Happiness & Public Policy

A number of works I’ve seen on the importance of social comparison extrapolate in a fairly simple way from the existence of non-human dominance hierarchies to human status. (Frank, for instance, motivates his view of status by citing the general logic of competition for mates.)  Many go further and identify human status largely with position in the income distribution. Both moves are mistaken.

It’s fair enough to point out that humans are primates, and so we should see some continuity. But humans also have language, higher cognitive abilities, and complex, cumulative cultural transmission and evolution. Humans, like other primates, eat. But human eating takes place in a rich cultural context, and the expression of human eating behavior is thickly culturally mediated. Like chimps, we like meat. Unlike chimps, we worry about eating it with the "correct" hand, or utensil, etc. Some of us won’t eat certain foods because of culturally transmitted dietary taboos. One should expect that human social comparison and positional competition, even if it is universal, will also be thickly mediated by culture, and will be expressed in different ways in different cultures.

Furthermore, human status need not be a homologous to dominance. Here is anthropologist Joe Henrich in his paper with Franscisco Gil-White, "The Evolution of Prestige: freely conferred status as a mechanism for enhancing the benefits of cultural transmission." (Evolution and Human Behavior, 22, 1-32):

Although nonhuman status is still poorly understood, a single process appears at least strongly predominant: agonism (aggression, intimidation, violence, etc. — that is, force or force threat). The resulting social assymetries are referred to as "dominance hierarchies" in the ethological and behavioral ecology literatures. The privileges that accrue to dominant individuals are (1) in males, preferential reproductive access to females, food, and spaces, as well as disproportionate amount of grooming from others; (2) in females, preferential access to food and spaces, and disproportionate grooming. Despite some controversy, the evidence suggests that dominance correlates with fitness. (Cowlishaw & Dunbar, 1991; Ellis, 1995). The stability of dominance is often reinforced through "reminders": submissive behaviors (e.g., grooming, submissive displays, yielding space, etc.) from subordinate to superior, whether or not induced through intimidation by the latter.

In humans, in contrast, status and its perquisites often come from nonagonistic sources—in particular, from excellence in valued domains of activity, even without any credible claim to superior force. For example, paraplegic physicist Stephen Hawking—widely regarded as Einstein’s heir, and current occupant of Newton’s chair at Cambridge University—certainly enjoys high status throughout the world. Those who, like Hawking, achieve status by excelling in valued domains are often said to have "prestige."

Henrich’s argument is that prestige is a feature of the human cultural capacity, which is adaptive because it saves the cost of having to learn everything yourself. I’m going to just continue to quote as at length because this really makes sense to me:

Once some cultural transmission capacities exist, natural selection favors improved learning efficiencies, such as abilities to identify and preferentially copy models who are likely to possess better-than-average information. Moreover, selection will favor behaviors in the learner that lead to better learning environments, e.g., gaining greater frequency and intimacy of interaction with the model, plus his/her cooperation. Copiers thus evolve to provide all sorts of benefits (i.e., "deference") to targeted models in order to induce preferred models to grant greater access and cooperation. Such preferred models may be said to have prestige with respect to their "clients" (copiers).

The above implies that the most skilled/knowledgeable models will, on-average, end up with the biggest and most lavish clienteles, so the size and lavishness of a given model’s clientele (the prestige) provides a convenient and reliable proxy for that person’s information quality. Thus, selection favors clients who initially pick their models on the basis of the current deference distribution, refining their assessments of relative model worth as information becomes available through both social and individual learning. This strategy confers a potentially dramatic adaptive savings in the start-up costs of rank-biased social learning. Finally, because high-quality information ("expertise," "performative skills," "wisdom," "knowledge") brings fitness-enhancing deferential clients, models have an extra incentive to outexcel each other. 

Because status-as-prestige isn’t agonistic, there are clearly market-like gains from positional competition in a domain. There may be a fixed number of clients, and so competition for clientele may be zero-sum. But clients adopt models and defer to them because that makes them better off, not because of a threat. And insofar as reputation tends to tracks information quality, deference will be deserved.  

(The adaptive advantages of cultural transmission necessarily include  the danger of the success of maladaptive ideas. Boyd and Richerson explain why this must be the case in detail in Not By Gene’s Alone. On Tuesday, I heard a good talk by Bob Subrick on how witch doctors in Botswana have successfully undermined WHO education efforts to contain HIV/AIDS by promoting widely believed false folk theories about the cause and transmission of the disease. This clearly involves a maladaptive allocation of prestige.)

So, the fact that we have a cultural capacity at all makes space for non-agonistic comparative advantage-based prestige/status. It would seem to me to follow that market systems, by promoting the refinement of the division of labor, promotes the multiplication of dimensions of excellence and therefore prestige. It is possible in market systems to gain the benefits of prestige and clientele from becoming a highly desired graphic designer, marketing consultant, or musician. 

Additionally, the fact that we have a cultural capacity is going to imply that, unlike other primates, status competition is going to be highly mediated by culture. It is possible to gain status among Mormons by being a good Mormon. There may be heated competition, even bitterness, over who is the best Mormon in the ward ("She’s not really that good a mother!" "I paid my tithing plus five percent!" ), but such positional competition may serve on the whole to reinforce generally socially constructive norms. Indeed, it seems likely that one of the ways we judge the quality of a culture is by the way it mediates and channels potentially harmful universal human dispositions, such as status-seeking and tribalism. Mormon culture mediates status-seeking in generally beneficial ways. Redneck and ghetto culture doesn’t.

The degree to which our place in the distribution of income/wealth is going to correlate with our status depends on culture. Some cultures and sub-cultures are more materialistic than others. Some are pointedly anti-materialistic. It’s worth pointing out that comparative excellence style prestige is pretty clearly going to correlate with greater earnings in general. The higher the prestige in a domain, the fiercer the bidding from clients for access. That doesn’t have to mean higher incomes, but on the whole it will. In this kind of case, higher relative position in the income/wealth distribution will be tracking, more or less loosely, excellence/prestige on some other dimension. Our high relative position on that dimension may make us both happy and high on the income/wealth distribution. But that doesn’t imply we care much at all about the income/wealth distribution. (The world’s best guitarist may have a lot of guitars, but he’s getting more out of his status as the best guitarist, not as a guy who has a hell of a lot guitars.)

What is going to count as a positional externality is going to depend on what kind of position people care about. That’s a matter of the kind of culture they’re embedded in. It strikes me that policy types ought to take a step back and be willing to think about whether cultures and sub-cultures are in general peaceful, healthy, stable, and mutually beneficial. My colleague Jude Blanchette today gave me Alesina and Fuchs-Schundeln’s paper on the effects of communism on people’s preferences. They find that the longer people spent in communism, the more they prefer a heavily intervening state. What are we to make of that? Give them what they want because that’s what they prefer? Or ask whether a system that leads people to want that is a good one to have? Similarly with cultures and subcultures. If a culture mediates status-seeking in such a way that certain acts of aspiration, success, and upward mobility might plausibly be understood as a kind of negative externality, should we plunge in and attempt to "rectify" the externality and push for efficiency relative to those culturally laden preferences? Or should we stop and ask if there is anything we can do to ensure that a culture that engenders these preferences does not long survive? 

This is not an argument of any kind. I’m not trying to make a point. This is thinking out loud. And you are going to help me.

Anne and Betty each prefer to positionally dominate the other—they both like coming in first better than coming in second. However, each has a different hedonic payoff from positional domination and subordination. How do we think this through?

Which world state, A or B, does a benevolent planner choose?

In Pareto terms, the planner is indifferent. Both Anne and Betty prefer to come in first, but both can’t.  The Benthamite planner is also indifferent: same sum of hedons.

What about willingess to pay? Well, pay for what? Positional domination or hedons? When Layard says that people undermine their own welfare by seeking status despite the fact that it doesn’t make them "happy," it sort of sounds like he’s saying that people sometime value status more than they value hedons, but are wrong to do so. Let’s get rid of the normative judgment and think about what it could mean to value positional domination independent of hedons.

Suppose that whoever pays most to positionally dominate positionally dominates. You can have an auction. Anne’s highest bid is $2000 and Betty’s is $2700. So does that mean that Betty gets a bigger hedonic payoff from dominating. No, by the stipulation of the matrix, she doesn’t. (And by stipulation of the matrix, the distribution of hedons is not the dimension of positional competition.) So does this mean that Betty is willing to pay more for a hedon? Maybe, maybe not. Why think Betty is bidding on hedons? It could be that Anne and Betty value the marginal hedon at the exact same rate. In which case, Betty is just bidding for positional domination, which she values for its own sake, not for the hedons that fall out of domination.  

Or maybe you can think of the choices between A and B as choices between packages of hedons and positional domination, which are independently valuable, but causally connected. This is value pluralism. There are lots of independent values: hedons, positional domination, etc. The value-to-money and money-to-value exchange rates may not be the same for each value. (Or in each direction; the endowment effect for a hedon and a dollar may be different. Misers may trade hedons for dollars, on the assumption that the dollars will pay off in even greater hedons, but, when the time comes, they are unwilling to give up dollars for hedons, so the dollars just accumulate.) And the money worth of some values might decline on the margin faster than others.

Suppose that there is a point of hedonic saturation (I believe this is true.) At the point of saturation, an extra hedon will have no money value, since there is in some sense nowhere to put another hedon. (Hedonically saturated states dry up pretty quickly though.) Suppose that positional domination doesn’t saturate, and remains ever valuable. It is never enough to be mayor, or governor, or president, or ruler of earth; there is always value in dominating on another positional dimension, or dominating a dimension of broader scope. So, one could be hedonically saturated, and unwilling to pay for another hedon, but not be positionally saturated, and perfectly willing to pay to become Generalissimo of the solar system.  

Suppose the willingness-to-pay planner chooses world state B on the strength of the higher money value of positional domination to Betty. Is such a planner really benevolent? If coming in second is a positional externality imposed on Anne, what is the value of the externality.

Are you confused yet?

I am.

I have also caused myself to wonder whether it might be possible to take money away from people under one description, and give it back to them under another, resulting in a net gain in hedons Could be! The issue wouldn’t be the transfer per se, but the description under which the transfer takes place. (This has nothing obvious to do with the above.) Does support for the state depend on a kind of gratitude stemming from an (illusory for most people) sense that the value of public goods consumed is greater than taxes (direct and indirect) paid? It’s like thinking somebody’s your best friend since that gave you $4 bucks after they took $5 out of your wallet but gave you the $4 so warmly.

</brainstorm>

I think Easterlin’s work on happiness across the life cycle is most revealing about the composition of life satisfaction over time. Indeed, I think it rather blows away the money won’t make you happy thesis. What Easterlin has done is construct a “synthethic panel” (stitching together several separate panels) to provide a picture of the course of satisfaction in several domains over the course of a life. What he is trying to explain here is how the ups and downs of domain satisfaction combine to produce a stable lifetime happiness trend.

The virtual congruence of predicted with actual happiness implies that the slight rise in happiness through midlife that occurs in the population as a whole is due, on average, chiefly to growing satisfaction with family life and work, which in combination more than offset diminishing satisfaction with health. As individuals marry and form families and progress in their careers, the enhanced happiness they obtain from these sources offsets the adverse impact on happiness of a gradual deterioration in health. Beyond midlife, however, happiness decreases slowly, because the continuing decline in satisfaction with health is joined by diminishing satisfaction with family situation and work. These negative influences on happiness are considerably offset, however, by an upswing in people’s satisfaction with their financial situation. This upswing, which is most marked at the oldest ages clearly cannot be due to an upsurge in income at older age, but must reflect a decrease in emotional strain as financial pressures and material needs diminish in the later stages of the life cycle.

Basically, after middle age, everything gets worse other than financial satisfaction, which continues to rise. And it rises at a rate sufficient to more or less offset decreasing satisfaction in all the other domains. Now, I think Easterlin sort of misses the most plausible hypothesis about the cause of climbing financial satisfaction. Easterlin’s view is that basically that at retirement our financial expectations relax, and so the reality expectations gap closes. There’s probably a lot to that. Of course the effect can’t come from increasing income once you’ve stopped having an income, or have reduced your income to pensions/annuities/old age assistance.

It seems to me that the obvious hypothesis is: retirement is focused on consumption and consumption is satisfying.

I know my financial satisfaction isn’t really rising much precisely because I’m at the stage in life where a large portion of any increase in income get ploughed directly into savings for retirement. Right now, I worry about saving enough for retirement. When I retire, long after I’ve paid off my student loans, my mortgage, etc., and I have saved enough, then I won’t worry about whether I saved enough. Most crucially, I get to start consuming the fruits of a lifetime of labor.

A lot of pre-retirement consumption is instrumental consumption. I have to buy clothes that I might not otherwise buy because of my job. I invest in my (hypothetical) children’s education. I might worry about the kind of car I have because the signal my car sends affects my perceived status, which affects my likelihood of promotion, which affects my income, which affects my consumption level in retirement. But when I’m retired, I just consume what I like because I like it. (Well, for the most part: Irv next door just bought a sweet set of Pings and I want to look good in the clubhouse, too. But, still, even my status competition has shifted to the leisure domain. I enjoy golfing more than overpriced french cuffed shirts.) As you get closer and closer to the end of life, and it is becomes more and more certain that the money isn’t going to run out, consumption becomes ever more worry-free, and so more enjoyable.

Obviously, income and wealth aren’t the same thing. Old people are the wealthiest, even though they don’t have the biggest incomes. The non-instrumental enjoyment of wealth is a great pleasure, and that’s what keeps life from being miserable in old age.

So, given Easterlin’s finding that financial satisfaction is what staves off unhappiness in old age, and the evergreen finding that at any given time and place people with higher incomes are happier, what argument is there, relevant to individual lives, that money has no important relation to well-being. I don’t want to know whether I am happier than someone at the same point in the income distribution 50 years ago. That’s irrelevant. I don’t want to know whether I am happier than a Serb at the same point in the Serbian distribution. That’s irrelevant. What I want to know is whether I will be happier if my income increases 20%. The answer is, yes, I probably will be happier. I want to know if my life will go better overall if I am wealthy in my golden years. The answer is, again, yes, probably.

If I have to read another article that shows me the flat 50 year happiness trend against the rising real income trend, and then implies that it wouldn’t matter to me if my income doubled, I swear I will strangle a kitten. What wouldn’t matter to me is if my income only ever increased at the rate of real income growth. But that just doesn’t happen for most of us. We shoot up through a bunch of income deciles over our working years. If improving relative position makes us happier, then most of us grow happier over our working lives due to rising incomes. As when we drop income deciles upon exiting the labor market, we coast on our accumulated wealth. That’s the story. Money matters.

Most of the literature on positional preferences emphasizes the downside. But what if the upside is bigger?

Becker and Murphy in Social Economics argue that without a taste for status, there would be too little entreprenuerial activity, because the expected monetary payoff of an entrepeneurial gamble would often be too small. However, if you add the expected status payoff to the monetary payoff, entrepreneuial gambles become rational. We would all be poorer if we didn’t have a taste for status.

Today, Tyler points to a number of papers by Rick Harbaugh. His “Falling Behind the Joneses: Relative Consumption and the Growth-Savings Paradox” is a beautiful example of the possible upside of positional preferences. Here is the introduction:

Consumers in rapidly growing economies should borrow against future earnings to smooth consumption, or at least should save at a lower rate than consumers in countries with stagnant or falling incomes. Instead, multi-country studies show a strong positive correlation between income growth and savings rates (Bosworth, 1993). Such a correlation could result from high savings rates inducing high growth rates (Lucas, 1998), but the pattern in most rapid-growth economies has been for rapid income growth to precede sharp increases in household savings rates. Of the possible explanations for this growth-savings paradox, the Duesenberry (1949) relative consumption model, which assumes utility comes from individual consumption relative to societal per capita consumption, seems an unlikely candidate. Rising incomes would appear to induce excessive consumption as consumers attempt to “keep up with the Joneses”. This notion is examined with a simple two-period model. Rather than increasing consumption, concern for relative consumption can induce a fear of falling behind which raises precautionary savings. As societal income growth increases this fear intensifies, allowing for a positive effect of growth on savings rates and potentially explaining the growth-savings paradox.

Benjamin Friedman argues that growth is a public good and, as is the nature of public goods, individuals will underinvest in it unless the government does something about, in this case by mandating or rewarding savings relative to consumption. Could it be that our fear of falling behind just is the “tax” that motivates investment in growth?

This article from the Christian Science Monitor explores new census data that shows that the poor in America own computers, dishwashers, and other appliances of convenience and amusement at historic rates. Naturally, the happiness question arises, and shows how journalists have been effectively propagandized into repeating a misleading, ideological happpiness talking point whenever good economic news arrives…

. . . by almost all measures, the data show rising well-being for all of society. And while the wealth gap may not be narrowing, the rich-poor gap in lifestyles has narrowed substantially since 1992 when measured in many of these tangible items.

“In terms of the items people have … it amazes me the number of people who are at or near the poverty line that have color TVs, cable, washer, dryer, microwave,” says Michael Cosgrove, an economist at the University of Dallas in Irving, Texas. That’s not to ignore the hardships of poverty, he adds, “but the conveniences they have are in fact pretty good.”

Poor, but more comfortable
The study doesn’t explore the happiness factor — whether the growing material prosperity is actually making people feel more satisfied with their lives. While economists tend to focus on things that can be measured in dollars and cents, the spiritual side of the economy has begun to garner more attention. That’s partly because some research has found that once people gain a modest sufficiency in goods, further increases in income don’t result in rising happiness.

This happiness talking point is extremely misleading. First, “don’t result in rising happiness” obscures the fact that a large majority of poor Americans already report themselves as being pretty or very happy. I think many readers would interpet this as “doesn’t do anything to pull people up from misery or unhappiness.” It would be less misleading to say “further increases in income don’t result in happy people becoming even happier.”

Second, the talking point makes it sound as if there is some general finding that implies that a doubling of my salary would have no effect on my happiness. Which, of course, is total rubbish. We’re talking about wealth within the United States, here. So, while the correlation between average income and average happiness is weak (though positive) over time or between countries–meaning that the average happiness at any given point in the distribution over the critical absolute threshold is likely to hold pretty steady over generations or between societies–the correlation within a given country at a given time is strong, and that’s the relevant measure. Since everyone lives in a particular country at a particular time, what the research has found is that if your income increases, you are likely to get an increase in self-reported happiness. At any time and place, wealthier individuals will tend to be happier than less wealthy individuals.

Now, a rise in income sufficient only to maintain your position in the distribution will be unlikely make you much happier than you already are (unless your aspirations were low). However, through their prime working years, individual’s incomes generally rise much faster than the economy grows (my income, to take a very typical example, has increased well more than 200% since I first entered the labor market). And so you can expect your rising income to have a very positive effect on your happiness through your working years, and throughout your life, if you have invested well. And this is just what the life-cycle happiness breakdown shows. It’s our growing wealth that keeps our total satisfaction with life more or less steady as our satisfaction with health and family starts to declines in our our middle age.

Journalists need to understand that the “more money won’t make you happier” talking point is, in fact, a piece of propaganda designed to weaken public support for wealth-enhancing policies. Once the data is framed correctly, there is really no reason to use the talking points. It does nothing to “balance” the story. Even if it is true that the microwaves and dishwashers of those beneath the poverty line aren’t making them happier than they already were, they are freeing up time that would otherwise be spent on cooking and doing dishes. And that’s just good.

Louis Rayo and Gary S. Becker, “Evolutionary Efficiency and Happiness,” Working Paper, University of Chicago.

Abstract. We model happiness as a measurement tool used to rank alternative actions. The quality of the measurement is enhanced by a happiness function that adapts to the available opportunities, a property favored by evolution. The optimal function is based on a time-varying reference point —or performance benchmark— that is updated in a statistically optimal way. Habits and peer comparisons arise as special cases of this process. This also results in a volatile level of happiness that continuously reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.

This looks pretty promising. I’ll comment when I’ve read the paper.

Magisterial is not a word to be thrown around lightly, but I suspect it applies to Benjamin Friedman’s The Moral Consequences of Economic Growth. (I’ve only been through the first 100 pages, but I don’t imagine it’s going to get any less impressive.) Friedman includes an important discussion of the relation between the comparative character of the effect of income on well-being and economic growth. It was, for me, the source of a satisfying “Aha!” moment.

Friedman notes that the effect of income on well-being depends mainly on two different kinds of comparisons. First, we compare our present circumstances to our past circumstances. If we’re better off economically than we used to be, we feel better off. Second, we compare our circumstances to those of other people. If we’re doing better than our imagined peer group, we feel better; if worse, then worse.

Friedman’s insight is that these two forms of comparison in some ways substitute for one another. If almost everyone is continuously doing better than they were before, due to a steady rate of growth, the satisfaction from intra-personal comparison mitigates the tendency to compare ourselves to others. However, if economy stagnates, and most are no better off economically than they used to be, the tendency to compare ourselves to others is heightened. And this, Friedman argues, has deleterious political and social consequences.

Here is what he says:

By continually giving people a sense of living better than they or their families have in the not very distant past, sustained economic growth reduces the intensity of their desire to live better than one another. Economic growth satisfies the form of people’s aspirations for “more” that is possible for everyone to fulfill. . .

When an economy stagnates, however, the importance people attach to living better than others against whom they naturally compare themselves is more intense. The fact they cannot do so, or at least on average cannot, then takes on heightened importance in their eyes. The resulting frustration generates intolerance, ungenerosity, and resistance to greater openness to individual opportunity. . .

Mobility, either economic or social, is inherently threatening because it means the possibility of movement either up, or, more to the point, down, compared to the prevailing norms of the society as a whole. But when the average income for an economy is stagnant, people who allow others to get ahead of them are not only falling behind in relative terms but also losing ground compared to their own past living standard. They lose out from the perspective of both benchmarks. When an economy is growing, however, and per capita income is rising, those who fall behind compared to others can still be moving ahead–and if growth is sufficient, moving ahead solidly–by the standard of their own experience.

If Friedman is right about this, and I suspect he is, then this is an exceedingly important argument. A number of happiness-centric economists argue that because increasing wealth has little positive effect on happiness, due to adaptation and comparison, we shouldn’t worry about implementing policies that would reduce, or even stall, economic growth just as long those policies are increasing happiness. But if slowing or stalling growth itself heightens the negative effects of social comparison, we have a powerful argument against such policies on the very grounds that they are supposed to be justified.

I highly recommend this book.

In the comments at the Fly Bottle, FXKLM offers this topical Dibert strip.

[click picture for bigger image]

In what I believe is the first post to link to this here Happy and Public Policy blog, my Cato colleague Radley Balko gives his take on happiness:

There’s a bias against contentment in our wiring. In hunter-gatherer society — where much of our psychology was developed — contentment meant complacency, which likely meant starvation. Ambition, angst, and worry compelled us to seek more — more status, more food, more mates, more “stuff.” And so those of our ancestors who lacked contentment probably did better at getting those things, and therefore at living longer and reproducing, than those who didn’t. Meaning they passed ambition, angst, worry and other traits at odds with happiness through our ancestry to us.

Which means, I think, that in virtually any setting, we’re (a) fighting against a natural predisposition toward unhappiness, and (b) we’re likely to measure our own success by those who live around us, our peers, and not on what took place before we were born.

I think there’s a lot to be said for this view. Radley worries that self-reports are likely to be fairly useless due to the tendency of happiness to recur to a fairly stable baseline, such that objective improvements in the conditions of one’s life are unlikely to show up in self-assessments. Again, I largely agree. Yet I don’t think that the fact that the wealthiest, most free societies score highest in average self-reported happiness is an accident either. The surveys don’t tell us nothing. There are institutional settings in which the baseline seems to shift up and stay up. That’s worth pointing out.

I also agree with Radley that much of the policy-relevant happiness work seems to be motivated by an anti-market mindset. However, the striking thing about the data, as unreliable as they may be, is they reveals that liberal market societies are good for whatever it is “happiness” surveys are actually tracking. I think it’s important to understand what this data does and doesn’t tell us about human well-being. And It tells us less than a lot of people think, partly for reasons Radley suggests. The truth about someone’s well-being often cannot be revealed simply by asking them. And it’s important to think carefully and systematically about how political institutions and public policy effect human well-being, and to do a better job of understanding the causal mechanisms by which they do so, instead of just piling up mounatains of semi-useful correlations. Therefore, we blog!

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.