Happiness & Public Policy

That’s “reliable” in the technical measurement sense of “repeatability” or “consistency.” Alan Krueger and David Schkade are on the case with a new NBER paper, “The Reliability of Subjective Well-Being Measures.”

ABSTRACT

This paper studies the test-retest reliability of a standard self-reported life satisfaction measure and of affect measures collected from a diary method. The sample consists of 229 women who were interviewed on Thursdays, two weeks apart, in Spring 2005. The correlation of net affect (i.e., duration-weighted positive feelings less negative feelings) measured two weeks apart is 0.64, which is slightly higher than the correlation of life satisfaction (r=0.59). Correlations between income, net affect and life satisfaction are presented, and adjusted for attenuation bias due to measurement error. Life satisfaction is found to correlate much more strongly with income than does net affect. Components of affect that are more person-specific are found to have a higher test-retest reliability than components of affect that are more specific to the particular situation. While reliability figures for subjective well-being measures are lower than those typically found for education, income and many other microeconomic variables, they are probably sufficiently high to support much of the research that is currently being undertaken on subjective well-being, particularly in studies where group means are compared (e.g., across activities or demographic groups).

The passage in bold is not exactly a ringing endorsement, and definitely a call for caution, the implication being that the reliability of SWB measures are insufficient for some current research. I look forward to digging in deeper.

[Thanks to Tyler Cowen for the tip.]

A while back, Tyler Cowen linked to the recent Oswald and Blanchflower NBER paper, “Is Well-Being U-Shaped over the Life Cycle” (paywall) reporting its conclusion: “ceteris paribus, well-being reaches a minimum, on both sides of the Atlantic, in people’s mid to late 40s.” Tyler commented: “It’s a good thing I don’t believe in that nasty happiness research…” Over on Slate Joel Waldfogel reports on the paper in an article on “The Midlife Happiness Crisis” as if it conveyed interesting information about age and happiness, and seems to me to totally misunderstand the point of the paper:

[Blanchflower and Oswald] document how happiness evolves as people age. While income and wealth tend to rise steadily over the life cycle, peaking around retirement, happiness follows a U-shaped age pattern.

Both Tyler and Waldfogel seem to think this paper is telling us something about how happy you are likely to be at a various points in life. But that’s not what the paper is about. It is about the effect of age, per se, on happiness. That is to say, they’re filtering out various correlates of age, like wealth and health, which generally have large effects on life-satisfaction. So this is a study of how happy people are with their age at various ages. The paper, as far as I understand it, says that people are least happy with their age at middle age. It does not say that people are least happy at middle age. Sadly, this completely ruins Waldfogel’s Slate piece. This is largely the fault of the authors for not making this sufficiently clear. Here is a key passage from the abstract:

A robust U-shape of happiness in age is found. Ceteris paribus, well-being reaches a minimum, on both sides of the Atlantic, in people’s mid to late 40s. The paper also shows that in the United States the well-being of successive birth-cohorts has gradually fallen through time. In Europe, newer birth-cohorts are happier.

By “ceteris paribus” here they mean controlling for the effect of most everything important to happiness other than how old you are, well-being reaches a minimum … in people’s mid to late 40s.” They simply don’t show that the well-being of successive birth-cohorts all things considered has fallen in the US. Newer cohorts are actually wealthier and healthier than older ones, which would predict increasing happiness overall. But B&O are controlling for the effects of things like wealth and health. So, basically, they’re saying Americans have become increasingly unhappy with being middle-aged, which is sort of interesting. Sort of.

In the paper they make clear note of what they’re not measuring–which is to say, overall life satisfaction–but they are far from fastidious in their use of terms like “well-being.” Here’s a couple of statements about what they’re filtering out in the attempt measure the effect of how many years we have been alive, in isolation from most everything else:

The paper’s concern is with the ceteris paribus correlation between well-being and age, so we later partial out other factors, such as income and marital status, that both alter over a typical person’s lifetime and have effects upon well-being.

[…]

an important issue is whether in happiness equations it is desirable to control in some way for health and physical vitality. There is here no unambiguously correct answer, but the approach taken in the paper is not to include independent variables that measure physical health. This is partly pragmatic: our data sets have no objective measures and few subjective ones. But the decision is partly substantive: it seems interesting to ask whether older people are happier once only simple demographic and economic variables are held constant.

Sorry to say, I don’t think this is very interesting. I don’t see why this is that useful to know, though I do suppose it would be interesting to find out why Americans (but not Europeans) increasingly think being middle-aged sucks. If you want to say something interesting about how happy people are at various ages, I like Easterlin’s approach [pdf], which takes things like satisfaction with health, finances, career, and family at different points in the life cylce into account. He finds that, all things considered, the happiest point of our lives is precisely when Blanchflower and Oswald find we’re least happy with our age. That is kind of interesting!

[Flickr photo courtesy of placinsun.]

Thanks to commenter Conchis for bringing this important paper to my attention.

Heterogeneity in Reported Well-being: Evidence from Twelve European Countries by Andrew Clark, Fabrice Etilé, Fabien Postel-Vinay, Claudia Senik, Karine Van der Straeten

CONCLUSION. This paper modelled the relationship between income and self-reported well-being using random-effect techniques applied to panel data from twelve European countries. We show that people are different, and in more complicated ways than just having different intercepts. We are not able to distinguish between heterogeneity in the utility function (translating income into utility) and heterogeneity in the expression function (turning utility into reported well-being). We can, however, strongly reject the hypothesis that individuals carry out these joint transformations in the same way.

We identify four classes of individuals, and show that the “marginal well-being effect of income” is very different across these classes. In particular one class is satisfied and has a high marginal well-being effect, while another is dissatisfied and has a low marginal wellbeing effect. Descriptive statistics reveal demographic and country patterns between classes. This has at least two important implications. First, in a political economy sense, as the effect of income differs sharply across classes (and classes are not independently distributed between countries), we would expect average opinion regarding economic policies to differ across countries. . . This is a subject for ongoing research.

Perhaps more importantly, our results suggests that aggregating data across diverse populations may be a dangerous practice. Individuals, who seem to fall naturally into a number of different classes, differ in ways that are far more complicated than those picked up by a simple fixed effect. The trend towards comparative research in social science, whereby data from different countries are compared, is laudable. Nonetheless, our results suggest that the blind aggregation of diverse populations risks producing empirical results that are false for everybody.

The econometrics in the happiness literature is clearly edging its way toward adequacy. What we have had is not quite useless. But now, minimally credible statistics that take into account individual variation throws a huge wrench into attempts to ground highly specified policy on happiness studies. Heterogeneity is very problematic for would-be benevolent technocrats. First, they’re stuck with a big information problem. They’d need to know about dynamiclly shifting individual differences at a finer grain of detail than is possible. Second, heterogeneity prevents you from basing policy on the welfare of an “representative” agent. If it is true, and it is true, for example, that income has a big positive effect on some people’s happiness, or that simply keeping very busy has a big positive effect, then tax policy aimed at incentivizing the consumption of leisure against the production of wealth is going to cause a lot of immediate micro-harm, not just the delayed macro-harm of slower growth. “Truces” in income/status “arms races” are very unlikely to be pareto improvements. (Which means the situation is not accurately characterized as an “arms race.”) This may not bother a Benthamite technocrat willing to overlook individual harms if the net utility is positive. But the Benthamite is still stuck with the informational problem. And ignoring the separateness of persons is terribly wrong, which is why Benthamism is false. Morally legitimate policy is left having to take pluralism and the separateness of persons into account, which generally means worrying primarily about the structure of the basic framework of interaction, trying to ensure that it is sufficiently general and neutral between reasonable sets of beliefs and preferences.

Also, back to the paper, note the inability to “distinguish between heterogeneity in the utility function (translating income into utility) and heterogeneity in the expression function (turning utility into reported well-being).” The recognition that there is a distinction between real well-being and self-reported well-being has big implications. We don’t know to what extent talk tracks fact unless we know how talk relates to fact. The recognition of variation in the expression function throws in a further wrinkle. If the expression function was homogenous, discovery of that function would allow us to infer real well-being from talk. But if there is variation in the reporting function, and that variation cannot be accounted for by a general law-like principle, then aren’t we getting pretty close to empirical proof of the near-uselessness of self-reports as a proxy for real well-being?

For Bob, income has a big positive effect on well-being, but, despite growing happiness from growing riches, Bob in his modesty won’t ever put himself in the highest category of reported well-being. Karen is sort of miserable, and higher income means almost nothing to her. But she’s a shallow, ideological, free-market economist, and worries that there must something wrong with her for not being happier given her wealth. So she says she’s “pretty happy” even though she’s not. Bob and Karen report themselves as being in the same category of self-reported well-being. What do we know about well-being? What do we know about the relationship between income and well-being?

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

ABSTRACT. In this paper we investigate how life satisfaction (or happiness) is affected by a substantial increase in real income. Our context is East Germany in the decade following reunification, and we implement a new fixed-effect estimator for ordinal life satisfaction and develop a decomposition approach that accounts for new entrants and panel attrition. Using data from the German Socio-Economic Panel we find that 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.

The great thing about this paper is not that it tells us that money matters, but that it is better statistics, doing something to take into account individual fixed effects.

I also highly recommend Frijter’s and Ferrer-Carbonell’s paper comparing various statistical methods for analyzing happiness data. The thing that really sticks out in their comparisons is that methods that take into account individual differences, like personality, produce quite different, but more likely accurate, results. “We call for more research into the determinants of the personality traits making up these fixed effects.” Me too! It’s also fun to note that the various methods disagreed a lot about whether kids were good or bad for self-reported happiness. Almost every method shows that money is good for SWB, by the way, albeit weakly so (better than being married, or having kids, not as good as being healthy.)

I liked the concluding thought in the methodology paper:

Finally, a note on the unimportance of income for happiness. The coefficient of 0.11 of log-income in the OLS individual fixed-effect model, implies that an individual would need an income increase of over 800000% to achieve an increase of one for general satisfaction on a (0,10) scale. This in itself raises the question of why individuals expend so much effort on obtaining more income to the extent that most economists since Jevons (1871) have taken this as the main human motivation. The psychologists Brickman and Cambell (1971) long ago answered this question by proposing that humans can be on an ‘hedonic treadmill’ in which they are constantly chasing objectives that cease to be satisfying once reached. This often repeated argument would fit the finding that average satisfaction hardly increases in countries where incomes increase (Diener and Suh, 1999; Kenny, 1999), but it would seem to need a high degree of imperfect forecasting and self-delusion on the side of individuals to be true. Is there perhaps more to individual choice than happiness?

Now, as you know, I think the self-report data is quite unlikely to accurately track individual or average increases in objective well-being, so I think the correlation between the self-report and income understates the correlation between real well-being and income. That said, I like their concluding thought. Even if folks do have some problems with forecasting how they will feel, surely you’d need to be pretty silly to have the experience of something failing to satisfy you hedonically over and over again and yet keep doing it because you’re looking for hedonic satisfaction. Donald Davidson would not accept this! The best explanation is that people keep doing it because they’re looking for something else.

In yesterday’s NYT, Darrin McMahon, an historian at Florida State, has some good advice about the pursuit of happiness: don’t pursue it. That’s a wortwhile lesson I associate mainly with Bishop Butler and Henry Sidgwick. However, despite the good advice to “just do it,” as it were, McMahon also repeats a happiness studies chestnut that deserves to die a brutal death. Or, at least, deserves to be confronted with enough skepticism that people will stop repeating it without further explanation or justification. Or a brutal death.

Sociologists like to point out that the percentage of those describing themselves as “happy” or “very happy” has remained virtually unchanged in Europe and the United States since such surveys were first conducted in the 1950’s. And yet, this January, like last year and next, the self-help industry will pour forth books promising to make us happier than we are today. The very demand for such books is a strong indication that they aren’t working.

Should that be a cause for concern? Some critics say it is. For example, economists like Lord Richard Layard and Daniel Kahneman have argued that the apparent stagnancy of happiness in modern societies should prompt policymakers to shift their priorities from the creation of wealth to the creation of good feelings, from boosting gross national product to increasing gross national happiness.

McMahon doesn’t say whether or not he is concerned, or sign on to the Kahneman/Layard program, but he does repeat the peculiar illogic by which one is tempted to move from the fact that self-report numbers are stable to the idea that we ought to shift priorities from creating to wealth to creating good feelings. I wish I’d stop seeing this sort of thing in the New York Times. So let us review the numerous reasons why the stability of happiness self-report surveys need not imply some kind of policy failure that needs correction.

FRAMING

The main explanations for the lack of increasing happiness are also explanations for the lack of talk about increasing happiness. So the self-report data may be reflecting the psychological processes that determine the avowal or self-ascription of subjective states, rather than reflecting the objective character of the subjective states themselves.

The main explanations for the “very happy” flatline are (a) adaptation and (b) social comparison. Now, if people don’t have a reliable “hedonometer,” which we can consult through introspection to discover the objective quality of our subjective experience, then we should expect that self-reports will be subject to habituation and comparison effects.

ADAPTATION. If you ask someone who has been wearing rose colored lenses for a week what color things appear, they will underestimate the objective rosy quality of their subjective experience, due to habituation. If you switch lenses the next week to an even more intense rose, the judgment of the rosiness of experience will likely stay pretty much the same. There is no reason to expect judgments of the hedonic quality of experience to much differ.

SOCIAL COMPARISON. The lack of a hedonometer requires a social rather than a private, internal standard for self-reports. When asked how happy one is, one will compare one’s narrative about one’s inner life, and one’s behavior, against a widely accepted cultural conception of what it means to feel and behave happily. If the entire population is becoming objectively happier over time, then cultural meaning of “very happy” will shift. Our talk about happiness is the result of comparing our representation of ourselves with our representation of the happiness scale, and our representation of where others lie on that scale. So even if people are getting objectively happier (whatever we take that to mean), we should expect self-reports to remain stable due to the shifting goalposts of the social meaning of happiness. It’s the same process by which people who make 150 large a year come to claim that they are middle class.

LIMIT AVERSION. This is closely related to what I’ll call “limit aversion.” Since there is no hedonometer, people have no way of telling whether there is an upper bound to happiness, or where the upper bound might be. So they don’t know if they are at the upper bound. Yet it is natural to believe that there are others who are happier, or to suppose that one might become happier still. So people who are at or near the upper bound may be hesitant to report that they are in the highest category of happiness. An illustrative anecdote: I’m pretty sure that, overall, I’m rather better off now than I was ten years ago. I know that I probably would have reported myself as “pretty happy” and not “very happy” then, and I would report that I’m “pretty happy” now, since I just don’t think I’m the happiest kind of person. And I suspect that I’ll feel the same way in another ten years, even if my well-being improves to the same degree. I know that I dislike the idea that my happiness level may have maxed out. I don’t suspect that others are that different.

UPPER BOUNDS

The idea that humans have some kind of happiness bank that could possibly have an ever-increasing balance is just silly.

However, the happiness bank assumption seems to be behind all the “paradox of prosperity” books, in which the authors pretend to find it alarming that the balance in our happiness accounts does not have a linear relationship to the balance in our bank accounts. Yet, as far as I can tell, no one has ever really defended the happiness bank hypothesis.

HOMEOSTATIC HAPPINESS. It turns out that no one really has a good account of what happiness really is. The best explanation of the nature of certain kinds of positive affect, which some somewhat vulgarly identify with happiness, is that it is a homeostatic mechanism designed to readjust after achieving a goal in order to keep us always wanting more. The prospect of happiness-as-pleasure is a Darwinian carrot that keeps us pulling hard in harness, and it just wouldn’t work if we stayed happy as clams when we got what we wanted. The homeostatic conception of happiness explains why hedonic adaptation may be adaptive. And it also suggests, to use the dumb analogy, that there may be something like a balance limit to our happiness accounts. Additionally, each person’s limit is likely a largely a function of their individual psychological disposition.

The fact that the wealthy liberal democracies are all toward the top in cross-country comparisons of average self-reported happiness, and that the “very happy” numbers aren’t rising, might indicate that these societies are close to as good as it gets—with a large proportion of their populations at their limit–not stalled and in need of a policy jump start.

And, back to something McMahon said, the fact that self-help happiness books continue to fly off the shelves does not really imply that that they do not work. It may tell us that self-help books are part of what have helped us achieve so much abiding happiness for lo these many decades. Or that people just like reading them. Given the simply embarrassing lack of longitudinal studies (it is, of course, hard to get tenure while waiting 20 years for the data to come in), for all we know people who read self-help books generally are happier, but they are offset in the aggregate by people miserably addicted to Us Weekly. If the happiness bank hypothesis was true, then a flat happiness trend line plus high self-help sales might speak volumes. But since it isn’t, it doesn’t.

So, it may be that we are in fact getting happier, and that the surveys can’t track the shift, due to adaptation, social comparison, limit aversion, and other phenomena governing the self-reporting of subjective states. Or it may be that some form or other of market-based liberal democracy is pretty the best we can do from a policy perspective, happiness-wise. Many of the policies that Layard pefers, for example, are already in place in this or that Scandinavian social democracy. And the difference in happiness between these countries and other wealthy basically liberal market societies is trivial or non-existent.

I’ve obviously gone way off the McMahon hook. But let me take the occasion to share my own conclusions about happiness and policy so far:

• Many people in rich market liberal societies are getting happier and the surveys miss it.
• Many people in these societies are at or near their hedonic limits. (Note: I think it may be possible for some people to push the limits through the right combination of diet, exercise, meditation, counseling, adventure, simplification, etc. But there are many others for whom this kind of stuff is pretty much impossible without fundamentally altering the kind of person they are. And I think most people, once they hit a certain threshold, are happy enough that they could just care less about further maximizing the positive qualitative character of their background affect. Dharma just wasn’t that much better off than Greg, once he loosened up a little.)
• Even if everyone was maxed out, there would still be a distribution of people through all the survey categories due to individual psychological differences. A society in which everyone is as happy as they are likely to get is not a society in which everyone reports that they are “very happy.”
• There is very little policy-wise that will have a large impact happiness-wise in societies that are already have advanced market institutions and liberal-democratic political institutions.
• The people who are least likely to be maxed out, and most likely to benefit from upward hedonic mobility in any society, are the poorest people.
• The policy lever most likely to help poor people out is whatever lever maximizes GDP growth. So prioritizing the creation of good feelings requires prioritzing the creation of wealth.
• If a society has a class of people who appear economically stuck, such that they tend, generation after generation, to see little benefit from growth, even if benefits are otherwise widely distributed, try to unstick them by removing things like bad welfare policy, or labor policies that price low skilled workers out of the market. Often it is crucial to break down informal cultural norms that discourage the accumulation of human capital, but there’s not much liberal policy can do here.
• Since most people in rich societies are already pretty happy, people who care about happiness ought to worry less about marginal policy changes in the US and Europe and worry more about people who do not already live in rich societies. The best thing we can do for them is free trade, more hospitable immigration policies, and fiscal policies that maximizes world GDP growth.
• Races for positional goods shouldn’t concern us.
• Happiness as we tend to think of it is not a natural kind, but a culturally loaded syndrome of feeling and behavior. It is far from the only moral and political value, and shouldn’t be our sole standard for evaluating policy.

In conclusion . . . You don’t need to be a philosopher of science to know that theory is undetermined by data. But it appears that lots of happiness studies folk either don’t know, or need to be reminded. The most plausible interpretation can’t simply be read off the data, and, to my mind, the most plausible interpretation probably isn’t one that supports actively trying to design policy that prioritizes creating good feelings over creating wealth. An obvious surface reading of the data that requires no fancy framing effects rigmarole says that we are, as far as we can tell, at least as happy as we have ever been, which is very happy. Why prefer “we are getting no happier” over “we have been, and remain, extremely successful at creating happiness?” The main reason why, I take it, is that it’s impossible to use the happiness data to drum up demand for one’s favorite unpopular policies without framing it in a way that makes it look like there’s some kind of problem that needs to be fixed. If you say that data show that we’re just as happy as our grandparents in America’s nuclear family, bowling together, Leave it to Beaver golden age, we’ll never socialize medicine! Anyway, the point is: at the very least, you need to at least tryto eliminate the most plausible competing interpretations of the data before you move on to try to use happiness data to mount your favorite policy hobby horse. No. At the very least, you need to acknowledge that there are alternative interpretations. Until they do that, people trying to sell policy on the basis of happiness research don’t deserve to be taken very seriously.

Good name for an album. Also, supposed to be one of the key pieces of evidence providing objective corroboration for happiness self-reports. Duchenne smiles are “real” smiles, the ones you make when someone cracks a funny joke and your eyes wrinkle and everything, not phony prom picture smiles. Some research has shown that expressing Duchenne smiles is correlated with heightened activity in the font left part of the brain, which is associated with experiences of pleasure. And people who Duchenne smile more report that they are happier.

But what are we to make of this, from Paul Griffiths and Andrea Scarantino, “Emotions in the Wild: The Situated Perspective on Emotion,” forthcoming in the Cambridge Handbook Of Situated Cognition, Robbins, P and Aydede, M (Eds):

One of the most important experimental paradigms for a situated perspective on emotion is the study of ‘audience effects’ – differences in emotional response to a constant stimulus which reflect differences in the expected recipient(s) of the emotion. Amongst the most dramatic effects are those obtained for the production of the so-called ‘Duchenne smile’ – the pattern of movement of mouth and eyes generally accepted as a pan-cultural expression of happiness (Ekman, 1972). Ten-pin bowlers are presumably happiest when they make a full strike, less happy when they knock down a few pins. However, bowlers rarely smile after making a full strike when facing away from their bowling companions and smile very often after knocking down a few pins when they face their companions (Kraut & Johnston, 1979). Spanish soccer fans show a similar pattern in their facial response to goals, and issue Duchenne smiles only when facing one another (Fernández-Dols & Ruiz-Belda, 1997). Fernández-Dols & Ruiz-Belda also demonstrate that at the 1992 Barcelona Olympics, although Gold medalists produced many signs of emotion during the medal ceremony, they produced Duchenne smiles almost exclusively when interacting with the audience and officials.

These results suggest that smiles are not outpourings of happiness which are merely witnessed by other people, but rather affiliative gestures made by one person to another with respect to something good which has occurred. This fits the model of emotions as strategic moves in the context of a social transaction. Obviously, people do smile and produce other classical emotional expressions when they are alone, but studies suggest that they do so far less often than one might expect. Even such apparently reflexive displays as facial expressions produced in response to tastes and smells appear to be facilitated by an appropriate social setting and the same appears to be the case for pain expressions (Russell, Bachorowski, & Fernández-Dols, 2003). Furthermore, it would be a mistake to conclude that audience effects are absent when a physical audience is absent. Solitary subjects who mentally picture taking part in a social interaction produce more emotional facial signals than subjects who focus on the emotional stimulus without an imagined audience. Fridlund has described this as ‘implicit sociality’ and remarked that his experimental subjects display to the ‘audience in their heads’ (Fridlund, 1994; Fridlund et al., 1990).

If Duchenne smiles are subject to audience effects, and especially if they are strategic (which is not to say they are contrived or fake–one of the author’s main points is that emotions are there to strategically manage social interaction), we maybe we shouldn’t make that much of them.

If Griffiths is right, “being happy” may be a longstanding social strategy. Take a different example to get the idea or emotion as strategy. Ever met anyone who cries any time they don’t get their way, or who grows sullen whenever there is conflict. This is, in part, a way of managing other people. Similarly, someone who is “happy” may depend strategically on behaving happily (again, this is not faking it) in order to seem likable, to reduce social friction, or maybe as a way to mask latent malevolence or aggression. We should expect that people for whom happiness plays this kind of strategic social role to both earnestly smile more and to have a self-image as a happy person. This should show up on the happiness survey. And it is plausible that being “a happy person” would require the activation of the neural correlates of positive affect.

However, just as we wouldn’t want to say that the unsmiling Olympic champion is not happy, I don’t think we’d want to say that people for whom happiness is not so strategically central are not equally happy in some deeply important sense, even if they’re not so often getting that tickle in the left frontal lobe that goes along with the Duchenne smile.

The Griffith essay is full of good examples of strategic emotion. People get angrier when their anger can get them restitution. Embarrassment as a signal of one’s realization that one has violated a norm. I like the account of sulking:

Sulking is a behavioral strategy for seeking a better deal in a relationship – an emotional game of ‘chicken’ in which transactions that benefit both parties are rejected until appropriate concessions are obtained. The question confronting an agent deciding whether to become upset in this way is not whether they have been slighted simpliciter, but whether taking what has happened as a slight and withdrawing cooperation will give them leverage. Once again, this strategic appraisal of the situation may be realized by a relatively simple mental mechanism.

I’d very much like to see a strategic account of happiness. Maybe it will turn out that some of our gains in self-reported happiness come from increasingly widespread adoption of the “being happy” social management strategy. And it may be a very good thing to have a society where “being happy” is a good way of getting what you want, even if “being happy” isn’t the same thing as the sense of meaningful well-being we all hope for. Fun stuff!

Is there a problem in comparing one person’s utility to another’s?

Well, it depends on what you mean by utility, of course. If, as on the formal theory, utility is just a way of representating an ordinal ordering of preferences, and preferences are propositional attitudes only contingently related to qualitiative states of consciousness, then there’s a problem, sort of, in the sense that quantitative comparison doesn’t make any sense. It’s just ruled out by definition. (How it is that you do welfare economics anyway has been one of the main preoccupations of the modern economics profession.)

Now, if utility is a certain kind of feeling of pleasure, then interpersonal utility comparisons are no more problematic than intrapersonal utility comparisons. I feel better now that I did when I woke up. It’s a fact! And I can feel better than someone else does, obviously. If Bob is enjoying a massage, and Al is taking his CPA exam, then Bob is likely racking up more utility, in the substantive psychological sense of utility.

The tricky question has to do with the value of utility, in this sense of utility. If you’re a Benthamite, then utility just is value. But unless one’s moral sense has been corrupted, it is easy to see that Benthamism is false. The value of lots and lots things obviously swings quite free of utility-as-pleasure. So if we ask, “Whose mental state realizes more value, Bob’s or Al’s?,” it is not easy to say. It may not be possible to say. The fact that Bob is experiencing more utility is informative only if we know how valuable utility is. Perhaps Al, while he finds the CPA exam arduous and boring, also finds that he is well-prepared, and the test, although not at all pleasurable, is the occasion for the experience of competence and self-efficacy. Arguably, the experience of competence and self-efficacy is more valuable than the warm, transient pleasure of a good massage.

(Some of you will be tempted to confuse the fact Al is feeling something that is good [self-efficacy] with the idea that he feels good. Don’t do that. Imagine a different example where the performance of competence is physically and mentally excruciating. Maybe a great warrior in a struggle to the death with a fierce opponent. Titus Pullo in the arena against the gladiators in the latest episode of Rome, say. Gravely wounded, and at the brink of exhaustion, Pullo simply doesn’t “feel good,” if you’re speaking English [or Latin]. Nevertheless, there may be value in his experience of competence as a fighter.)

Of course, we should avoid talk of the plain old valuable and ask, “valuable to whom, for what?” Different people have different life plans, and different life plans have different requirements. As Aristotle noted, food is good for everyone, but how much food is good depends on what you’re up to. Milo the wrestler needs more food than the rest of us, owing to his vocation. Likewise, the value of utility-as-pleasure depends on our projects and goals.

For example, take this bit of a USA Today story about performance artist Criss Angel:

In the premiere, he lit himself on fire. This week, Angel flies suspended from a helicopter, hanging with four 8-gauge fish hooks stuck into his back. “You have to put them in the flesh just right. Too shallow and they will rip right out, too deep can be permanent muscle damage. It was excruciatingly painful, yet one of the most beautiful things I’ve ever done.”

And I take it that Angel sees some of the beauty of it–some of the value of it–in the fact that it was excruciatingly painful. Same with David Blaine starving himself, or freezing himself in a block of ice. The pain is essential to the art. It could even be that Criss Angel dies with more dolors than hedons in the bank, due to the exquisite pain involved in his macabre calling, yet passes into the afterlife considering his life a brilliant, beautiful success.

So how does the value of Criss Angel’s excruciating pain compare with the value of somebody else’s pain? That’s the question that doesn’t make any sense. A lifeplan-relative theory of value makes the interpersonal comparison of the value of utility-as-pleasure impossible, since pleasure and pain doesn’t play the same role in everyone’s life plan, even if it is possible to compare who is having more or less pleasure or pain. We have not found the science, and we won’t.

Asians reliably report lower “happiness” on surveys than do Westerners, even after controlling for wealth and institutions. Are their lives worse? Is there something the matter with them? No. The value they place on whatever it is that happiness surveys track may just be different. The may be doing just as well relative to their lifeplans as we are, and maybe even better.

Andrew Oswald, “On the Common Claim that Happiness Equations Demonstrate Diminishing Marginal Utility of Income,” http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/oswald/concavity2005.pdf

From the end of the paper (it’s really short):

Psychological wellbeing is not measured in objective units. It is necessary, instead, to listen to what people say. Under the (reasonably mild) assumption that happier people tend to report themselves as happier, we can learn about the direction of influences upon subjective wellbeing. The literature has done this.

However, it requires more stringent assumptions about the nature of people’s answers before we can draw conclusions about curvature. We know little about the shape of the reporting function that human beings use.

Imagine, for example, that there is constant marginal utility of income, but that people, as they get happier, mark themselves happier on a questionnaire scale but do so in a way in which they are intrinsically reluctant to approach the upper possible level on the questionnaire form (the 5 on a 1-5 scale, say). Then the reporting function itself is curved, and we will have the illusion that true diminishing marginal utility of income has been shown.

In conclusion, despite what many articles and textbooks have begun to say, the literature has not established that happiness is curved in income.

I’m glad to see that the conceptual distinctiveness of reported happiness and real happiness, whatever that may be, has really sunk in for Oswald. This directly pertains to the discussion of framing below. The function that maps reported happiness to real happiness depends on the nature of framing effects for self-reports, among other things. I also like Oswald’s hypothesis that people have an aversion to identifying our sense of well-being as falling on the upper limit. After all, we all believe we could be happier, or that others out there are happier.

[Thanks to Tim Hicks for the link, and apologies for leaving his helpful comment in purgatory for the sin of including two links.]

Tyler Cowen of Marginal Revolution kindly links to us and reminds of us his posts on happiness. This important passage is among them:

The flat-lining of the happiness-wealth relationship may in part reflect a framing effect. The literature usually focuses on aspiration or treadmill effects, whereby the wealthy expect more. Their greater wealth therefore translates into less happiness than might have been expected. But this is not the only adjustment occasioned by growing wealth. The wealthy also recalibrate how they should respond to questions about our happiness. If happiness itself is subject to framing effects, surely talk about happiness is subject to framing effects as well. The wealthy develop higher standards for reporting when they are “happy” or “very happy.”

So let us assume that both framing effects – concerning both happiness and talk about happiness – operate at the same time. This will imply that even a constant measured level of reported happiness implies growing real happiness over time. Life improvements do usually make us happier, while both our expectations and our reporting standards adjust upwardly. This is the most likely interpretation of the aggregate data. Most individuals strive to earn higher incomes, even after they have experienced the strength of “aspiration” and “treadmill” effects. [emphasis added]

Tyler’s point about the effect of framing on questionnaire responses is very important and rather underappreciated. Work based on SWB studies too often reflects a naive assumption that self-reports reliably track or indicate the objective nature of internal states. This view is naive because there is almost no reason whatsoever to believe that we have cognitive access to some fixed or invariant scale against which to compare the quality of the subjective experience. Our experience of temperature, pain, time, color, brightness, and on and on, is contextually variable. So, we can’t just introspect and say “I’m experiencing 32.6 hedons of positive affect,” because there is no external public standard, like the standard meter for a hedon. Instead, a person must go through a fairly complex chain of inferences. The self-report problem is exacerbated by the fact that happiness is quite likely a culturally loaded notion, as opposed to, say, simple sensations of physical pain.

So, I must monitor my own affect, experiential quality, or hedonic tone, make an inference about how the quality of my experience influences my behavior, commit to a generalization about how behavior tends to relate to the quality of subjective experience, observe other people’s behavior, and then, on the basis of my generalization, ascribe to them a certain quality of subjective experience. I must access conventional standards of how it is that a “happy” person feels and behaves, and compare my feeling and behavior to that standard. Then, I conclude that I’m “Very Happy,” “Pretty Happy,” “Not so happy,” etc…

Kahneman, lord of framing, naturally recognizes both sorts of framing effects, and pushes for the study of “objective” happiness, which does not rely so heavily on self-reports. And he pushes for a purer Benthamism in policy. In “Objective Happiness” Kahneman writes:

Policies that improve the frequencies of good experiences and reduce the incidence of bad one should be pursued even if people do not describe themselves as happier or more satisfied. The recognition that aspiration levels adjust and that people will never be fully satisfied does not mean that they cannot be made (objectively) happier. The implication of this analysis is that the goal of policy should be to increase measures of objective well-being, not measures of satisfaction or subjective happiness.

And it is worth pointing out that the unreliability of measures of subjective well-being does not really imply that objective well-being should be the standard for evaluating policy, instead. It may be that neither subjective nor objective well-being is the correct standard for evaluating policy, even if some form of well-being is the correct standard for determining the rationality or desirability for individual action.

In any case, once we take framing effects into account, we ought to conclude, as Tyler does, that the SWB data obscure a probable ongoing positive real relationship between wealth and happiness.