Should economists be studying happiness?
November 5, 2012
Nov 5, 2012
6 Min read time
Should economists be studying happiness?
The pursuit of happiness is on! Not Jefferson’s version, the one he slipped into the Declaration of Independence in place of property. I mean the stampede to study happiness, create happiness measures for national policy, and publish pop-science and how-to books on the subject.
Bhutan’s Gross National Happiness Commission uses citizens’ reports of their happiness to assess national progress, and former French President Nicholas Sarkozy appointed a Nobel-encrusted commission to study a similar idea; the United Nations places “happiness indicators” on its war-burdened agenda; American science institutions pour money into fine-tuning measurements of “subjective well-being”; and Amazon’s list of happiness books by moonlighting professors runs from The Happiness Hypothesis to Stumbling on Happiness, Authentic Happiness, Engineering Happiness, and beyond.
Since at least the 1950s, academics have analyzed surveys asking people how happy or satisfied they feel. We’ve used fuzzy questions such as, “Taken all together, how would you say things are these days—would you say that you are very happy, pretty happy, or not too happy?” to assess respondents’ morale. We’ve compared, say, women to men and the poor to the rich. Dutch sociologist Ruut Veenhoven started compiling the findings into his World Database of Happiness back in the 1980s.
So what set off the current frenzy? Economists found happiness.
In the decade after 2000, the number of articles on happiness in major economics journals roughly tripled. One economist told me a couple of years ago that his colleagues’ pursuit of happiness was depressing him. Nonetheless, established leaders and bright new scholars turned to the topic and brought with them the funding, media prestige, and political clout of the profession. That a guild which prides itself on scientific rigor and hardheadedness would embrace such a sappy concept measured in such mushy ways is, well, bemusing. Even Federal Reserve Chief Ben Bernanke drew on the new economics of happiness to find the moral for his 2010 commencement address to University of South Carolina graduates: “I urge you to take this research to heart by making time for friends and family and by being part of and contributing to a larger community.”
The embrace resulted, I think, from the great challenge the emergence of behavioral economics posed to the discipline. Standard economics assumes that people are rational deciders, and they reveal their preferences, what gives them “utility,” by their choices. But, as I discussed in the last issue of Boston Review, people often have confused preferences, make sub-optimal selections, and regret their decisions. Because of this, Nobel Prize–winner Daniel Kahneman and current Chair of the Council of Economic Advisers Alan Krueger wrote in 2006, “An exclusive reliance on choices to infer what people desire loses some of its appeal.”
If economics is all about individuals optimizing their utility, but that utility is not revealed by people’s actual choices, how then do we know which economic behaviors and policies are optimal? Track happiness. Kahneman and Kreuger have mounted projects to do just that, trying to bring the measurement precision of, say, steel production reports and the Fed’s overnight interest rate, to happiness. Study subjects are asked to list their activities of the previous day and rate the pleasure and pain they felt then. (This is cheaper than “experience sampling,” in which subjects report their moment-by-moment feelings via a pager or similar device.) The returns from this research investment have so far been slight.
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What do we know about happiness? We know that people’s reports of immediate joy and misery fluctuate from activity to activity—sex is an upper; commuting is a downer—and often diverge notably from the summary answers they give to questions about their happiness “these days.” We also know that subjective well-being can be complex. People can be happy about work and sad about love; the latter usually matters more. The opposite of happiness, research suggests, is not necessarily despair, but rather apathy; some people just don’t feel much of anything.
Nonetheless, people who say they are generally happy tend to be economically secure, married, healthy, religious, and busy with friends; they tend to live in affluent, democratic, individualistic societies with activist, welfare-state governments. The connection between reporting happiness and personal traits often runs both ways. For example, being healthy adds to happiness, and happy people also stay healthier.
For decades, researchers have been especially interested in—and, with the recent invasion of economists, are now obsessed with—whether money makes people happy. We know that being poor makes people less happy. Some researchers argue, however, that having more money beyond that needed for basic security returns no additional happiness and can even create unhappiness. Making more money may be fruitless because people adapt psychologically to their levels of wealth and, like addicts and drugs, need ever more money to get the same level of pleasure. Or perhaps it’s not really about the money; it’s about position. People chase money to feel superior to the folks next door. That, of course, becomes a vicious and pointless cycle. Other researchers, including Veenhoven, agree that the more money one makes, the more money it takes to move the happiness meter, but they nevertheless insist that more money—unlike the futile experience with drugs—does bring more happiness, just at a slower pace among the well-to-do. The data appear to support that position.
The money-happiness question was initially raised by economist Richard Easterlin, who observed that growing affluence since the mid-twentieth century had not led to more reports of happiness in national surveys. (Actually, Freud raised a similar question in Civilization and Its Discontents, in 1929.) One explanation of the Easterlin Paradox, aside from adaptation and competition, is that increasing materialism ruined the pleasure Americans might have gotten from becoming wealthier. Some, including your correspondent, have argued that there is no paradox to start with, because the growing wealth since the 1970s has concentrated in the hands of the few. Average Americans haven’t gotten happier in part because average Americans haven’t really gotten wealthier.
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The experts pressing for happiness indicators are reacting to policymakers’ habit of assessing progress only in terms such as the Gross National Product. Happiness researchers propose blending their numbers with other measures of well-being, such as health statistics, educational attainment, social ties, political voice, and sustainability. Theirs is a generous and democratic impulse.
Still, cautions are in order. Politically, this move expands the generation-long division between tree-hugger and lunch-bucket liberals. “Post-materialists,” who believe that Americans have wrung out all the happiness wealth can surrender, argue that we should work on other sources of happiness, such as personal relationships and experiencing nature. Materialists, who believe that too many Americans are stuck way below some wealth-and-happiness optimum, argue that we should keep pushing for more and better-paid jobs. It’s sort of Seattle Democrats versus Youngstown Democrats.
More broadly we must ask if happiness is really the bottom line. Should we discount tragedies because, research shows, victims typically recover their happiness? Should happiness data decide policy—where economists are involved, policy is rarely far away—and could a drug like Brave New World’s soma or an app that stimulates the brain’s pleasure centers be the ultimate policy tool?
The happily contrarian economist Deirdre McCloskey recently unleashed a cannonade on happiness research in The New Republic. She points out that the happiness industry brings us back to Benthamite aspirations to assess utility as if by the tailor’s yardstick. She dismisses the measurement technology and, more fundamentally, the emphasis on happiness over material conditions. That concern emerges, she sneers, from the snooty literati’s contempt, born of romantic pastoralism, for the material needs of average folks. She asks what gives us most meaning in life and—sounding pretty Seattle-ish herself—suggests it is more often found in painful striving than in achievement.
Whatever the philosophical issues around happiness (oh, the philosophy professors have also joined the pursuit) asking people questions about their feelings of well-being is a useful diagnostic tool for research. We learn, for instance, that increasing economic inequality since the 1970s widened the class gap in feelings of happiness and that the job and income losses of the Great Recession have depressed Americans’ average happiness. But these are rough measures, and whether they can or should guide national policy remains an open question.
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November 05, 2012
6 Min read time