Tuesday, April 01, 2008


In addition to being one of the most popular with journalists, research by economists into what makes us happy is one of the most rapidly growing areas of research. Ever since Richard Easterlin published research in the 1970s indicating that despite decades of economic growth Americans weren't any happier than they were in the 1950s, economists have had to labor under the suspicion that one of their most basic theoretical models, which indicates that more income relaxes consumers' budget constraints, enables more choices and thus make them better off, is built on sand. In recent years economists, journalists, and popular commentators have taken this now vast body of empirical research and used it to draw the conclusion that we emphasize economic growth too much, and that public policiesshould instead emphasize other things that the research indicates matters more in making people happy -- in particular income equality and general "social solidarity."

One of the reasons income equality is said to matter is that people are said to judge their happiness by their standard of living relative to that of others, rather than by their own absolute level. The poor become happy not just by becoming richer themselves, but through the knowledge that the rich ain't all that rich. Resentment in poverty-stricken countries similarly builds up as globalization makes some countries ever-richer even as others continue to languish. Because global communications systems make people ever more aware of these disparities, globalization is creating a world of a few smug haves and a mass of angry have-nots.

This body of research naturally lends itself to the grand government plan. If people are not living lives as fulfilling as they could, then the free market that has generated these results must be controlled. People need to be given marriage license, the government needs to ensure that unemployment is low, and confiscatory taxes need to be imposed to prevent envy. (Never mind that and he is at best an ethically dubious basis for government policy, and that in the US at least our founding document argues only for "the pursuit of happiness," not its achievement.) Indeed, one British school has even somewhat creepily taken it upon itself to offer happiness lessons, with a goal (naturally) of helping its hapless students overcome their obsession with “celebrity, money and possessions,” a necessary result of the well-known fact that “as societies become richer, they don't become happier -- a fact regularly shown by social science research."

Well, the research doesn't actually quite show that. As Will Wilkinson of Cato notes, it is actually much more complicated than that. It consistently shows that within a society wealthier people tend to be happier than those with less wealth, and that people in richer societies are substantially happier than people in poor ones. he argues that it also suggests that opportunity and freedom, not equality per se, promote individual satisfaction.

And I think this is what is really going on in a lot of this research. I suspect it is true that people make mental comparisons in deciding how satisfied they are with how their lives are turned out. But the comparisons are not to the outcomes of others' lives per se, but instead of their own outcomes relative to what they feel they could have achieved. Other people are merely used as a reference point. If people feel they've had a fair chance, that is all they ask for. Of course, some people some of the time invariably to react life’s disappointments with anger at the unfairness of society, but freer, more open societies will, I suspect, generate people who arehappier with their lives, other things equal. An implication of this view is that, independently of the level of wealth in a society, less corruption by the government ought to be associated with more happiness. As far as I know, this is a proposition that has not been tested. In this view, happiness is about equality of opportunity rather than equality of outcome.

Of course it is true that money isn't everything, but it is not true that the welfare-state society is the happy society, particularly in the context of the United States. Arthur C. Brooks, who has recently been doing some of the most interesting research on charity and its causes and effects, finds in his forthcoming book Gross National Happiness (according to the Amazon.com reviews) that differences in happiness among Americans are “largely due to differences in social and cultural values. The values that bring happiness are faith, charity, hard work, optimism, and individual liberty. Secularism, excessive reliance on the state to solve problems, and an addiction to security all promote unhappiness.” People who give to charity to help the poor are happy, people who want the government to solve poverty are not. Indeed, I suspect that the people who place the greatest stock in politics to solve our problems are the most unhappy. Politics is a dirty business, its practitioners require (and hence manufacture) a constant supply of crises to solve, and is thus ultimately unsatisfying. But that is a book all its own.

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