Happiness & Public Policy

Rajeev Dehejia, Thomas DeLeire, Erzo F.P. Luttmer, “Insuring Consumption and Happiness Through Religious Organizations,” NBER Working Paper 11576. [$5 download, unless you have institutional access to NBER papers.]

The authors find (to grossly oversimplify) that religious participation helps insure against consumption shocks for whites, but not so much for blacks, and against happiness shocks through income loss for blacks and not so much for whites. Their attempt at explaining the black/white differences is interesting. But I was most interested in the concluding passage:

The finding that religious organizations partly insure individuals’ stream of consumption and of happiness against income shocks has important implications for the public provision of social insurance. Social insurance is less valuable for those who are already partly insured through their religious organization, implying that the optimal level of social insurance is inversely related to the religious participation of the population. Moreover, social insurance can crowd out insurance provided by religious organizations. Thus, even where Church and State are officially separated, governments providing less social insurance will indirectly stimulate the demand for insurance from religious organizations and thus mostly likely strengthen the influence of religious organizations.

This nicely illustrates the trade-off between a big welfare state and a flourishing civil society. How does this relate to the happiness literature?

The preferred politics in many of the happiness books is a kind of statist communitarianism. David Myers, for example, ascribes what he calls the “social recession” (i.e., increases in divorce, illegitimacy, crime, etc.) from the seventies through now to an increase “radical individualism” and “civil and economic libertarianism” while almost entirely dismissing the disastrous unintended effects of the Great Society welfare state. (If you thinks expanded welfare and social insurance programs are a key to social cohesion and welfare, you’re surely not going to point the finger at the state for “social recession.”)

However, the happiness literature, if it makes anything clear, makes clear that our embeddedness in community, family, and networks of friends really matters for a sense of well-being. The last sentence of the Dehejia et al paper suggests that more social government social insurance will reduce the demand for insurance from religious organizations, and thus reduce demand for religious participation. And, from a standard SWB perspective, this is a very bad thing. Gruber and Mullainathan (2002) find that “the effect on self-reported happiness of moving from never attending to attending [religious services] weekly is comparable to the happiness effect of moving from the bottom to top income quartile.” As much as possible, you should want to encourage local substitutes for government social insurance that also provide the benefits of friendship, community engagement, access to networks of social capital.

There are independent philosophical reasons to support a shift away from the state and back toward civil society, in addition to potential effects on self-reported happiness.

First, as David Schmidtz argues in Social Welfare and Individual Responsibility, government welfare and insurance programs are not a matter of individual vs. collective responsibility, but a matter of internalized vs. externalized responsibility. A church community collectively internalizes responsibility for it’s various members. (The internal welfare system of the LDS church is a wonderful example of this.) State assistance simply externalizes responsibility, and makes the recipient unaccountable to anyone in his or her community, and so promotes free-riding, and “individualistic” detachment from conventional social norms, etc. A plausible alternative explanation for Myers’ “social recession” is the rise of externalization of responsibility through the vastly expanded welfare state.

Second, as John Tomasi has pointed out [pdf], the way the secular liberal welfare state crowds out alternatives, like civil-society-based social insurance, violates principles of liberal neutrality. That’s why Tomasi argues provocatively (and I think correctly) that Rawlsian political liberalism implies something like Bushian compassionate conservatism. A liberalism that takes pluralism seriously must be loathe to promote hegemonic state liberalism, but must instead empower the institutions of civil society that, in addition to promoting the internalization of responsibility, better express the plurality of American society.