Apparently, the UK has the lowest quality of life among 10* European countries, despite our higher income. Measures like this are important complements to the standard indicator of GDP. But as Nietzsche said, "Happiness is blessed, therefore it lies."
If a large part of our national income is invested in the future -- say, funding for social science research -- then some of our extra wealth compared to those happy-go-lucky Italians is being put into things that will benefit our children. The choice between GDP growth and quality-of-life is a choice between jam now and jam tomorrow. (In the eighteenth century, overworked English peasants probably had worse quality of life than the lucky inhabitants of Tahiti. Now the comparison is reversed, and we can go to Tahiti for our holidays.) Another way to put it: GDP levels are not very mean-reverting, so if we grow extra this year, we are likely to have that extra GDP for a long time.
That doesn't mean we are better off now. But it does mean that happiness indices and such should be taken with a pinch of salt... and we should be wary of replacing the Protestant work ethic with the ideals of those lotus-eating continentals.
* or is it 7? Great fact-checking, Grauniad.