Econtalk hosts Richard Esptein on burgeoning happiness studies literature (see link for example).
The findings of this research have formed the basis of an attack on conventional economic thinking, namely that people prefer more wealth to less, and that people are to some degree rational (though there are differing views on what that means) in their pursuit of material ends. Advocates have suggested that the goal of public policy should be to maximize national happiness rather than GDP or other measures of wealth.
Since the concept of “national happiness” implies that it is possible to make interpersonal happiness comparisons and to aggregate happiness across a population, it also implies the legitimacy of wealth redistribution to increase aggregate happiness because, as science has shown, the losers won’t miss it very much any way.
I will summarize Esptein’s points and present a few additional observations.
Epstein discusses the finding of some research that more money does not make people happy. This can be restated as, people earning more money maybe not any happier or perhaps less happy. If you think about it for a moment, this is a perfectly reasonable conclusion because the higher pay of certain jobs is required to compensate the employee for high stress, frequent travel, long hours, and other factors that might make the employee less happy.
Esptein points out that many people willingly take these jobs because they are trading off less happiness for more money. Does this prove the point that money doesn’t make you happy but people go for the money, anyway? Are people systematically delusional? Not exactly. Epstein points out that people are willing to make different trade-offs of happiness for money at different periods of their life. Someone might take a higher paying stressful job either to gain valuable experience that they hope will lead to a job doing what they really want to do a few years down the road, or, to increase their savings because they plan to do something else later in life, say, start a family. Epstein argues that people should not be required to make the same tradeoff between money and other values at all times in their life — rather, they should be free to make this trade-off differently at different times in their life.
The discussion then moves on to the concept of “demonstrated preference”. People have many choices in modern American life. Every day people move from one state to another, quite their job, change careers, go back to school, get married, get divorced, take time off work to raise children, and all kinds of other significant life choices. If, as this research suggests, people are making choices that do not lead to happiness, are people systematically delusional? When presented with this information, why don’t people make different choices?
Epstein also points out that the willingness of some people to work very hard especially in jobs that require a lot of international travel, makes the rest of us better off because of the benefits of international trade. I might add that, to the extent that people are working hard to make money, the additional capital accumulation enables the remainder of the population to work less hard for the same standard of living because overall labor productivity is higher. If some people want to sacrifice their happiness for the betterment of society, should they be prevented from doing so?
Epstein makes a number of good points on the envy issue. Some of the research shows that happiness derives from relative position, which is to say that envious people are unhappy with their relative position. I won’t summarize all of Epstein’s points here. I will add, is envy a legitimate type of preference to base public policy on? If some people drive happiness from the misfortune of others, should government policy treat that as a legitimate preference to be traded off against the property rights of people who have acquired their wealth through labor or commerce?
The last part of their discussion deals with the point that some research has shown that having children brings less happiness than you might expect, or, as Epstein points out, less happiness than the people doing the research might expect.
Epstein argues on the basis of evolutionary psychology that a lot of our innate needs are based on the drive to reproduce our genetic material and that our emtions must be understood in relation to this. That is why people have evolved to care about our offspring. And caring means experiencing a whole range of negative emotions including fear, sadness, worry, regret, which motivate us to keep our offspring safe to avoid harm, and to avoid experiencing these most negative states. Esptein points out that the happiness literature presumes a hedonistic bias, while our emotions are much more complex than this.
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Epstein was EconTalk more recently discussing “the rule of law”:
http://www.econtalk.org/archives/2009/06/epstein_on_the.html
Epstein is an extraordinary public speaker. As another poster put it:
“Richard is simply breathtaking. His mastery of his subject results in an epithanic clarity in place of what had been muddled public discourse.
At the same time, it is somewhat offputting due to its intellectual hurricane force delivery. Any panel or public forum on which he participates leaves the audience and sometimes the other panelists dumbstruck.”
Economics is not and has never been about money (except under Monetarism) is is of course about utility, and decision making under uncertainty. People naturally maximise their utility. Money is a constraint, but it is not in fact fixed. People exchange their labour for money, and their money for goods and services. Money is a medium of exchange. Without it we are reduced to barter, however, even so, economics is still equally valid, just more difficult to measure. (Soft spot for the Chicago school). Economics is the science of happiness maximization. Happiness being that which motivates human action.
Epstein is brilliant, but his work is marred and limited by a deep and flawed utilitarianism. Re the utilitarianism of his IP views and how it leads him to unlibertarian conclusions, see Richard Epstein on “The Structural Unity of Real and Intellectual Property”.
In fact Epstein’s very theory and defense of (“limited”) government, as set forth in Takings: Private Property and the Power of Eminent Domain, is utilitarian. It is based on the idea that government action can “increase the size of the pie” by overcoming various free-rider or public goods costs; and that from this extra wealth produced, it can fund the state actions that lead to it. (He tries to use this utilitarian pie-production metric as a filter to reject state policies that do not clearly lead to growth in the pie, and while an admirable try, it is unrigorous and can’t really limit government.)
Happiness research has many problems, but one of the biggest is that they don’t know what makes people happy. They assume that relative circumstances cause happiness, but it doesn’t. The best psychologist I know of says happiness is a choice people make. We choose to be happy or unhappy.
If envy of others who are better off was a cause of unhappiness, then why doesn’t satisfaction with being better off than others compensate? Do those same people who are rich but envy those richer feel any guilt at being better off than billions of others?
Another problem with the researchis using self-reported happiness. I have studied marketing surveying for many years and have learned that people lie. I know it’s hard to believe, but most people are huge liars on surveys. Even though surveys are anonymous, people still tend to give what they think is the acceptable answer.
So instead of asking people if they are happy and causing them to lie, just look at what they do. People do the things that they think will make them happy. They may find after the fact that what they did wasn’t as satisfying as they thought it would be, but that is usually do to another feature of human nature: we tend to have unreasonable expectations about most things. If our expectations are low, then most things will satisfy us and make us happy. But most people have unreasonable expectations about marriage, work, and most things in life. When those things fail to meet our expectations, we are unhappy with them.
Whose utility are you maximizing? Are you maximizing “society’s” utility (whatever that means) or are you maximizing the utility of 51% at the expense of 49% (democracy) or are you maximizing the minimum individual utility (socialism)?
The IEA has a good monograph that critically examines happiness economics:
http://www.iea.org.uk/files/upld-book416pdf?.pdf
This just in:
Brits Rank 74th in World Happiness
http://www.telegraph.co.uk/earth/earthnews/5733503/Britain-74th-in-world-happiness-rankings.html
further to kinsella’s comment, epstein’s utilitarian defense of ip (especially for pharmaceutical patents) is less than convincing:
http://files.libertyfund.org/econtalk/y2007/Epsteindrugs.mp3
Greed is wanting more than you have.
Covetousness is wanting what other people have.
Envy is wanting other people to not have what they have.
The Declaration of Independence says that we are entitled to life, liberty, and the pursuit of happiness. This is much different than saying we are entitled to happiness.
We do not need any definition of happiness because the body politic is not in the business of providing or maximizing happiness. So long as people are free to pursue happiness, they will figure out their own path (whether it is happy or not).
Arguing for a public policy that ostensibly makes people happier is one more facet of the fatal conceit of government knowing what it good for us. On the other hand, social justice is profoundly one dimensional because its adherents measure everything in terms of money. Social liberals focus entirely on wealth redistribution because deep in their hearts they believe that money does buy happiness.
Greed is wanting more than you have.
Covetousness is wanting what other people have.
Envy is wanting other people to not have what they have.
The Declaration of Independence says that we are entitled to life, liberty, and the pursuit of happiness. This is much different than saying we are entitled to happiness.
We do not need any definition of happiness because the body politic is not in the business of providing or maximizing happiness. So long as people are free to pursue happiness, they will figure out their own path (whether it is happy or not).
Arguing for a public policy that ostensibly makes people happier is one more facet of the fatal conceit of government knowing what it good for us. On the other hand, social justice is profoundly one dimensional because its adherents measure everything in terms of money. Social liberals focus entirely on wealth redistribution because deep in their hearts they believe that money does buy happiness.
People who want money want the money for the money.
People don’t want money to be happy, people just want money.
It takes money to buy food to eat, not happiness.
Last time I went to fill up my gas tank at the gas station and tried to pay the clerck with “happiness” instead of dollars, I had a very hard time with the cops, LOL !
Just like a car takes fuel to advance, individuals require money and power to live.
Those who claim that money does not make them happy can all give it to me and make me happy.
Fundamentalist,
Does this mean I can bet you up all day with a metal club and you can just choose to be happy and so you won’t care if you are being torn appart ?
What I hate about “happiness” studies is that they are mostly liberal biasses against materialism and those who claim that money and power don’t make you more happy are missing the fact that we are flesh and blood creatures with physical needs.
Surely the persons who’s needs are met is more happy than those who’s needs are not met.
But people who eat don’t eat because it makes them happy, they eat because they need food to survive.
Those who earn money do so because they need this money to buy stuff they want.
People don’t pursue happiness, they pursue physical answers to physical needs.
Last time I checked, my car runs on fuel, not on “happiness” and last time I got busted, the gas station demands to be paid in dollar, not in “happiness”.
When I fill my gas station and pay in hard dollars, I do so to have the fuel to power my car.
I think “happiness” is way overrated and always put out of context.
Fundamentalist,
I’m sure we can build a wonderful and splendid world if only we would all have low expectations. The lower the better that way we will all achieve great things and solve all the problems in the world.
I think that people who think happiness is the holy grail have “too high expectations” about lowering their expectations.
Hope is what gives humanity it’s dignity, refusal of the constraint imposed to us is what gives us our dignity.
Having low expectations is not happiness, it’s retardness.
What it means, Windmill, is that happiness is a state of mind, not a particular set of circumstances, and thus it can be achieved under a wide variety of circumstances. This makes it very subjective indeed, as different people can find happiness under very different circumstances. Interpersonal comparisons on happiness are impossible to make.
The other problem is with surveys. Ask people what they want, and they’ll tell you, but with little or no regard as to the expense or opportunity costs involved, or the trade-offs that may be necessary to achieve what they claim to want. That’s why a person’s actions, under the restraint of those costs and trade-offs, tell us more about what they actually want than if they just say they want something or other.
Michael A. Clem,
What I dislike in research about happiness is that they tend to put happiness above material conditions.
When you are starving, you need food not happiness.
People who say to me that happiness is all that counts in life and would later on be in a dire situation that requires my help, I would tell them: “Don’t worry, by happy!” and continue on my way without helping them.
Happiness preachers tend to lack empathy and they refuse to admit the flesh and material conditions of life.
How is this reflected in his comments on utilitarianism.
Oops!
“How is this reflected in his comments on Happiness studies“
In one of my economics classes a couple years ago we looked at happiness studies and I remember thinking at the time that, yeah sure, there may be some surprising and interesting conclusions but it should have absolutely no implication for public policy.
I haven’t listened to that podcast by Richard Epstein yet, so I may be echoing some things he said, but I just dug out my old notes from the lecture and these were some of my thoughts and criticisms at the time:
* Methodological problems. How do you define “happiness”? It’s subjective and has different meanings for different people and different cultures.
* Unquantifiable. There is no unit of measure, no ‘happiness utile.’
* Transient influences. Happiness varies according to the time of day and between seasons.
* People compare themselves to the society they live in – when asked if people are happier than their parents, they are.
* People *say* they might be happier if they worked less, but aren’t their opinions of little relevance? i.e. talk is cheap. Isn’t revealed preference what should matter?
* It may be true that happiness levels have not increased with economic growth, but that also means that happiness hasn’t increased with lowering infant mortality rates, higher life expectancy, increased leisure time, etc.
* If you ask someone in 1970, “all things considered, from 1 to 10, how happy are you?” And they reply with a number, say, 6.5; if you come back 30 years later – and they’re ‘twice’ as happy, how can you measure that? How can someone be 13/10 happy?!
I decided not to go and do any real reading in the area because, from my exposure to the field, it just seemed kind of silly and not very scientific.
If I remember correctly some research was done about the causes of happiness by a group of Psychologists.The findings were that a large proportion of our happiness was genetic in origin,the rest being due to our efforts to be happy.
Happiness researchers have long known that personal autonomy is essential to happiness–even if it is the case that many people unwisely sacrifice leisure time, social interactions, and cultural pursuits for the sake of acquiring more consumer goods, trying to force anyone to better manage their consumption is always counter-productive. Indeed, the psychological need for autonomy can be seen as a fundamental argument for private property and free markets in its own right, quite apart from any considerations of efficiency or economic calculation.
An interesting sidelight on this is that the one state that has overtly adopted “national happiness” as the basis for its policies, namely the Kingdom of Bhutan, is finding it impossible to suppress the burgeoning popularity of a Western-style consumerist culture.
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