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September 2014 posts

There Is Little Happiness to Be Found in Happiness-Based Policy

Mark D. White

IllusionGovernments around the world are starting to measure happiness (or subjective well-being) with the goal of a more humane process of policymaking. According to supporters, happiness-based policy will focus governments’ attention on what really matters to their citizens, their essential well-being, better than economic measures such as gross domestic product or national income that are too far removed from the day-to-day concerns of the people.

While the intentions may be good, the benefits of happiness-based policy are illusory at best and counterproductive at worst. There are fundamental problems with defining and measuring happiness, as well as implementing policy based on it, that prevent it from being a viable alternative to traditional policymaking based on GDP and other economic statistics.

First, the term “happiness” is notoriously difficult to define. Philosophers have tried to do this for centuries, identifying and detailing many types of happiness but arriving at no universal definition. Songwriters, poets, and novelists have done a better job describing happiness in all of its nuance and glory, but this does not provide a solid basis for measurement. For the most part, psychologists and economists who try to measure happiness do not worry about definitions, satisfied that “everyone knows what is,” but with no guarantee that everyone knows it to the be the same thing. Happiness is simply too vague a concept to define precisely enough for measurement without excluding what many people consider happiness to be to them.

Second, there is no straightforward way to translate an essentially qualitative and subjective feeling such as happiness into quantitative data. Most happiness surveys consist of questions about the respondents’ current state of happiness or satisfaction with their lives, which they answer on a numerical scale with the units labeled “very unhappy” to “very happy” or “the least satisfied I can imagine” to “the most satisfied I can imagine.” Even if the definition of happiness were clear, these labels are not. For instance, how a person interprets these labels depends critically on the experiences and circumstances of his or her life. A wealthy and successful CEO may feel she has not lived up to her potential, while the janitor in her building may be very pleased with his lot in life. Human beings have the ability to adapt to their life circumstances, which explains why people living in deplorable conditions may nonetheless report high levels of happiness and well-being. This also implies that the steps on the happiness scale are inherently subjective, nonuniform, and incomparable, rendering them unable to support the mathematical processes researchers need to perform on them to provide information for policymakers.

Finally, even if there were no problems with definition or measurement, happiness-based policymaking raises numerous ethical and political issues when it comes to implementation. For example, would the government target a growth rate for happiness? This is problematic in light of the “hedonic treadmill,” by which we work hard to achieve more happiness, only to adapt to that level and strive for more. In the end, we work more and more and end up with little increase in happiness, and the same would likely hold for official happiness “stimulus.” Another concern is the possibility of significant inequality of happiness: due to adaptation, the underprivileged may report levels of happiness that mask their circumstances while the affluent express dissatisfaction and boredom. Would we then redistribute resources from the poor who seem happy to the rich who don’t? Finally, people often give up some happiness now in exchange for more later, such as when they go to school or on a diet. How would government measures focused on the now take account of investments in the future? All of these are questions that policymakers will be forced to struggle with if they choose to base policy on measures of happiness.

Given the inherently vague, qualitative, and subjective nature of happiness, it is impossible to define and measure it well enough for the purpose of policymaking. This is not a simple matter of refining statistical techniques; the problems with happiness measurement are more fundamental than that.

There is, however, a better way. Instead of trying to determine what happiness is and how to measure it, the government can trust individuals to make choices in pursuit of their own interests. Instead of trying to boost the happiness of those doing fairly well, the government can devote its resources to alleviating the suffering of the poor. Instead of targeting the general level of happiness based on arbitrary definitions and inaccurate measurement, the government can address specific problems that their citizens tell them need to be addressed.

In short, the government does not need to define, measure, and evaluate happiness in order to find problems to address. There are enough problems facing the country that are readily apparent. Liberals, conservatives, and libertarians may disagree about the scale and scope of what government should do, but I think they would all agree that the government should deal with the problems at hand rather than invent new ways to find them. In the end, that may be the best way to make people happy.

For more, see my latest book, The Illusion of Well-Being: Economic Policymaking Based on Respect and Responsiveness (pictured above), as well as a longer two-part treatment of the above at the LSE Politics and Policy blog (here and here).

"Spain without the Sunshine"

By Jonathan B. Wight

Paul Krugman takes aim at the Scottish independence movement in today’s column

We can all think of the advantages to merging with a bigger economy, as long as there are cultural similarities, as happened in West and East Germany, and North and South Yemen, and may someday happen in North and South Korea. 

But the pressure to decentralize seems to be a large human instinct. Think of all the “break-away” countries during the last few decades: South Sudan, Namibia, Slovakia, Eritrea, East Timor, Serbia, and the big daddy of them all, the break-up of the Soviet Union. An ethnic minority just does not want the majority tribe telling them what to do.

When the American colonies broke away from England, there were strong economic arguments for independence based on trade and fiscal policy.  Adam Smith, who saw the handwriting on the wall, badly wanted to stay united with America and move the joint capital to Philadelphia: faster growth would come from the New World he believed. 

During the decade leading up to the break, America’s cultural ties with England were still very strong, and many patriots protesting against British tax policies still swore allegiance to the King. Scottish independence

Krugman’s analysis of Scotland has nothing to do with culture or the Queen and everything to do with currency values. Since Scotland claims it would maintain the British pound as a currency, Krugman rightly points out that this is a recipe for disaster. Scotland would have no monetary policy, like many of the currently struggling European countries on the euro, and hence would have very little wiggle room for its fiscal policy.  The conclusion:

You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.

There are other reasons to stay united: Does Scotland really want to send ambassadors and set up embassies in 190 countries around the world?  Think of the huge expense in that.  Then there's  military defense, which again involves huge scale economies.

Is there an analogy here to divorce?  A couple sharing housing and cooking together achieves many savings, and hopefully also marital bliss.  When times get rough, as surely they will at times in any partnership, do you simply break it all up?  Of course, if a spouse if inflicting mental or physical pain, the answer is obvious. But surely poverty will often follow a divorce, which is why the divorce rate rises during economic booms and falls during economic slumps.  Given that the European economy is a still slumping, it would be surprising if the Scots vote to secede at this time.

We are all on the edge of our seats to see what happens September 18.