Happiness & Public Policy

The truly delicious bits of this new NBER working paper by Di Tella, Haisken-De New, and MacCulloch on adaptation to income and status is the stuff on political leanings:

We study “habituation” to income and to status using individual panel data on the happiness of 7,812 people living in Germany from 1984 to 2000. Specifically, we estimate a “happiness equation” defined over several lags of income and status and compare the long run effects. We can (cannot) reject the hypothesis of no adaptation to income (status) during the four years following an income (status) change. In the short-run (current year) a one standard deviation increase in status and 52% of one standard deviation in income are associated with similar increases in happiness. In the long-run (five year average) a one standard deviation increase in status has a similar effect to an increase of 285% of a standard deviation in income. We also present different estimates of habituation across sub-groups. For example, we find that those on the right (left) of the political spectrum adapt to status (income) but not to income (status).

That is (in case you’re confused), folks on the left get used to money, but not status and the reverse for folks on the right. This is funny, since I’ve been reading a bunch of papers on inequality, mostly by political philosophers on the left, and they are positively obsessed specifically with the status effects of material inequality. It’s pretty amusing if this is just a reflection of a particular personality type. More generally, the fact that the happiness-effects of various things seem to be mediated by ideological leanings seems to basically ruin the prospect of using happiness research as a neutral, scientific way of assessing policy. It may just end up sort-of-usefully reminding us that one group may like a certain policy and another group may not simply because it makes one group feel better and another group feel worse. It doesn’t settle the dispute: it explains why we’re having it. Also, ideological mediation is one more nail in the coffin for the introspective method of normative philosophy. If the effects of this or that on people’s sense of well-being is mediated by their ideological cast, then chances are, our intuitions about real and hypothetical cases are probably already deeply infected with our ideological notions–or with the personality traits that lead us to find those notions attractive–and arguments based on these intuitions simply beg all the interesting questions in a subtle way.

Here’s a good overview of Richard Lucas’s recent work on adaptation. Lucas has found that adaptation is generally not as complete as previously thought.

The thrill of marriage generally lasts about two years.

The agony of divorce, on the other hand, can last a lifetime.

That’s according to Richard Lucas, a psychology professor at Michigan State University.

Lucas studies happiness - “the thing we call subjective well-being to make it sound more scientific,” he said - and how our levels of happiness can change.

For years, the accepted wisdom among psychologists has been that those levels don’t change. Much.

The article offers a Lucas quote that emphasizes the importance of invidividual variation and the hazards of cross-sectional studies:

Lucas said there is an optimistic message to be gleaned from his results and that message has to do with the variety of individual reactions to any life event.

“For example, when we look at marriage, on average, people come back to where they were in about two years,” he said.

“But there’s a lot of variability in the amount of change that occurs. There are actually a lot of people who get a large boost in happiness following marriage, but they’re balanced out by those people who don’t get any change or even have a decline in happiness.”

The important thing to know is what kind of person you are, and the kinds of conditions under which your kind of person will find lasting satisfaction, not what happens to people on average.