The Economics of Happiness
A late December article from The Economist reports that levels of happiness (according to national surveys) has remained more or less fixed over the last 50 years, even as the "richness" of most relatively affluent nations has shot up. What are some mechanisms that would leave, say, an upper-middle-class white American male in 2007 no happier than an upper-middle-class white American male in 1957, even though our guy today is considerably wealthier than his counterpart in the '50s?
There are two recurring explanations in the article that are worth considering. First, the habit argument: "People grow accustomed to what they have--however much of it there is." Just because the 2007 guy can spend circles around his counterpart from yesteryear, happiness simply isn't measured by gross tonnage of stuff you own. Today's luxuries can become tomorrow's necessities, so having the hot new thing isn't likely to sustain your joy. As mentioned in my previous post, this is a fundamental criticism of commodity culture: if we look to purchases to make us happy, they'll only break our hearts.
Second, and related to the habit issue, there is the problem of "positional goods", an economic term for goods that are valuable when you have them and others don't. It may be that having a fancy car is less important than having a fancier car; if everyone gets the same amount richer (for the moment, forget that we know this isn't the case) and can afford better cars, you might be no happier than you were before, since back then you had a better-than-average car and today your (more expensive and capable) car is still simply better than average. A better example is in schools: if you or your future employer value a Harvard degree, going to a good high school might be less important than going to a top high school. Even if many good schools are better today than they were in the '50s, there are still only a few that can call themselves "top".
What you may see, then, is a type of inflation in the world of wealth. If everyone makes huge sacrifices at work in order to stand out from their colleagues, then the bar is raised and the standout employees much work that much harder to maintain their edge. If many parents push their kids to be dreamy college candidates, the top candidates must look that much better. The overall improvement in worker or student quality (an increase in wealth, really) might not translate into much happiness if happiness is measured through competition with peers, just as the overall improvement in technology or other goods might not translate into much happiness if happiness is measured through the owning of cool new toys.
There are two recurring explanations in the article that are worth considering. First, the habit argument: "People grow accustomed to what they have--however much of it there is." Just because the 2007 guy can spend circles around his counterpart from yesteryear, happiness simply isn't measured by gross tonnage of stuff you own. Today's luxuries can become tomorrow's necessities, so having the hot new thing isn't likely to sustain your joy. As mentioned in my previous post, this is a fundamental criticism of commodity culture: if we look to purchases to make us happy, they'll only break our hearts.
Second, and related to the habit issue, there is the problem of "positional goods", an economic term for goods that are valuable when you have them and others don't. It may be that having a fancy car is less important than having a fancier car; if everyone gets the same amount richer (for the moment, forget that we know this isn't the case) and can afford better cars, you might be no happier than you were before, since back then you had a better-than-average car and today your (more expensive and capable) car is still simply better than average. A better example is in schools: if you or your future employer value a Harvard degree, going to a good high school might be less important than going to a top high school. Even if many good schools are better today than they were in the '50s, there are still only a few that can call themselves "top".
What you may see, then, is a type of inflation in the world of wealth. If everyone makes huge sacrifices at work in order to stand out from their colleagues, then the bar is raised and the standout employees much work that much harder to maintain their edge. If many parents push their kids to be dreamy college candidates, the top candidates must look that much better. The overall improvement in worker or student quality (an increase in wealth, really) might not translate into much happiness if happiness is measured through competition with peers, just as the overall improvement in technology or other goods might not translate into much happiness if happiness is measured through the owning of cool new toys.
Labels: class, economics, economist, power
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posted by Burke Scarbrough at
00:57
4 comments
4 Comments:
A couple of considerations, perhaps. 1) Inflation adjusted wages have--I'm told--remained static for 30 years now. So a great many people aren't better off, at least not better off than 1976 American Man. 2) There has been a disparity the past several years between what people have to say about the economy and how the stock market and other economic indicators have suggested. People think the economy sucks, but the numbers say it's quite strong. One suggestion has been the increasingly provisional nature of employment. Job security has eroded drastically--again, I'm told, having no data of any kind to back this up--and the absence of security may impact how 'happy' one feels. --Alex
Interesting points, both. My understanding about inflation-adjusted wages is that the seeming stability over decades masks, not surprisingly, major disparities between the better-off and the worse-off. Education is one of the most consistent determinants: a college degree earns one much more than it did (adjusted for inflation), and there are many more people who have them, but a high school degree or less leaves people much worse off than it used to. Though the article didn't say that it disaggregated by such factors, they claim that those who ARE better off than their historical counterparts are nonetheless no happier on average. They also mentioned Japan as an example of an economy where there has been a more consistent rise in wealth across the board, but not an increase in happiness.
Lastly on that point, inflation-adjusted prices for a number of goods have fallen over 50 years, which would increase the purchasing power of an income that hasn't changed over the same period. That is, income is only part of wealth.
As for your other thought, job security as an "intangible" factor in happiness self-assessments makes sense to me. My father has also argued that there's evidence that people measure their success (and, perhaps, happiness) against their expectations for themselves. That is, whether or not a person will make more money than his historical counterpart matters less than how he compares to his expectations for himself over the course of his life. Like the "habit" and positionality arguments in my post, self-expectations can experience the "rising tide" effect, adjusting the bar for whatever economic conditions one finds oneself in. And one thing that's increasingly, depressingly clear is that social mobility (perhaps one measure of how well one meets or exceeds one's hopes for oneself) is harder and harder to find anymore.
Many thanks for an interestinq question and posting!
Wealth buys freedom from some worries... good food, nice shelter, adequate healthcare.
Past that, MANY studies show money does NOT significantly increase happiness. You can certainly have a great deal and still worry about being over extended.
Happiness and success are two very different things. Many people chase after success thinking it will bring them happiness and they are often disappointed. There are lots of very successful people who are NOT especially happy.
Happiness skills are very different. There are simple, eternal, universal truths that lead to happy, spiritually successful lives.
If we embrace and adopt these values, beliefs, ideals, strategies and boundaries we all can be happy or at least happier.
They're very simple steps like "Avoid the Fault Finding Feel Goods" and "Avoid All Unnecessary, Non- Productive Negativity, Be Guided by Goodness, Fuel Your Life and Your Work With Fun, Try to Be Your Best, Do Your Best and Feel Your Best All of the Time."
We can learn to "Choose our Moods and our Attitudes, Drive our Discipline with Desire," and realize that "Love Powers Happiness, Spiritual Success and Performance Excellence." "The Best Way to Excel at Anything is to Cultivate a Love for It."
These are just some of the simple, powerful things we can do to be happier.
Anyone who has visited a third world country and seen genuine joy and happiness beaming from people with little materially understands the silliness of thinking happiness comes from economic prosperity. It comes more from cultures that love, appreciate and enjoy everything around them.
Habitually happy people assess reality accurately, make wise decisions, power their decisions with desire and lots of positive expectations.
They decide what they are going to do and they find ways to make whatever they do enjoyable and rewarding for everyone involved.
When you try to enjoy and make the most of each moment, amazing things happen.
Habitually happy people try to be happy all of the time, and so do I!
Michele Moore, author of Happiness Blog http://HappinessBlog.com,
and "How To Live A Happy Life - 101 Ways To Be Happier"
www.HappinessHabit.com
Per-capita real income has increased significantly since the 1940s, while average real wages have not. This is due in large part to the increase in the participation of women in the workforce. That increase in workers increases total income, without increasing the population. Hence, per-capita income increases. However, since the number of workers has been increased by the additional female workers, average earnings "per worker" would not be pushed up by this. How might these facts impact an evaluation of happpiness measures over that time period?
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