Climate change policy and subjective well-being

A small (but increasing) number of economists has recently started to recognize that the costs of climate change mitigation measured as reduced growth in GDP need not reduce welfare in view of the weak correlation between the two in richer economies, provided that mitigation and employment policies are properly combined. In this paper we sketch neglected links between these - now major - research areas and discuss how subjective well-being and employment could be raised in the medium term by cost-effective mitigation and green fiscal policy, in addition to the long-run benefits of greenhouse gas reductions. A 'green new deal' placing more emphasis on climate change mitigation and happiness (rather than GDP as the key proxy for welfare) could be the appropriate strategy in the current economic climate of austerity and worsening recession, while also initiating the large-scale mitigation investment for job creation that is so urgently needed.