Rich and Happy

[Cross-posted at Happiness and Public Policy]

Cato intern Jonathan Rick sends me this Washington Times article with news that Americans are slap happy, according to a Harris Poll conducted using the Eurobarometer questions. The new poll has it that Americans are happier than any other people in the world, except for the not-so-gloomy Danes.

The Times chooses to emphasizes high American sastisfaction and optimism relative to Europeans, at the expense of explicitly pointing out that European satisfaction and optimism are rising at a faster clip.

My favorite datum:

While 56 percent of Americans say things are better than in 2000, the number stands at 57 percent in Britain, 60 percent in Sweden and 63 percent in Ireland.

Compare:

The Irish economy, while quite small by EU standards, nonetheless outperformed all OECD countries in real GDP growth over the last six years by a wide margin.

[from Yahoo! Finance]

How did Ireland do it? Here's Ben Powell:

The Celtic Tiger provides an excellent example of how real economic growth occurs – by utilizing market forces to free a flagging economy. After a stagnant 13 year period with less than two percent growth, Ireland took a more radical course of slashing expenditures, abolishing agencies and toppling tax rates and regulations. At the same time the government made credible commitments through EU treaties not to engage in deficit spending.

Ireland's long history of free and open trade has also played a role in its recovery. However, only since freeing other aspects of its economy by lowering taxes, decreasing regulation, maintaining low inflation and providing a stable fiscal environment has Ireland been able to grow rapidly enough to surpass greater Europe's standard of living.

A recipe for happiness?

[Cross-posted at Happiness and Public Policy. Please comment there.]

New Happiness Blog

I've decided to start a single issue blog devoted to happiness research, policy, and politics, in support of the paper I am writing for Cato and as a one-stop resource for others interested in happiness and policy (but perhaps not interested in other stuff I write about here.) All my Fly Bottle happiness posts, along with your comments, have been imported there. I'll start out cross-posting happiness stuff, but eventually (when Google starts to notice the new blog), I'll start just pointing you to Happiness and Public Policy. I'm just getting started setting the thing up, and there's a lot more to come, including bibliographical resources, featured books, and other useful research tools.

Leiter on the Morally Reprehensible

Injustice is not primarily a property of systems, but a property of judgments and other actions. I think it is safe to say that willful injustice is morally reprehensible. And so Brian Leiter's ridiculous package-dealing smear against “conservatives,” asserting that they invariably defend the morally reprehensible, is itself morally reprehensible.

In a baffling attempt to morally discredit conservatives who would praise the life and courage of Rosa Parks, a praiseworthy person if ever there was one, Leiter writes:

It is perhaps worth remembering that the “conservatives” of each prior era in America in the last century were, without an exception I can recall, on the morally reprehensible side of every major social and economic issue: the “conservatives” opposed the New Deal, opposed social security, supported segregation, opposed civil rights laws, and on and on.

This is simply ignorant, dishonest, and ugly. Leiter is attempting to persuasively define “conservative” as “morally reprehensible” where the criterion for inclusion in the category of “morally reprehensible” seems to be something like “whatever Brian Leiter vehemently disapproves of.” I'm eager to see Leiter's defense of the theory of egocentric nominalism.

Opposing the aggrandizement of the coercive political class, and the trashing of republican ideals of self-government, through the New Deal is hardly equivalent to defending the state-sanctioned apartheid of Jim Crow. Indeed, they're not even in the same conceptual universe. Further, as Will Baude mentions, opposition to state communism, an ideology that led to the murder of tens of millions of innocent human beings, was de rigueur among conservatives, as well as among humane, clear-headed liberals. Need it be pointed out that this was not the morally resprehensible side? Indeed, much of the recent history of the left involves the attempt to whitewash much of the left's deep complicity in the crimes of totalitarian socialist regimes. Anyway, if the struggle against worldwide totalitarian socialism is not a “major social and economic issue” than nothing is. So there is Leiter's neglected “exception.”

Additionally, I invite Brian Leiter to read and criticize my Cato paper arguing that Social Security, as set up by FDR and as currently constituted, violates core liberal requirements of moral and political legitimacy. I argue that opposition to the Social Security status quo is mandatory for liberals in the Rawlsian and deliberative democratic vein. So, where did I go wrong, and slip over to the morally reprehensible side? Now, having staked out the position that opposition to Social Security as we know it is somehow beyond the pale, like Jim Crow, one can hardly expect Leiter to honestly and openly debate the matter as if the conclusion has not been pre-certified. Though he has taught us to expect the worst, we can always hope for the best from Leiter.

But, really, what could motivate a sectarian attack on the intellectual and moral integrity of someone like LaShawn Barber, a conservative black woman (mentioned in the post Leiter approvingly quotes) who surely fully and genuinely understands the importance of the life of Rosa Parks? Does Leiter suppose that if he allows himself to approach conservatives as fully fledged moral beings, with sound moral emotions (such as gratitude and respect toward Parks), then he would have to recognize that other “conservative” positions (i.e., positions, Leiter dislikes) may not be fliply dismissed as the result of a retarded or distorted moral sensibility?

More on the Paradox of the Lack of a Paradox When Maintaining That There is a Paradox

I finally received David G. Myers The American Paradox in the mail. Naturally, it begins, "We Americans embody a paradox." After quoting Dickens, "It was the best of times, it was the worst of times," that is. But what's the "worst of times" about our times? Myers says, "There are those who wring their hands and just as rightly worry that our civilization could collapse on its decaying moral infrastructure." Just as rightly as whom? Those who claim, "We've never had it so good." And then we get data showing that, yes, things are as good as ever. Swell! And the evidence that "civilization could collapse on its decaying moral infrastructure?" Well, nothing. Pretty much.

Out of wedlock births are up (down recently, but up over decades). Crime. Violence in the media. "Rampant individualism." Materialism. Etc. But none of this begins to add up to the collapse of civilization. Indeed, we've just seen that we're as rich and happy as ever. Hurray! No? The paradox, if there is any, is that none of this bad stuff has made us discernibly less happy. The inference ought to be that there is no threat to civilization. The moral infrastructure is sound. "Radical individualism" and "materialism" apparently leave us as happy as our grandparents in the imagined communitarian golden age. Our main political and economic institutions are remarkably robust, even as social institutitons evolve. And we're just about as happy as people get. "Americans Watch TV More, Get Out Less, Are Exactly as Happy as Ever." Why don't we see stories like that?

This is the nth book in this genre that I've read, and I simply no longer understand them. The more intimate I am with the data they present, the more inscrutable I find the overall arc of the arguments. The lesson they each show us is that we are better off in a multitude of different ways, worse off in a few others, and as happy as we've ever been. The troubled and disappointed tone has come to stupefy me. It simply doesn't make sense, relative to common sense, or to the science, to think of individual happiness as an open-ended increasing sum, rather than as homeostatic, a kind of equilibrium state. So it's just not a mystery why our wealth or anything isn't making us a lot happier, because we've already arrived.

Assuming that it is possible to compare happiness across people (and I don't really see why not), then there is a happiest person alive. That person is probably a genetic deviant, like the tallest person, the smartest person, or the fastest person. And, the thing is, they probably aren't that much happier than many of us. I think we have to accept the possibility that many people who are alive today are about as happy as people get. We may be banging against the upper limits of our (non-reengineered) hedonic capacity. And that's precisely why people are looking for something else or more, or whatnot.

Because happiness is just one of the good things that makes a life go well, not the thing that makes a life go well. Being happy is like having a good pair of shoes. They'll take you lots of places. But you still need somewhere to go. And you still need pants.

More happiness stuff:

Rummel has posted this chart from Inglehart and Klingerman's important paper showing the relationship between political freedom (as measured by Freedom House) and happiness. It's very clear that freedom (as well having high GNP growth, and a non-communist past–highly interrelated attributes) is good for happiness. Rummel promises to sort out the colinearit problems.

Pete Boettke and Chris Coyne have posted a draft of a paper discussing a Austrian/Public Choice approach to the happiness lit. Chris points to his LibertyGuide review of Easterbrook's book, and says something after my own heart:

There is one final point to be made regarding the underlying paradox which Easterbrook sets out to solve – perhaps there is no paradox at all. Most people would agree money and material things are not the equivalent of happiness. Given this, why would we expect to see a correlation between an increase in progress and an increase in happiness? It is not clear the claim has ever been that prosperity will lead to the removal of all uneasiness.

Right on.

To the Deluxe Apartment in the Sky!

I've cited this Alesina et. al paper that reportsthat the widespread belief in high income mobility is the source of the fact that high inequality has no negative effect on the self-reported happiness of poor Americans, but a significant negative effect for wealthier Americans, who understand that mobility is a two way street, and that the inequality gap is the distance one can fall. Well, here's a bit of survey evidence on the the less wealthy side of the equation, reported in the Washington Post:

About two-thirds locally and nationally say there's a good chance they will be rich someday. Nearly one-third also predict they'll be famous, including a majority of local African American teens, who expect both celebrity and riches. Even many less affluent black teens foresee wealth and fame: a finding that may indicate reassuring confidence — or media-fed delusions.

It's not clear to me what “rich” is supposed to mean here. I wonder if a certain amount is specified in the poll question. If it's up to the kids to interpret, then almost all of them may be correct. I remember thinking that $100,000 per year made you rich as a teenager. There's a good chance I'll get there, sooner or later. Of course, I won't see it as rich when I do. (I already don't.) However, fame is much more of a winner-take-all market, even if we're talking “ghetto famous.” So, clearly, someone's going to be disappointed.

The Fake Paradox of Prosperity

So, you know all the paradox flogging books: The Progress Paradox, The American Paradox, The Paradox of Choice. Layard begins Happiness with “There is a paradox at the heart of our lives.”

Now, I'm increasingly baffled by the idea that there is anything paradoxical afoot. Many of these books refer to “Easterlin's Paradox,” in honor of Richard Easterlin's famous '74 paper showing that average self-reported happiness has not gone up as average income has gone up. Now, like I argued in my last post, this isn't a paradox relative to orthodox economics, because happiness isn't a concept in the theory of orthodox economics. There is a widespread folk theory, popular among economists, that says that desire satisfaction brings happiness, and that higher incomes brings more desire satisfaction, and so higher incomes ought to bring greater happiness. But the ideas of adaptation and social comparison most often used to explain the stability of the happiness trends are also part of popular folks theories, and, I think, much more plausible prior to rigorous investigation than the economist's money–>happiness folk theory. Its pretty obvious from personal experience, not to mention from about the entirety of our literary tradition, that we tend to take what we have for granted, that we tend to measure ourselves against others we imagine to be our peers, the money alone won't make you happy, that what we really need is each other, etc. So, the data show we're wealthier and that we say we're just as happy as we used to be. Where's the paradox? There is no paradox.

But maybe there are explanations, other than the economist's misguided folk theory, for the bullheaded insistence in describing as a “paradox” something that is in fact predictable and intuitive relative to intuitively plausible psychological principles.

In ages of yore there was a raging debate over whether capitalism or communism was best at delivering the goods. Capitalism now reigns as undisputed champ. But the conquest of scarcity under communism was also supposed to be psychologically transformative and liberatory. And so, yeah, capitalism delivers the goods. But are we transformed? No! We're almost exactly the same, and that's really disappointing. If you were expecting the era of material plenitude to free our minds for higher pursuits, and to enable deeper, more meaningful engagement with our fellow men, then capitalism may seem like a bust. We're left yearning for something else.

So, we're wealthier than ever, and have the extra freedom that entails. We're at least as happy as ever. (Despite what you may read in the papers, the average isn't flat, it's just rising very slowly.) Indeed, we're about as happy as people have ever been, as far as we can tell. Depression, like ADHD, is “on the rise” because simply because it is promiscuously defined and diagnosed. But there must be something wrong. Bowling alone? Ennervated by too many kinds of jam? Something. Because life's just what it's always been, only just a little better. And we were hoping for something more, well, dramatic.

Utility Does Not Mean Utility

I find it extremely frustrating that economists, who like to color themselves intellectually rigorous folk, insist on confusing people about the meaning of words. Here's Robert Frank in Luxury Fever:

In economist's parlance, it is customary to speak not of happiness, but of utility. The analogous construct in the psychological literature is subjective well-being, a composite measure of overall life satisfaction. For present purposes, little will be lost if we view both expressions as being roughly synonymous with satisfaction.

The problem is that is “customary” for economists to speak not of happiness, but of utility, in a most confusing and haphazard fashion. Conceptually, happiness has nothing to with utility in economics, nor does subjective well-being, or subjective satisfaction. Utility is way of representing an ordering of preferences. It simply isn't a psychological concept, nor a value concept, nor does it imply either. A utility function is just a little machine in which you can put an ordering ofpreferences, a pair of alternatives, and have something that somebody decided to call a “utility” assigned to each alternative, the most preferred getting the greater utility.

If I prefer the presence of a mouse in Paul Krugman's kitchen over the absence of a mouse, and there is a mouse in Paul Krugman's kitchen, then my preference is "satisfied" and I “get” more utility from this state of affairs than the alternatives, even if it in no way enters into my life or experience. The world being such that my highest ranked preferences are semantically satisfied, and that I am “getting” as much utility as possible relative to my ordering, logically has nothing at all to do with my subjective well-being.

As Lionel Robbins put it, just as economics was systematically expunging the psychological from economics:

So far as we are concerned, our economic subjects can be pure egoists, pure altruists, pure ascetics, pure sensualists or – what is much more likely – bundles of all these impulses.

That is to say, economics makes no substantive assumptions about the contents of preferences. It cares only for the form of preferences, namely, that they be consistent.

So why does Robert Frank, and almost everyone else in the economics profession, insist on keeping us all in a state of confusion? Contra Frank in the preceding page of Luxury Fever, economists qua rigorous appliers of utility theory, don't think that being wealthier ought to make you happier. They think that a bigger budget gets you a more preferred bundle of goods, and more preferred means, by definition, more utility. But since utility is a not a subjective psychological state (since semantic satisfaction is not), no one should be surprised that having more utility won't make you more anything, subjectively. The world could be exactly the way you prefer it, and you could be miserable, because you could prefer to be miserable.

The “paradox” of our being wealthier, but no happier, is a paradox only relative to a substantive psychological theory, which is what utility theory isn't. Bentham did think that money was a proxy for pleasure, and that pleasure constituted happiness. So this would be a paradox for Bentham. But Bentham's vulgar psychological egoism and hedonism are, as Robbins more or less points out, simply not a part of economic theory. And the paradox emphatically isn't one for a modern utility theorist. The “paradox” is just proof that utility and happiness are non-identical, which didn't need to be proved anyway, since the only identities in an axiomatic theory are definitional.

[Update: What is “semantic satisfaction”? It is the “fit” between the content of a propositional attitude and the world. In the case of a belief, if the content of the belief matches the world, then its “satisfaction conditions” are met. In the case of a preference, if the world matches the content of the preference, then its satisfaction conditions are met. This is not the “I can't get no satisfaction” sort of satisfaction. Which is why preference satisfaction talk compounds the confusion over utility. It need not be satisfying to have one's preferences satisfied, and so one's utility may have no utility for creating utility, or, in other words, may be of little use in bringing pleasure.]