Better to Be Richer

I just ran across Angus Deaton's latest summary of his happiness findings at the Gallup website:

As the graph indicates, life satisfaction is higher in countries with higher GDP per head. The slope is steepest among the poorest countries, where income gains are associated with the largest increases in life satisfaction, but it remains positive and substantial even among the rich countries; it is not true that there is some critical level of GDP per capita above which income has no further effect on life satisfaction. Instead, each doubling of income adds about the same amount to life satisfaction, across poor and rich countries alike. [bold added]

Please share this fact with friends at your next cocktail party.

Here's the graph:

Deaton conjectures that the consistent relationship between income and life satisfaction has to do with some kind of shared global standard for self-reporting — the Danes know how good they have it relative to the folks in Togo, and the folks in Togo know how bad they have it relative to Danes. I don't know about that.

If the U.S. Is So Rich, Why Isn't It Happier?

My guess: Because it is very big and very diverse. America almost certainly does better than the average of the EU. Does anyone know of a source of state-by-state happiness data? Because I figure Minnesota, were it a country, would rank right near ethnically similar but even more homogeneous Norditopian countries. (New state slogan: “Minnesota: Rich as Norway, happy as Denmark!”) Mississippi would rank, I figure, right around Italy.

Some Thoughts About Happiness and Travel

Yesterday I answered a few email questions from Aaron Hotfelder of Gadling, Weblogs Inc.'s travel blog. The results are here. Here's what I had to say about his parents' upcoming anniversary:

1. My parents have a wedding anniversary coming up. Why should I buy them, say, a trip to Hawaii or an Alaskan cruise rather than a new flat-screen TV?

You should buy them what they want! If they don't like traveling, bring the world to them — in HD! But if they're indifferent, go for the equivalently-priced trip.

According to psychologists, we are prone to “adaptation” or “habituation,” the tendency for changes in our experience to become the new normal. When you jump into a swimming pool, it's really cold at first, but then suddenly it's not. Getting new stuff is a lot like that. After a while, the novelty of a sweet flat-screen will wear off, and Seinfeld reruns will be no funnier.

Travel, however, constantly stimulates our taste for novelty. Habituation is precisely why people feel they are “sleepwalking” through their daily routine–the familiar recedes into the deep background of consciousness and only changes register. That's why you feel more “alive” in a new place: your mind takes very little for granted. You are awake to everything. Also, long after mom and dad have retired their once-new TV, they'll still value the memories of their trip.

Your Democracy in Action

On NPR this morning I was listening to some Congressmen bloviating about the terrible injustice inherent in the Air Force's decision to give a contract to build re-fueling tankers to EADS, a French company the Air Force says promises the most high-quality aircraft. The level of caterwauling over the Air Force not abusing the contracting system and choosing what it judges to be the best use of its massive allotment of taxpayer money nakedly reveals the normal corruption of the system. The Congressmen barely bothered to dredge up some quasi-patriotic America-first tropes to conceal their plain assumption that the function of military spending is to redistribute taxpayer money to their districts. The idea that the Air Force would want the best planes with which to serve the  military functions of the Air Force: outrageous! Because transfers of tax money to politically-connected arms manufacturers and their highly-compensated employees is what wars are for. Obviously. Get with the program, Air Force.

A Hypothetical Contract with People You Cannot Escape

If you're looking for reasons to not be a Rawlsian, please read my colleague Tom Palmer's terrific new paper “No Exit: Framing the Problem of Justice” [pdf] for a profoundly illuminating discussion of why Rawls's theory justice makes sense only within his illiberal and fantastically unrealistic zero-mobility assumption.

There are a lot of good libertarian criticisms of Rawls, but I think Tom's may be the most damning I have ever read, probably because there is nothing really especially libertarian about it, unless challenging deeply question-begging assumptions about the nation-state as the inevitable and inescapable framework of justice is essentially libertarian. If I were to make the argument in one sentence it would be this: Rawls provides accounts of liberalism and justice that are essentially nationalist/anti-cosmopolitan, but since nationalism and anti-cosmopolitanism are pretty obviously illiberal and unjust he fails at a very fundamental level.

Here's a taste:

The sleight-of-hand involved [in establishing “justice as fairness”] is remarkably similar to that typically involved in specification of the choice situation governing the provision of public goods. Once a decision has been made to produce a good on a non-exclusive basis, it is then asserted that the good cannot be produced through voluntary, uncoerced cooperation. Or the demonstration begins by assuming the existence of a good from which consumers cannot be excluded (or can only be excluded at some cost), when the problem is to produce such goods in the first place. Assuming that the good exists is hardly a solution to the problem of how to produce it. Similarly, by excluding exit or choice among options as an option, the problem of distribution of rights and obligations is converted into a pure bargaining game, which sets the stage for Rawls’s voluminous writings and the many jots and tittles added by his followers. By eliminating such options, Rawls does not solve a problem of justice or fair division; he creates it.

Tom's paper is limited to speaking to rights of emigration or exit from a polity, but it points to a rather more general lesson. That it is impossible to discuss questions about the (in)justice of limiting the right to travel across state borders, or to discuss questions of the justice of the distribution of national citizenships within a pure Rawlsian framework goes to show how useless is that framework for thinking about questions of equality and distribution in an increasingly globally interdependent world. It also goes to show just how captive is Rawlsian political theory to what I think are a set mistaken, distinctively 19th and 20th-century background assumptions about the nation-state as more or less co-extensive with society.

Added: Tom's essay may be found in Ordered Anarchy: Jasay and His Surroundings, ed. by Hartmut Kliemt and Hardy Bouillon (London: Ashgate, 2008)

Education, Inequality, and Complementarities

Discussing Brink Lindsey's outstanding New Republic piece on why the education premium isn't drawing more people into higher education (about which more later), Yglesias says:

… nothing is going to change policywise unless people think that reconciling ourselves to ever-growing inequality is wrong and, therefore, we ought to be interested in ways to reverse the trend. Meanwhile, I think it's not wrong to think of some of the aspects of our school system's poor treatment of low-income kids as precisely representing affluent people gaming the system (by, among other things, withdrawing across jurisdictional boundaries which they then zone with large lot requirements and “overcrowding” rules so as to prevent poor people from moving there) to preserve positions of privilege for their children.

I think “gaming the system” is a bad way of looking at the structural barriers to the upward mobility of the poor created by the behavior of wealthier people. The problem is that (a) the reasonable motivation of the middle and upper classes to do the best they can for their kids and (b) the structure of our public educational institutions together combine to create a de facto barrier to the opportunity of poorer kids to get a decent education and subsequently a decent wage that really makes work worthwhile. There is no point in attacking (a). The problem is (b).

Here's something sort of related that puzzles me. Suppose there is a growing premium for a more or less general high level of cognitive functioning. No matter how many people we train to achieve this higher levels of functioning, there will always be some kind of normal-ish distribution in it. Now suppose (this is the big hypothetical) the tendency of new technology is to increase the rate at which productivity increases as you move right across the distribution, and that wages tend to reflect productivity. In this scenario, we'll get increasing earnings inequality no matter how well we educate people, i.e., even if we shift the whole cognitive functioning distribution to the right. Correct? Real economists?

Now this doesn't really concern me, since this is a scenario in which everyone's productivity, and therefore everyone's wage rate, is rising, and I don't care about inequality per se. I'm just wondering how much our world is like that, or is becoming like that.

Trade, Inequality, and Perspective

Matt Yglesias writes:

I've been eagerly awaiting my opportunity to say something about Paul Krugman's Brookings paper on trade and inequality but it turns out to be the case that real economics involves a lot of math I can't follow. My best understanding is that his conclusion is that it's . . . complicated. Trade with China in the 21st century may be a much bigger driver of inequality than earlier studies done in an earlier period indicated, but then again it may not be.

Matt sensibly concludes that if you want to bring down U.S. inequality, there are much better ways of doing that than restricting trade with China. That's right. Nationalist egalitarians would be much better served by arguing for, say, less welfare for military contractors and more welfare for poor people. Of course, globalist egalitarians should die in the last ditch to avoid further restrictions on Chinese imports, whether or not it has any effect on inequality between already rich U.S. passport holders.

In The Conscience of a Liberal, Krugman seemed to want to minimize all non-political explanations of rising inequality, like trade. Is he now easing off his super-strong insistence on explaining inequality almost entirely in terms of politics and norms? But I suppose insufficient protectionism would be a matter of politics and norms, too, if you want to look at it that way.

Fact of the Day

From Tyler Cowen:

When a Pole moves to London he can buy many more goods and services.  It's a big move up in real income plus lots of new goods are introduced to the consumption basket.  So when there is lots of voluntary movement from poorer to richer regions, changes in measured income will understate some of the true gains.

The other measurement understated is the reduction in real consumption inequality.

This Week on Free Will: Stephen Marglin

In today's Free Will at Bloggingheads TV, I talk with Stephen Marglin, the Walter S. Barker Professor of Economics at Harvard University, about his new book The Dismal Science: How Thinking Like an Economist Undermines Community.

I expected to hate this book, but I didn't. Instead I found it thoughtful and stimulating, if ultimately flawed. I agreed with Marglin much more than I was expecting. It's just that, unlike him, I don't think the Amish are a very good moral model for anyone, and don't think there is much worth lamenting when those kinds of communities are undermined by markets. I agree with Marglin that the transition from institutions of personal to impersonal exchange is radically transformative of community and personal identity. However, I'm willing to go to the mat for the idea that the gains in wealth, longevity, individual autonomy and creativity overwhelmingly swamps the loss of “thick” identities and tribal “meaning”. I think we're “designed” to crave those things, however, so the cosmopolitan liberal utopia necessarily leaves us with a residue of regret. We will always be tempted to wreck Eden in a search of Eden. Thinking like an economist is inhuman and the bulwark against our ruin.

Also, Marglin's left-communitarianism confused me. He was able to give no examples of the progressive, inclusive Gemeinschaft. I think there's a good reason for that, and that's reason enough not to try for it.