971～75
4.5%
1976～80
4.4%
1981～85
3.3%
1986～90
4.9%
1991～95
1.5%
1996～2000 1.0%
2001～05
1.4%
Source: ESRI, Cabinet Office, "Annual Report on National Accounts“ Note: data before 1980 are 14
based on
Note: data after 1995 is based on chain-linking method, 2000 price.
the 1968-based SNA.
Deterioration of the government fiscal balance
％
General government budget
balance （% of GDP）
Cyclical balance
Projected
-5.2
-4.7
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
4
0.3 2.1
2
0.8
0
-2
-4 Structural balance
-4.2
-6
-5.1
-5.9
-8
-7.5 -7.9
Budget balance
-10
15
Source：OECD “Economic Outlook 79”(June 2006）
Japan’s Indicators for Well-being
Second Wave of Well-being Metrics : 1986
1986
New Social Indicators (NSI)
国民生活指標
8 Indicators for Different Aspects of Life
1. Health
2. Environment and Safety
3. Economic Stability 4. Family Life
5. Working Life
6. School Life
7. Community/Social Activities
8. Learning/Cultural Activities
+ Subjective Indicators
1. Satisfaction 2. Happiness 3. …
16
Japan’s Indicators for Well-being
Second Wave of Well-being Metrics : 1992
1992
People’s Life Indicators (PLI)
‘Well-being Indicators’
新国民生活指標
「豊かさ指標」
8 Indicators for Different Aspects of Human Activities
1. Live
3. Work
5. Healing
7. Learn
2. Consume
4. Raise (Children)
6. Play
8. Socialize
+ 4 Indicators of Life Evaluation
1. Safety/Security 2. Fairness 3. Freedom 4. Comfortability
Evaluated and implicitly ranked 47 prefectures of Japan.
1st : Fukui (relatively underdeveloped pref.)
Last: Saitama (next to Tokyo, relatively developed/urbanized pref.)
With complaints from low-ranked prefectures, PLI was discontinued after
17
a few years (private firms succeeded the similar RANKING).
Phase III
(1990s-2009)
Long Stagnation
& Koizuminomics
1. Bubble Burst (1990)
& Long Stagnation
(1990s-2000s)
Structural Reforms in the
Japanese Development Model
2. Koizuminomics
Supply-Side Policies
& Widening Inequality
(2001-2006-)
Phase III.2:
Koizuminomics Supply-Side Policies
(2001 – 2006-)
18
Employee by Type of Employment
(%)
100.0
90.0
80.0
70.0
60.0
50.0
Regular staff
Non-regular staff
40.0
30.0
20.0
10.0
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0.0
1986: Worker Dispatch Law
Source: e-Stat Database of the Japanese
Government Statistical Office
2004: Manufacturing sector included
1999: Job lines for dispatched
workers were liberated
(excl. manufacturing).
19
20
Unemployment
4,000
10
9
3,500
8
3,000
7
2,500
6
2,000
5
4
1,500
3
1,000
2
500
1
0
0
Total unemployed (thousand)
Unemployment rate (%)
Source: e-Stat Database of the Japanese Government Statistical Office
21
PM Koizumi’s Supply-Side Economic Reform
(2001 – 2006)
Change in policy formation style
-- Strengthening the role of Cabinet for policy formation
-- Weakening the influence of the MOF
-- Weakening the voice of the Liberal Democratic Party
Settlement of the “Bubble” economy aftermath
-- Banking reform, esp. disposal of NPLs
-- Budget consolidation, esp. reduction in public works
Measures to cope with depopulation and aging
-- Reform of social security, health and disability insurance
22
Growth is good for the poor, but
Supply-side policies for revitalizing economies put the country in the lowerright quadrant with widening inequality.
Thatcherism
(1979-1990-1997)
Reaganomics
(1981-1989)
Koizuminomics
(2001-2006-2009)
Source: Dollar and Kraay (2007), Figure 1
23
Recent Movements in Japan’s Gini Indices
Source : Author’s unscientific imagination !?
24
Phase IV
(2009-)
Political Regime Change,
3.11 and Beyond
1. First Regime Change
through Election
LDP+  DP+ (2009)
2. 3.11 & Fukushima
In Search of New Goals
Phase IV.1 : Political Regime Change
from LDP+ to DP+
25
Life Satisfaction and Real PcGDP
(Thousand yen)
4,500
5
4.5
4,000
4
3.5
3,500
3
3,000
2.5
2
2,500
1.5
2,000
1
1981
1984
1987
1990
Real GDP
per capita
1993
1996
1999
2002
2005
2008
Life Satisfaction
Source: Cabinet Office of Japan (1981-2008) “The National Survey on Lifestyle Preferences”
26
(%)
70
Spiritual and Matrialistic Affluence
60
50
40
30
20
10
0
Spiritual affluence
Materialistic aflluence
Source: Cabinet Office (2010) “Opinion Polls on People’s Livelihood”
27
(%)
80
Number of Suicides and Suicide Rates by Gender
40,000
70
35,000
60
30,000
50
25,000
40
20,000
30
15,000
20
10,000
10
5,000
0
Total
Male
Female
Total
Number
0
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
Source: National Police Agency (2010) “Report on Suicide 2010”
28
Population Share by Age Groups
100%
90%
80%
70%
60%
more than 65
50%
15-64
0-14
40%
30%
20%
10%
0%
1930
1940
1950
1960
1970
1980
1990
2000
2009
2020
2030
2045
2065
2085
Source: Historical Statistics of Japan, Statistics Bureau, Ministry of Internal Affairs and Communications
29
Concerns/Needs of People in Japan (2008 Survey)
Holiday and leisure
time, 3.50
Family, 4.41
Community life, 3.62
Safety and protection
of individuals, 4.29
Education and
culture, 3.68
Income and
consumption, 4.18
Working life, 3.98
Medical care and
health, 4.17
Equity and life
security, 4.01
Living environment,
4.12
Source: Cabinet Office of Japan (2008) “The National Survey on Lifestyle Preferences”
30
Factors for Happiness (Survey in 2010)
70(%)
60
50
40
30
20
10
0
Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”
31
Intended/Desired Goals of Society
80
(%)
70
60
50
40
30
20
10
0
Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”
32
Political Regime Change 2009
Buzzword of 2009
‘Regime Change’
32,000+ Suicides. 32,000+ Deaths in Solitude, 15 million Singlemember Household Disconnected Society（無縁社会）

Friendship/Fraternity (友愛)
PM Yukio Hatoyama
(2009.9.16-2010.6.8)
+
‘New Public Commons’ (新しい公共)
Society where people with various backgrounds support each other
for education/child raising, community development, crime
prevention, disaster measures, medical/care services. The role of
government in the 21st century is to （side-）support those civil
societies and NPOs.
 Compiling Happiness Indicators (幸福度指標) for guidelines.
33
PM Naoto Kan
(2010.6.8-???)
‘Minimum Unhappiness Society’ (最小不幸社会)
My belief is that the role of politics should be to minimise the factors that make the
people of Japan and the rest of the world unhappy. That is to say, politics should aim to
build a society with a minimum level of unhappiness. I say this because, while seeking
great happiness - such as through a romantic relationship or a favorite activity like
painting - is certainly important, this is not an area in which politics should be engaged
very much. On the contrary, I believe politics should seek to eradicate poverty and
avoid war.
I want to rebuild Japan from the ground up and make it a more dynamic country, one
which also produces more youngsters who walk on to the world stage and distinguish
themselves. One way of doing so is to revive Japan's economy, rebuild Japan's public
finances and turn Japan's social security system around. That is to say, we need to shore
up the economy, public finances and social security together in a cohesive manner.
 Compiling Happiness Indicators (幸福度指標) for locating factors of unhappiness.
34
What do we Japanese need? We need,
1)New Goals based on (Individual) Happiness
and Social Capital/Network
 Connected Society with New Public Commons
 Safe and Secured Life （安心、安全）
with Consideration for Others （思いやり）
2) Economic Growth
 Employment for meaningful life
 To cope with the large stock of public debt
 To reduce the burden on the younger/future
generation in supporting the aged/retired 35
Phase IV
(2009-)
Political Regime Change,
3.11 and Beyond
1. First Regime Change
through Election
LDP+  DP+ (2009)
2. 3.11 & Fukushima
In Search of New Goals
Phase IV.2 : 3.11 & Fukushima
In Search of New Goals
36
3.11 Earthquake & Tsunami
37
Displaced People
Orderly Evacuation
Keeping the line for …
(Kyodo pics.)
Food
Convenience Store
Inconvenient but Orderly Life
at Shelters
38
Public Transportation
Nuclear Energy to Renewable Energy
Extravagance to Modesty
Disconnected Society to Connected Society
39
Traditional Values in Japanese Society
質実剛健
(Simplicity and
Fortitude)
(Peace, Harmony, Unity)
Shitsu Jitsu Go Ken
武士道
和
Bushi-do
Wa
仁
Jin
(Humanity)
-(Duty)-
義
gi
思いやり
(Justice)
(Consideration for Others)
40
Disparities (格差) in Japanese Society
Intergenerational Gap
Economic and Social Research Institute
(ESRI) of the Cabinet Office released a
study on generational imbalances in Japan’s
social security system in 2009.
According to the report, while older
generations enjoy net benefits,
younger/future generations will suffer large
net burdens.
While retirement age has been raised over
the years, unemployment rates among
younger age groups have been rising.
Is Japan an ‘unequal society’ for
younger/future generations?
Gender Inequality
Human Development Report 1993,
while introducing the gender –
disparity-adjusted HDI, presented a
Box on ‘Women in Japan.’
Japan’s HDI Rank in 1993: 1st
Gender-disparity-adjusted HDI: 17th
Tertiary enrolment ratio: ⅔
Average earnings: 51%
(ratio to that of men)
Women occupy only 2% of
parliamentary seats
etc. etc.
Is Japan an ‘unequal society’
for women?
41
Unemployment Rate by Age Groups
12
10
8
15～24
25～34
35～44
6
45～54
55～64
4
65〜
2
0
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
As the retirement age has been raised from 55 to 64 over the years, elder
workers have taken away jobs from the younger generations.
Source: e-Stat Database of the Japanese Government Statistical Office
42
Disparities in Lifetime Benefits and Burdens
40,000
60.0
30,000
50.0
20,000
40.0
10,000
30.0
0
20.0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
-10,000
10.0
-20,000
0.0
-30,000
-10.0
Net lifetime benefits and burdens (Thousand yen)
Net lifetime benefits and burdens rate (%)
Net burdens of future generation: ¥108 million; 51.4% of their life-time income
Note: Based on net payments/receipts through the government of social security (pension,
medical/care insurance, etc.). Based on a set of growth, interest rate, and demography assumptions.
Source: “Sedai-betsu no Jueki to Futan (Benefits and Burdens by Age Groups) ,” ESRI Discussion Paper Series 217
(June, 2009).
43
Disparities in Average Wage per Hour
(Male full-time worker =100)
75
70
65
60
55
50
45
40
1989
1991
1993
1995
1997
Female full-time worker
1985: Equal Employment Opportunity
Act for Men and Women
1999
2001
Male part-time worker
2003
2005
2007
2009
Female part-time worker
1999: Basic Act for Gender-Equal Society
The large wage gap still exists between men and women, though it has been gradually narrowing.
Discrimination by sex in labor practices was denounced/illegalized by the 1985 Act.
44
Source: Basic Survey of Wage Structure, Ministry of Health, Labor and Welfare
Gender Disparity in Average Annual Income
7,000
6,000
5,000
4,000
Total
Male
3,000
Female
2,000
1,000
0
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
The average female annual income as the ratio to that of male workers
has been 50%± despite the various initiatives taken by the government.
Source: Results of Survey of Income in Private Sector, National Tax Agency
45
Labour Participation Rates by Gender and Labour Force Status
90%
80%
70%
60%
Male
50%
Female
Male side work
40%
Female side work
30%
20%
10%
0%
1956
1962
1968
1974
1977
1982
1992
2002
Note: Male, Female—mainly engaged in work
Male/Female side work—engaged in work on the side
The rate of female labor participation as their main engagement has been only 30%+.
Male labor participation rate has been gradually declining with the increasing university
enrollment ratio from around 15% in 1955 to 50%+ in 2005 (10% in 1955 to 50%+ in
2005 for all students).
46
Source: Basic Survey of Employment Status, Bureau of Statistics, Ministry of Internal Affairs and Communications
Female Worker by Type of Employment by Age Groups
80%
70%
60%
Dispatched/contract worker and others
50%
Part-time worker
40%
30%
Regular full-time worker
20%
10%
0%
15 ～
19
20 ～
24
25 ～
29
30 ～
34
35 ～
39
40 ～
44
45 ～
49
50 ～
54
55 ～
59
60 ～
64
65 ～
Many Japanese women will not/cannot return to their regular jobs after their
marriage/childbearing. However, in order to support family finances, many joins
the pool of part-time workers later (with much lower hourly wages).
Source: Basic Survey of Employment Status, Bureau of Statistics, Ministry of Internal Affairs and Communications
47
Findings from Happiness Survey in 2010
Women are econo-socially disadvantaged but happier!?
Average Score
Total: 6.46
(n=3,569)
Male: 6.20
(n=1,739)
Female: 6.70 (n=1,830)
% of 7 or higher
(by gender)
Male: 48%
Female: 58%
(where 10 = "Very happy" and 0 = "Very unhappy”)
% of 7or higher
(by age groups)
15-29 yrs: 57%
30-39 yrs: 58%
40-49 yrs: 53%
50-59 yrs: 53%
60-69 yrs: 49%
70- yrs: 51%
The younger, the happier!?
48
Source: Cabinet Office of Japan (2010) “The National Survey on Lifestyle Preferences: People’s Happiness”
… ‘Happiness’, Japanese Style
Thank You !
49