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.
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Workin’ in the fields
till you get your back burned
Workin’ ‘neath the wheel
till you get your facts learned
Baby I got my facts
learned real good right now
You better get it straight darling
Poor man wanna be rich,
rich man wanna be king
And a king ain’t satisfied
till he rules everything
-Sir Bruce, Philosopher
Question: How do you get a philosopher off your porch?
Answer: Pay for the pizza.
-Elizabeth Hoppe
Will, an entertaining post–I got a laugh out of it. But perhaps you are conceding too much to the happiness critics. Let me run an argument by you to see what you think.
Happiness has increased significantly in the past few decades. The reason is simple: life-expectancy has, within the past half century, increased by about 10 years in the United States. If people are as happy now as they were then, then, ceteris paribus, they should now live even happier lives overall because they live longer lives. For example, suppose that I live 5 years and these are very happy years. If I live 5 more years in addition to the first 5, then overall I’ve lived a happier life: the total sum of happiness has gone up. Thus, people are getting happier by living longer.
Javier, Good point. But the happiness studies are not tracking a quantity of happiness, but the average of how happy folks say they are. Longer lifespans should, in fact, depress the average. Easterlin’s study on happiness in the life cycle shows that self-reported happiness peaks at about 45 and declines slowly thereafter. So, each additional year in average lifespan ought to bring down average self-reported happiness. Check out this graph:
http://static.flickr.com/25/54022653_947adb6765_o.jpg
I’ve heard the opposite actually: older people tend to be happier than the young. Here’s a quote from this study:
This is only referring to life satisfaction, it appears that “negative affect” increases slightly after the age of 60.
Anyways, to the extent that the happiness researchers only focus on how happy people are on average, they are missing out on something that makes happiness more valuable–namely, the additional years we now have to enjoy it. And it is precisely in this respect that society as a whole has been getting significantly better off.
Yeah, that has to do with the lack of good panel data. Read this Easterlin paper, which is the most recent work on happiness accross the lifespan. As folks age, they become much less sastisfied with their health, family life (children move away; siblings dies, etc), and work (retirement). This is largely offset by rising satisfaction with finances (compound interest!), but not completely.
Here is the paper [doc]:
http://www-rcf.usc.edu/~easterl/Lifecyhapsour.doc
Here is a useful summary power point presentation [ppt]:
http://www.google.com/url?sa=t&ct=res&cd=6&url=http%3A//www.usc.edu/dept/socialwork/SFCCC/pdf/happiness.ppt&ei=E4BWQ5vZA6ji-AGdsISiBw&sig2=dsnoZn_NFrUzf1Ckw2AsNw
Interesting information, I just skimmed the paper.
Easterlin’s conclusion is still that happiness is very stable throughout people’s lives on average. Even past 80, it appears that most people respond that their lives are “very happy” or “pretty happy.” So the people that make it into their late old age seem to be enjoying additional years of happiness.
An interesting corrolary. Suppose we are just looking at the average happiness level. If the proportion of elderly in the population grows, it might seem that happiness levels are trending down. But again, this method overlooks what is fundamentally a good thing: people are enjoying more years of happiness.
Ah, you already pointed that out. Well then.
The Easterlin study does NOT rely on what you decry as the economists’ concept of utility as preference satisfaction. The happiness variable in that study is simply a self-report on a scale provided by the surveyer.
The Easterlin study is not armchair. It does not, however, provide any information on whether what subjects meant when they said they were “not happy” or “very happy” refers to preference satisfaction, desire satisfaction, an experiential state independent of either, eudaimonia, etc.
Since Easterlin is not relying on the economic assumptions Will criticizes, I cannot see why Will’s arguments against those defeat its conclusions. Nor can I see, in light of Easterlin, what evidence Will is relying on to claim that we’re actually getting happier ever so slowly.
More generally, note that claims like “happiness is rising ‘very slowly’” or that we’re “at least as happy as we’ve ever been” presuppose not only (a) interpersonal utility comparability, but also (b) that average utility is a meaningful and very relevant concept.
Many interlocurers on this blog have denied that interpersonal utilities are comparable when they argue against redistribution that would promote higher total utlity. If these arguments are right, which I obviously do not think that they are, then it cannot be the case that we can demonstrate that (for example) capitalism promotes happiness better than Stalinism or Sovietism.
As for taking average utlity as the relevant measure for social policy analysis, that method runs counter to the view that individual rights must be respected even if violating them increases average utlity.
Lastly, Easterlin’s studies purport to show that individuals’ happiness does not increase (throughout their lives) as their incomes increase, contrary to their expectations. They do not claim show that people (on average) are not getting happier as (average) incomes rise. There is a big difference there!!
Easterlin does not assume interpersonal comparablity OR the relevance of average utlity!
Bill, I don’t quite know what you’re going on about. I think you must be misintepreting what I was saying, or the context in which I brought up the recent Easterlin study. I wasn’t saying that there’s any problem in particular with Easterlin’s work. I think it’s good and useful (although I question some of the implications some people see in it.) In the first mention of Easterlin, the ‘74 paper, I was saying that there is nothing paradoxical about his finding (I believe that one was comparing avg self-reported happiness with avg income). In the mention of Easterlin in the comments, I was pointing to his recent work on self-reported happiness accross the life cycle, to give evidence to Javier that folks tend to get less happy as they get older.
The evidence showing a slow rise is in other studies. Veenhoven’s database shows a small increase over the last few decades in most wealthy market societies.
Whatever the case may be, whoa.
What are we maximizing here? Happiness? That’s why they line up with Hitler when he promises them struggle, pain, and hardship. To be happy.
I agree, very odd this search for paradoxes everywhere. I suppose there would be fewer books to write about life being kind of happy and kind of unhappy in varying degrees and patterns. My greater interest in this thread goes a different direction, one hopes not too OT.
Not being a professional economist, may I assume that a Big Grad Student Opportunity exists to define what study subjects mean by "happiness" and to put the tools in order? Bill Korner’s comment wondering whether ‘ "not happy" or "very happy" refers to preference satisfaction, desire satisfaction, an experiential state independent of either, eudaimonia, etc.’ would seem to suggest a standard is needed in studies of this kind, to spell out the assumptions of researchers and subjects. Its absence should get a study marked down for vagueness.
Different kinds of people are made "happy" by different narratives and undertakings, as brig observes. Hitler need not be referenced; there is the advertisement attributed to Shakleton:
One basic task in defining happiness is distinguishing between
The matter can be further unpacked by eliciting and analyzing a report of multiple circumstances in which the subject now remembers being happy. As a coach and blogger especially interested in maximizing happiness (with special attention from time to time about how it relates to the virtues), I suggest at least these 3 stages of inquiry.
Congratulations, you’ve just sketched out a research program to rewrite large sections of Aristotle’s ethics. The problem is in considering, first, happiness to be the goal. People don’t want happiness, they want something serious. That’s why every religion demands suffering. Second, it makes no sense to speak of happiness in terms of “more and more stuff.” That may be the unconditional demand of capitalism: produce and accumulate more. That’s one thing, and don’t confuse it by bringing in happiness. The point of accumulating more is to increase your potential energy, ie utility (because economics is a translation of 19th century thermodynamics). But happiness has nothing to do with either accumulating or expending potential energy. Smelling a flower is neither planned for nor does it cost anything. Nor is it happiness.
Why do I have the feeling that my proposal being equated to Aristotle is not something to be congratulated on?
Well, presumably people call what they want, when they have it and it satisfies them (whether internal or external), “happiness.” Or some cognate term. My approach is perhaps more rough-and-ready than strictly conceptual, but since the topic here is human experience, the keystone is accepting people’s own evaluations and criteria for their own experience, then respectfully probing those reports for some kind of uniformity, systemic clues, classes of experience, and whatever else may present itself to the alert observer. Self-reporting problems notwithstanding, the person is the authority on his own experience.
I’m quite interested in someone’s comments about what makes him happy. Less so in his absolutes about what makes everyone happy, without breaking a sweat to bridge the subject-object gulf for anyone else. So then, could we apply curiosity to each subject, rather than the researcher imposing his Not-Even-Defined theory of happiness on the material?
For one thing, if we discovered what constitutes happiness for another, and honored it, utopian tyranny would be impossible. To some that is a bug, to some a feature.
I love statements like this from a self-professed empiricist:
“Indeed, we’re about as happy as people have ever been, as far as we can tell.” Yes, as far as we can tell, that is some qualification, no doubt based on careful studies of Mayan survey research.
Will says on the one hand something perfectly reasonable: more material wealth is not happiness. But then he says: but marginally, imperceptibly, it is happiness. It is increasing total happiness by that tiny amount every day that adds up to exponential leaps in happiness measured over centuries and millenia. And if you don’t feel the effects of this imperceptible increase, which is almost nothing, well that’s because it’s imperceptible.
Which amounts to, we have no idea what it is, but we do know it’s increasing every day.
It’s always struck me that Will represents the ideology of an angry middle aged man wrapped in the appealling packaging of exciting liberation. And if some say it’s not very exciting and it’s not really liberation, he’ll respond: yes, and it’s increasing every day!
Brig, The studies show that self-reported happiness correlates strongly with income until around 10-15K (because below this range, more money has profound effects on health, diet, quality of shelter, etc.), and then quickly levels off, so that more income comes to have only a surpassingly small average positive effect. Because the there are fewer in our society below the critical income threshold than ever before, and we are richer on average then ever before, it is not unreasonable, on empirical grounds, to conjecture that a person picked at random in the US (or any of the wealthy liberal democracies) is more likely to report higher life satisfaction than a person picked at random from any society in almost any earlier time. That’s what the data should lead us to believe. That is perfectly consistent with the idea that correlation betwen income and self-reported happiness grows weaker and weaker the wealthier we become.
I’m happy my to hear that my ideology is wrapped in an appealing package!
I thought all along that Will accepted Easterlin’s findings, but still don’t see why the fact that they are not supportive of nonsensical economic models is interestingly “non-paradoxical”. As I read these two posts they are saying:
(1) Ecomomists have a ridiculously unrealistic model of utility, in that what they talk about has nothing to do with actual happiness.
(2) Its not the least bit paradoxical that studies of self-reported happiness do not find that it is furthered by the wealth increases that mainstream welfare economics demonstrates should produce greater “utility”.
OKAY!
But the possibility remains open that (1) an individual does not reliably get happier when their income increases above $10-15K BUT YET
(2) having wild income inequality in our society reduces the well-being of everyone including the super rich.
And the two following propositions are also consistent:
(1) The individual with the least wealth has more wealth in a high-inequality system than in a low- inequality system.
(2) The one with the lowest wealth and the one with the highest wealth both are better off in an achievabble low-inequality system than in the actual high-inequality system.
Bill, Cool. I get what you’re saying now, and you’re right. I haven’t said anything that rules out the possibility that people are in general better off in a low-inequality system, because I haven’t been talking about inequality.
The paradox is that people want (or say they want) happiness, but that (at least after a certain threshold is reached) when people get more of what they want, they aren’t happier. It isn’t a new insight, but it is relevant to the ideological battle between social democracy and libertarianism for the reasons Bill mentions.
The insight that getting what we want doesn’t make us happy isn’t startling and isn’t a contradiction, but I don’t know why we can’t call it a “paradox.” Is there some technical meaning of paradox I’m missing here?
Gareth: It’s not clear from Easterlin’s study that people even “want” more money. What is clear is that they expect to get it, over the course of their lifetime. And they expect it to make them happier. But it does not.
The possibility remains open, within Easterlin’s framework, that people would like to “get happy” by other (more reliable) means besides increased wealth.
My conjecture is that most people would like to get happier (and could) by doing other things. But we are encouraged (by mighty economists among others) to do whatever we want to do by getting more wealth. And, in addition, wealth inequality and the norm in favor of increasing individual wealth have effects that prevent us from doing many things that we would truly like to do.
The book Ecclesiastes has been written to offer the results of this quest. If you take time to read it, the pages are few in number, you will find your own type of lifestyle and choice of searching listed as one tried by the author during the passing of his own days on earth. An honest read will result in finding ‘happiness’ is in the choices of your own heart and not the outside [the world around you]. My two-cents.
Is there any evidence at all that policies which encourage more leisure and less wealth accumulation make people happier? Both France and Germany have less inequality and people work less in those countries, but they apparently have lower rates of life satisfaction than the United States. Some data here. This is of course a crude comparison, but I don’t know if any serious research on this topic exists.
Bill, The thing I like about Easterlin’s life-cycle work is that it’s moving beyond simple money-happiness correlations. Looking at his data, it seems fairly clear to me that increasing wealth correlates with increasing satsifaction with one’s finances, and that has a continuing positive effect. It’s just that the positive effect of wealth is offset by declining satisfaction with health, declining satisfaction family, etc. That is, the overall trend is for people to become less happy after middle age, but wealth mitigates that trend.
Javier:
It is a crude comparison. Ordinary observation tells you that the US is both more religious and values optimism and cheerfulness a lot more than Western Europe. These factors might overwhelm the anti-hedonic effects of greater income inequality.
(I suspect there is a good way to try to quantify this, but it would be more work than I’m up for.)
On the anti-hedonic effects of inequality, check out this paper:
http://post.economics.harvard.edu/faculty/alesina/papers/HappIneqREVApril3.pdf
Most interesting:
“In Europe, the happiness of the poor is strongly negatively affected by inequality, while the effect on the rich is smaller in size and statistically insignificant. In the US one finds the opposite pattern, namely that the group whose happiness seems to be most adversely affected by inequality is the rich. A striking result is that the US poor seem totally unaffected by inequality. Any significance of the inequality coefficient in the US population is mainly driven by the rich.”
Admitted, but as of now there is scant evidence that more income equality and fewer formal work hours translates into greater happiness for society.
Also, note that fewer formal work hours at one’s paid employment doesn’t necessarily translate into more leisure time. European countries have reduced formal work hours faster than the United States, but it seems that they have approximately the same amount of leisure time when you factor in unpaid work in the household. If anything, the United States seems to have a slight advantage here. Here’s a comparison between Sweden and the US and here’s a comparsion between Germany and the US.
If leisure time makes people happier, then it’s a mystery to me how we should encourage people to work less, since high taxes and mandatory hour limits don’t seem to do the trick. As for income inequality, this is all that I could find (I believe Will also brought this up at one point):
I would be curious to know what other research is out there.
Woops, sorry for the doublepost of the same study. Anyway, here’s some evidence on the other side. The conclusion of this study found that
I’m not agree with Gareth. Because when you get what you whant, when you reach your goal there exist a littie period of time when you feel yourself happy.This period is very short because life goes on. You make another goal. There is no paradox here.
So if I’m already suicidal at age 45, I may as well get it over with.