Happiness & Public Policy

The McKibben nonsense below has moved me to share a very short excerpt from my forthcoming Cato paper:

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The best studies are those that track people over time and see what happens to their happiness as their circumstances change. One such study used the reunification of East and West Germany—and rapidly rising incomes in the East—as a kind of natural experiment to test whether increasing incomes do make us happier. In a paper entitled “Money Does Matter!” the authors write:

average life satisfaction in East Germany increased by around 20% between 1991 and 2001, leading to a clear convergence with West Germany. Importantly, increased real household incomes in East Germany accounted for around 35–40% of this increase, which corresponds to the economists’ view that money surely matters.

On the flip-side, sudden reductions in income correlate strongly with declining subjective well-being. Hagerty and Veenhoven note that “in Russia average happiness decreased by two points following the Rubel crisis in the mid 1990s, which severely disorganized the economy. As the Russian economy began to pick up, so happiness also began to rise.”

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Note that these are quite recent papers using state-of-the-art research methods. McKibben doesn’t even deign to actually cite a single study or social scientist by name.

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Citations

Paul Frijters, John P. Haisken-DeNew and Michael A. Shields, “Money Does Matter! Evidence from Increasing Real Incomes and Life Satisfaction in East Germany Following Reunification,” American Economic Review 94, no. 3 (June 2004).

Ruut Veenhoven and Michael Hagerty, “Rising Happiness in Nations 1946–2004: A Reply to Easterlin,” Social Indicators Research 79 (2006).