Happiness & Public Policy

One of the reasons extra income has a small effect on happiness is that we rapidly adapt to new luxuries. A fancy new Porsche will cause a spike in my sense of well-being, but I’ll get used to it soon enough, and the happy effect will wear off. If we adapted completely to everything, then there would be little we could do to permanently alter our sense of well-being.

One thing you could do is consume more, faster. That is, buy something even nicer just before the positive effect of the last thing wears off. As far as I can tell the happiness investigators simply haven’t seriously considered this option. There seems to be a kind of bias against transient pleasure. But if you’re ALWAYS experiencing SOME transient pleasure, then you’ve permanently jacked up your level of SWB, even if EACH pleasure wears off.

One of the huge deficiencies of the happiness literature is that there is almost no data following individuals over time. So the data can tell you that, on average, buying a new car doesn’t make people happier over the long run. But it can’t tell you that always buying a new car before you get used to the old one doesn’t make you happier over the long run. There needs to be more research on this kind of individual hedonic strategy.

Also, it turns out that we don’t adapt equally to everything. So if there are things that we can spend our money on that will make us happier, and some of the effect will tend to stick, then more money could get you more happiness as long as the money is spent on the right kind of thing. The evidence shows that if you want to be happier, you should spend more time and money on exercise, meditation, and strengthening your social bonds. And It turns out that we don’t adapt much to cosmetic surgery. Looking better makes us happier, and we stay happier. Especially with boob jobs.

So, here’s my Benthamite policy proposal of the day: vouchers (and/or tax breaks)for breast implants.

“Happiness is peace after strife, the overcoming of difficulties, the feeling of security and well-being. The only really happy folk are married women and single men.”

- H.L. Mencken, A Mencken Chrestomathy

“Of all the cankers of human happiness, none corrodes it with so silent, yet so baneful a tooth, as indolence.”

- Thomas Jefferson, Letter to his daughter, Martha Jefferson.

Discussion:

Which famously bigoted hero of liberty knows happiness? Not Mencken!

H.L.’s flare-up of Nietzschean misogyny gets it flat wrong. Marriage has a bigger positive effect on happiness for men than for women. Married men are much happier than single men, and, it seems, even a skoche happier than married women. The feeling of security and well-being, are surely components of happiness. But what these have to do with the following sentence are a mystery lost to time.

Of course, I’m talking about the cramped, mundane happiness of the bourgeouis here, not the wild, expansive happiness of the overflowing soul and indomitable will. As Nietzshe said, “Man does not strive for pleasure; only the Englishman does.”

Jefferson, very much the Englishman, nails it. Unemployment is VERY bad for you. Pace economists, it ain’t experienced as “leisure.” Among the most important things for happiness are a sense of self-efficacy and self-control, and this sense slips when we’re not productively engaged. We begin to feel adrift in the world, tossed by malign external forces we are impotent to resist.

So score one for TJ, who suggests a get-up-and-at-’em slogan for t-shirts and public school bulletin boards everywhere: “Indolence: the canker that corrodes with a baneful tooth!”

By far the best overview of the happiness literature from an economics and policy perspective is Frey & Stutzer’s Happiness and Economics. Frey, a first class constitutional theorist, explores the big impact policy can have on happiness, but warns against construing the happiness function as an approximation of that unicorn of social science, the social welfare function, and then trying to maximize it. F&S point out that the goal of maximizing social welfare has traditionally faced three problems: (1) empirical emptiness; (2) aggregation (Arrow social choice stuff); (3) incentive compatibility (Buchanan public choice stuff). The happiness data perhaps solves (1), but it does not solve (2) or (3). Folks like Layard are particularly inept with respect to (3). Here’s what F&S say:

Missing incentives. Deriving optimal policies by maximizing a social welfare function only makes sense if the government has an incentive to apply the optimal policies in reality. This is only the case if a “benevolent dictator” government is assumed. (Brennan and Buchanan 1985). From introspection as well as from empirical analysis in political economy (see, e.g., the collection of papers on political business cycles in Frey 1997), we know that governments are not benevolent and do not follow the wishes of the population, even in well-functioning democracies, not to mention authoritarian and dictatorial governments. Hence to maximize social welfare corresponds to a “technocratic-elitist” procedure, neglecting the crucial incentive aspect.

This criticism applies particularly when one tries to derive optimal policies by maximizing happiness.

This point cannot possibly be emphasized enough. Even if your theory of value, or your philosophical standard for policy evaluation, is “correct” in some metaphysical sense, this gets us almost nowhere. Why? First, people, especially agents of the state, must understand and broadly agree that it is correct. This is exceedingly unlikely. Second, people, especially agents of the state, must be motivated to reliably act in accordance with its prescriptions. But if understanding and agreement is unlikely, then motivation based on them is unlikely. It may be conceivable to structure incentives so that it is as if agents of the state were motivated by a commitment to a single normative standard, but it is usually unrealistic.

Here is F&S’s approach:

There is a solution on hand that overcomes the problems posed by the impossibility theorem and by the government’s missing incentives. Constitutional political economy (e.g., Buchanan 1991, Frey 1983, Mueller 1996, Cooter 2000) redirects attention to the level of social consensus where, behind the veil of ignorance, the basic rules governing a society–the fundamental institutions–are chosen or emerge. At the same time, the approach shifts from a (vain) effort to directly determine social outcomes to shaping the politico-economic process by setting the institutions.

. . . The fundamental institutions shape the incentives of policymakers. Once these basic institutions are in place and the incentives are set, little can be done to influence the current politico-economic process. Economic policy therefore must help to establish those fundamental institutions, which lead to the best possible fulfilment of individual preferences. Research in positive constitutional economics helps to identify which institutions serve this goal, and whether they do in fact systematically affect happiness.

F&S’s research shows that procedural aspects of government, such as the directness of democratic participation and the degree of decentralized federalism, are themselves determinants of happiness. The Swiss are among the happiest people in the world not only because they are fabulously wealthy, but because the canton system allows for direct democratic rule of over local jurisdictions, with little interference from the central state.

Via Jesse Walker, comes this BBC article on the possibility of using beta blockers to blot out bad memories. This makes Jesse think of the Eternal Sunshine of the Spotless Mind. I am put in mind of Thomas Schelling’s amazing essay “The Mind as a Consuming Organ.” A selection:

An unavoidable question is whether I could be happier if I could only believe things more favorable, more complimentary, more in line with my hopes and wishes, than what I believe to be true. That might be done by coming to believe things that are contrary to what I know, such as that my reputation or my health or my children’s health is better than it is, my financial prospects or my childrens’ better than they are, and that I have performed ably and bravely on those occasions when I did not. Or it might be accomplished by improving the mix of my beliefs by dropping out–forgetting–some of the things that cause me guilt grief, remorse, and anxiety. [emphasis added]

If the answer is, “Yes, you would be happier,” then what is the correct response? So much the worse for truth? So much the worse for happiness? A subtle and cautious blend?

Let’s go back to Layard’s attempt to justify his relative position “pollution” argument for taxation against his strawman libertarian critic:

Libertarians strongly object to this argument. They say it panders to the ignoble sentiment of envy, which ought to be disregarded. This is an extraordinarily weak argument. Public policy has to deal with human nature as it is. The desire for status is ubiquitous, and we all recognise it. Greed is also common, and libertarians do not disallow it. So why should they disallow the desire for status? Both sentiments are features of human nature. We are not perfect, and public policy should help us make the best of what we are. [Happiness, p. 153]

How many things are wrong with this argument? Feel free to count to ways in the comments.

Let me just say that it is cheap to equivocate between the desire for status and the desire for relative position in the income distribution. The latter is a contingent cultural expression of the former, as Layard himself concedes. And so public policy “dealing with human nature as it is” isn’t therefore public policy that treats our tastes for relative position in the income distribution as having normative weight. Our taste for coalitional solidarity and out-group xenophobia is natural in precisely the same way that our taste for status is. But we don’t think that this confers any significant normative weight on any old cultural expression of our tribalist impulses, such as apartheid, Jim Crow, or the Final Solution.

OK. Now try to square Layard’s “rebuttal” to the libertarian with the following. . .

First, Layard emphasizes in a number of places that many of our tastes, desires, preference, etc., are determined endogenously by institutional and cultural factors. Second, he argues convincingly that we can choose to change our own preferences.

The fact is, we can train our feelings. [p. 188]

Advocating Buddhist meditation Layard says:

Buddhism tells us to address the “poisons” that are disturbing our peace of mind: our unrealistic cravings and our tempestuous anger and resentment. [p. 189]

It is difficult not to draw the connection between this “poison” and the “pollution” that is caused by our taste for relative position. The difference is that here Layard clearly admits that the poisons are a function of our own states of mind–our unrealistic cravings–not simply the external fact that others have moved up relative to us.

Advocating the practice of cognitive psychotherapy, he writes:

If happiness depends on the gap between your perceived reality and your prior aspiration, cognitive therapy deals mainly with the perception of reality. [p. 197]

From his discussion of Buddhism, Christian mysticism, and cognitive therapy, Layard draws this lesson:

A second conclusion is that we have to control our tendency to compare ourselves with others. [p. 199]

(The first conclusion is that we ought to develop Buddhist habits of mindful attention to the present, which is also a way of controlling desire based in social comparison.)

Finally, Layard says that public policy can help by undertaking the “education of the spirit” through, naturally, mandatory state-funded spiritual education programs aimed at producing more open, compassionate, benovelent, and less comparison obsessed children.[p. 200-1]

Other than the monstrously illiberal suggestion that there ought to be a state curriculum in spiritual education, I agree entirely with Layard’s emphasis on our ability to shape our preferences through meditation, cognitive therapy, and, I would add, literary experience. But the spiritual education idea, in any case, amounts to conceding that a tax may not be the conclusion of the externalities/pollution argument, even if we insist on structuring policy around human nature as it is.

Indeed, if one of the most important lessons we should take away is that we can and should control our preferences based in social comparison, then why would we make public policy of a tax that is justified entirely in terms of those same unhealthy and controllable preferences? By choosing to treat these preferences as having normative weight in tax policy, isn’t the state sending exactly the wrong signal? Wouldn’t this be like arguing for a special tax on blacks on the grounds that this would increase total utility by pleasing the racist white majority, even though one has admitted that racist preferences are pernicious, and should be changed?

“I feel nothing but the accursed happiness I have dreaded all my life long: the happiness that comes as life goes, the happiness of yielding and dreaming instead of resisting and doing, the sweetness of the fruit that is going rotten.”

- Captain Shotover in George Bernard Shaw’s Heartbreak House

Discussion:

No doubt it would be helpful if I had read the play, rather than just combing the Columbia Encyclopedia of Quotations, but the Captain seems to me to be making an experience machine-like point. Some kinds of happiness, the accursed “happiness of yielding and dreaming,” are worth less than other kinds of happiness, the happiness of “resisting and doing.” The problem with the happiness of yielding and dreaming, the “happiness that comes as life goes,” isn’t that it doesn’t feel good, but that it feels too good. The “sweetness of the fruit that is going rotten” is too sweet, and encourages our indolence. When we indulge in it, we become rotten. The special value of the happiness of resisting and doing lies not solely in the distinctive feeling of resisting and doing, but in the fact that we are exercising our capacities, that we are doing, that we are really living, rather than rotting sweetly, happily, and accursedly on the vine.

“Happiness is always a by-product. It is probably a matter of temperament, and for anything I know it may be glandular. But it is not something that can be demanded from life, and if you are not happy you had better stop worrying about it and see what treasures you can pluck from your own brand of unhappiness.”

– Robertson Davies

Discussion:

Brad DeLong’s head may explode, but you know what Davies means. An unhappy life is not a life without value. Indeed, there may be treasures in unhappiness. There is evidence that happier people are more self-deceiving, for instance. So it may be that unhappiness enables self-knowledge, or outward knowledge unclouded by the mists of optimism. Of course, one is not made happier by dwelling on unhappiness, so refusing to dwell on it may mitigate it. But refusing to dwell on it also allows one to reorient to other values–knowledge, virtue, spiritual communion–one may, unhappily, achieve. This reorientation may, in the end, bring some measure of happiness. Yet even if it doesn’t, life will be better for it.

This fascinating paper by Di Tella and MacCulloch shows that the simple fact that one’s favored political party is in power has a big effect on happiness:

A surprising finding of the paper concerns the relative importance of politics. We include in our partisan happiness equations a variable that measures the ideological position of the government in power. It indicates that when the government leans more to the right ideologically, right-wing individuals tick up their happiness scores. In the same periods, left-wing individuals declare themselves to be more dissatisfied with their lives. The size of the coefficient is large and highly significant. A right-wing individual living under Mitterrand would be willing to put up with an increase of 11 percentage points in the inflation rate in order to see Margaret Thatcher take charge of the government. One possible explanation for this result is that there are other policies, not linked to macroeconomics in nature, along which governments differ and that our analysis ignores. These could include agricultural policy, the approach to fighting crime, the policy on abortion and other social issues, etc. But another possibility is that politics enters directly into the utility function (or that people simply care about winning). Furthermore, the variable capturing the ideological position of the government (Right Wing Government) is strongly correlated with inflation (negatively) and unemployment (positively). Thus, there seem to be two channels through which governments affect the well-being of their constituencies: a direct channel and an indirect effect through unemployment and inflation. Our results indicate that the color of the government matters for a large part of the population. [emphasis added]

My favorite hypothesis is that coalitional success enters directly into the welfare function. Now, this is fascinating for all sorts of reasons. For instance, it would seem, then, that the need to maintain a distinct and coherent coalitional identity will limit median-voter convergence. It also implies weird things for utilitarians who insist on maximizing relative to current preferences. If the utility hit to rightwingers out of power, for example, is greater than the utility to hit to leftwingers out of power, then, other things being equal utility-wise, it could turn out that a rightwinger minority should be put in power over a leftwinger majority. The general application of this kind of thinking is that partisans will try to convince their side that being out of power is really depressing, with the result that no matter who is in power, half the population is really depressed.

But let me instead point out a picayune possible implication for libertarians. People apparently like unemployment insurance because we tend to prefer that our income changes in a relatively smooth way, rather than suddenly and drastically. Could libertarianism be a utility smoothing individual political strategy. You’re never in power, but then you’re never out of power either. No ups, no down, no anxiety about the next raise always around the corner. In a world of partisan volatility, libertarianism is a kind of insurance against hedonic swings from politics. Whether this leaves us better off on net is an open question.

“Happiness is a hard master–particularly other people’s happiness.”

- Mustapha Mond in Aldous Huxley’s Brave New World.