Journal of the mental environment
“Towards what kind of future are we being led by savage, fanatical capitalism?”
In the last few years, a growing number of economists have been discovering happiness. It’s not that they are spending more time admiring flowers, helping old folks cross the road, dancing on the street or baking pies for neighbors. In fact, these happiness economists are working long hours in soul-numbing ways, torturing data with their latest econometric techniques to force deeply buried facts to the surface.
What is different is that these economists are revisiting old assumptions and asking new questions. They’re not taking the neoclassical model of rational economic man for truth. They have been willing to learn from their colleagues in psychology. They have given up on the old assumption that the more you consume, the better off you are; instead, they are actually looking at the question empirically. Most importantly, they are bravely asking, “What factors make people happy?” It’s another sign of the coming revolution in economics.
Not everyone is welcoming this new research program. The results are terrifying Milton Friedman’s disciples. Consider this: once people have an annual income of about $10,000 per capita, further income does little to promote happiness. Worse yet, economic growth in most industrial nations, which has tripled or quadrupled our wealth since 1970, hasn’t made us noticeably happier. In some countries, despite all this vast increase in wealth and consumption, folks are less happy than they were a generation ago.
I talked to Rafael Di Tella, an Argentinean economist at the Harvard Business School who is deeply involved in happiness research. Speaking from Buenos Aires, he explained, “Some of the very basic things we assumed in economics are not consistent with the evidence. This idea that income is so important to happiness is not correct. All the evidence seems to be pointing in the direction that we are working too much. In fact, we’re happy if we work less. We are spending too much time on work and too little time with friends and family. So there’s a mistake in the economic models that suggest happiness will come from more income.”
How worried are those who believe society is but the sum of all the (selfish) individuals (with insatiable appetites) who square off in the market against powerful corporations freed of government control? Very worried. The Cato institute, a think tank based in Washington, DC, issued a 41-page brief attacking happiness research and its potential to undermine the “libertarian ideals” embodied in the US socioeconomic system. It countered with a creative interpretation of the data: “The happiness-based evidence points unambiguously to the conclusion that those of us lucky enough to live in the United States in 2007 are succeeding fairly well in the pursuit of happiness.” Perhaps Cato also interprets the stats showing the millions of Americans on anti-depressants, the number of kids who show up at school without having had a decent breakfast, or the proportion of African-American men spending their days in prison as other signs their ideals are succeeding. Unfortunately for advocates of laissez-faire, the happiness evidence keeps knocking over more and more of the most cherished economic beliefs.
Lord Richard Layard is a distinguished British economist, Member of the House of Lords and a committed advocate for reorienting public policy towards the promotion of happiness. After reading his recent book on the economics of happiness, I could not resist calling him up to learn first hand what his research would imply for Chicago-school economics.
“Economists often fail to think of the social externalities of the policies they promote,” he noted, “Many economists suggest workers should be ready to move to where the high paying work is, since this would increase income. Workers who move a lot would destabilize the community and family life. This would tend to decrease trust and increase mental illness.
“Another example is when one person works harder to improve their income, and feels extra well-being from greater consumption. At the same time, they make their neighbors feel worse off, because the neighbors’ relative income has worsened. Not only that, but the pollution caused by the extra consumption enabled by higher income also decreases happiness for the rest of society. So most economists worry about how taxes discourage people from working, but in fact, taxes can be encouraging people to have a less feverish pace of life and to focus more on time with friends and family rather than consumption.”
It seems almost unimaginable that economists would be now thinking of ways to design the tax system so that we work less, consume less and value each other and the planet more. But Layard would not stop there. (Advertising executives be forewarned.)
“One of the keys to achieving happiness is to live appreciating what one has, rather than wanting more. It is important that we not be totally focused on wanting something that we don’t have – that makes for unhappy people. So it’s not at all healthy for children to be bombarded with stories on the box that make them feel that they have to have this particular brand of clothing or this particular toy or train or whatever it is, as if they can’t be a decent human being without it.” Layard even pointed to the value of Sweden’s law prohibiting advertising to children.
The folks at Cato and their brethren at the Vancouver-based Fraser Institute are most alarmed by how economists are now training the happiness lens to examine the gap between rich and poor. As Layard explained, “It’s a very simple fact that an extra dollar is worth more in terms of happiness to a poor person than to a rich person. We now have evidence that shows the extent of the difference, which is roughly that a dollar is worth 10 times more to a poor person than to a rich person whose income is 10 times higher. The value of an extra dollar to somebody is roughly inversely proportional to their income, such that a little more or a little less money makes so much more difference in happiness to a poor person than it does to a rich person.”
For a 21st-century economist, what an outlandish idea! By spreading the wealth around a little more equitably, society’s total happiness can go up. After all, a CEO who takes home $50 million a year could have 90 percent of it taxed away without their total number of smiles dropping by more than a couple dozen, while that same money would be enough to improve the lives of the entire population of a small city in Africa.
No wonder the folks at Cato and other neocon “think” tanks are fearful. Might we actually deal with the legions of homeless in rich countries more generously then dropping the odd coin in the soiled paper cups they hold up to us? Might we find a way to transfer some of the wealth that has flowed for so many decades from South to North in the opposite direction? Imagine a world where everyone lived on at least $4 a day, while a few people lived slightly less extravagantly. Might we increase the total happiness on this planet?
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Comments
i just love the math. "a dollar is worth 10 times more to a poor person and a person who makes 10 times more money values the dollar 10 times less" this is untrue.
a dollar is worth the amount of EFORT AND TIME given to earn that dollar. Then that arbitrary value is pitted against the local cost of living (ie. food, shelter, gas etc.) so the 10 times is way over simplified. furthermore if someone makes $300,000 a year but his cost of living is $290,000 his dollar is essentially worthless to him whereas a poor person who only makes $10 000 a year but has a cost of living at $2000 he has more proportionate cash left over and so his dollar is worth hundreds of times more.
and lastly if your a amazon you don't have any money what so ever! so the cost of living is not represented in money but in the exact things that are necessary for life. like fishes and pelts and wood for fire. so there "dollar" or base unit of value is EXPONENTIALLY more valuable than our dollar because it would cost us say $16.00 for a steak but they have to kill it. so one kill vs 16 bucks means its 16 times more valuable.
(Sorry for the poor sentence structure... I majored in engineering not English)
This is a revolutionary way of thinking about economics because it represents a paradigm shift--- it changes the basic tenets of the field and would create an enormous overhaul of the system. I remember asking my [princeton] professor why we were told to believe fundamentals in economics like 1. more is always better 2. people are self-serving and gain maximum utility from their own work-leisure tradeoff. I tried asking him "what about people who place more value in their community than in consuming" or "what about those who derive utility from paying more, but emitting fewer carbon emissions" OR the big one-- DO we REALLY want all countries to develop into what the US has become-- a monstrous, overconsuming machine-- when it could mean two dire things: more of the world being more unhappy i.e. mental illness and completely killing the planet.
the truth is, in the current economic paradigm there is no room for questions like these. a brilliant economic professor cannot answer them because we are coming from different fundamental assumptions. we can't even begin exploring the implications of happiness, mental health or global environmental health because neo-classical economics is a discipline so resistant to change that they won't even entertain these basic questions.
research like this, along with enormous political and academic willpower (or greater catastrophes of climate than the world has ever seen) is what it will take for an economic paradign shift.
Happiness is not what you have as much as what you give.
Maybe that's why, I hate Christmas the holiday, as a vehicle of consumerism, all that shopping and worrying about gift buying, but I love it as a time to spend with my relatives and reflect on my religious beliefs...
I'd really like to see how all of these facts and numbers for the population's happiness were found. I could imagine they would be based on the cases of mental illness and depression, but is there more to it?
I also wonder why we don't all have access to all the interesting statistics of the world. They're not easy to find.
Human happiness? First food, than sex and art.
And so the conversation degrades to include only the rich and poor men of the world. How ridiculous and boring.
I'm a 30 years old single white male, living in San Francisco, earning my life by making functional art(say design). I have found the way to avoid unhappiness with the following lines.
Have We not expanded for you your breast,
And taken off from you your burden,
Which pressed heavily upon your back,
And exalted for you your esteem?
So, verily, with every difficulty, there is relief
Verily, with every difficulty there is relief.
Therefore, when you are free (from the immediate task), still labor hard,
And strive to please thy Lord.
"Man doesn’t strive for happiness, only the English do that".
Nietzsche
Too true.
Though poverty is itself destructive to man, to society and the soul, the excess of abundance can be just as challenging. A friend of my mother's worked at a high school teaching "At Risk" kids. For every poor kid with meth head parents who burnt him with an iron, there was a 'rich' kid who's behavior was just as if not more extreme. The suffocation of the latest game systems, cars at 14 and another at 16, but no parents there just a pressure to "Study for your future" made these kids lash out just as much as starvation and neglect.
What man needs, beyond basic comfort, is purpose in life. But to create that we need a stable, sustainable society. The rich elite, themselves soulless and vacant and only caring about the next three months profit, want a society of eternally fearful, frustrated people to make good workers to make them more money since they can never have enough. The elites don't care what they do to society, their fellow man, the earth, for that is secondary thought compared to having the next three month's profits.
What many seem to have conveniently forgotten is that communism in practice was no different than the cartel capitalism that dominates Western economic activity. The Western cartel system reaches from oil (International Oil Corporations and OPEC) to metals (the Alcoa-led aluminum cartel, for example) to telecommunications (Verizon, ATT) and finance (Goldman Sachs, JP Morgan, etc.) - and of course, the weapons manufacturers. There are many small independents, but they struggle mightily and don't enjoy the "special access to government (contracts)" that the cartels do.
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The surprising fact is that the Soviet military-industrial complex was very similar to the Eisenhower military-industrial complex, and the Soviet Union's empire was run much the way that America's South and Central American Empire was run. Take the Aral Sea in Kazakhstan, probably the world's largest environmental disaster behind global warming - Moscow-based Soviet planners thought that by diverting rivers that fed the Aral Sea, they could turn the region into a massive agricultural export zone - the Kazakh plantation. As a result, the sea dried up, destroying local livelihoods. Similarly, industrial export zones were set up by the Soviets in Romania and Bulgaria, resulting in some of the worst industrial pollution seen anywhere - entire landscapes blanketed with soot (much like China).
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The main beneficiaries of all this were the Moscow elites who ran the Soviet empire, who in practice behaved much like the CEOs, board members, politicians and bankers who control the direction the U.S. economic system takes.
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Empires are empires - the basic rule is that a lot of people get to suffer quite a bit so that a small number of people can enjoy great wealth - not necessarily happiness, as many wealthy people are quite unhappy and distrustful, even paranoid about their wealth (and the intentions of their "friends"), and great wealth still cannot cure the likes of cancer or AIDS or bad luck.
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This issue goes back to prehistoric times - the tale of King Midas and his golden touch still hits home today. The difference now is that we've got nuclear weapons and the ability to more-or-less permanently alter the planet's biosphere and climate. As many people have said before, the problem is that our technological evolution has surpassed our social and moral evolution... and modern consumer-advertising culture deliberately acts to suppress that social and moral advancement. Why, do you ask?
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Well, educated and self-aware people are hard to lead around by the nose, they ask inconvenient questions, they aren't easy marks, and they just in general demonstrate too much free will for any imperial overseer to tolerate.
I'm sorry, but this article and the research described therein is all based on the assumption that the purpose we're here on earth is to be happy.
What if one disagrees with that premise?
A lot of the greatest successes in the world and the hugest leaps in human ability and technology were borne from unhappiness. The more content we are, the less we accomplish.
Regardless, this is just another poorly veiled attack piece aimed at discrediting those who are financially successful and those who choose to work hard - as if that is the morally wrong thing to do. The bias is evident, and no attempt to balance out viewpoints is made. In essence, this is a propaganda piece - similar to (as an above poster mentioned) communism in its ethos. Nice. Another version of self-gladhanding and mind control. But because it's from the other side, the left, I guess that makes everything OK.
I'm sorry to say, but manipulation and control are the same regardless of what one's viewpoint is.
Regarding the communism-loving poster above: it's evident that those who embrace communim as a "good thing" have never in thier lives lived in a communist society: as I do.
Cheers to a closed open mind.
I'd be curious as to which communist society you've lived in.
And, I like that you are questioning this article's premise: the assumption that the purpose we're here on earth is to be happy.
Feelings come and go. And, happy is only one feeling. I've come to like all of my feelings. I think that feeling feelings is beneficial. Rather than be happy, instead I feel happy. Sometimes.
Is the article and the research based on the assumption that the purpose we're here on Earth is to be happy or is it based on the assumption that something is horribly wrong with our current economic system and that we have to start looking at alternatives? ( Although, we shouldn't have to even start looking at alternatives, because people should already be adapting, but it seems that they are not because of some idiotic fear that any change in economic behaviour is somehow scary Communism. )
But lets assume that you've identified the core premise successfully, that "our purpose is to be happy", You assert that happiness has a negative economic impact? Was not the Capitalist United States of America built on the "pursuit of happiness" and was not Communist Stalinist Russia built on the very premise you now defend of "the more content we are, the less we accomplish"?
What made me laugh most about your comment was the very next line when you said "discrediting those who are financially successful". Your own statements discredit those who are financially successful because you are certainly arguing in favour of keeping people financially insecure so they continue to work hard to improve their lot. Then your line of though contradicts itself again when you say that people actually "choose to work hard". They choose to work hard now? I thought you were saying before that people work hard because they are unhappy?
Make up your mind. I want to live in an economy where I'm not forced by a ruling elite, whether thats political or economic, to work hard because they keep me perpetually unhappy. Money does not bring happiness but it does a great deal to relieve unhappiness (not being unhappy doesn't necessarily make you happy, they are two seperate feelings). Once we have solved unhappiness we can have the time to so the things that make us happy: enjoying our loved ones, our bodies and our minds.
Your mind is recordable media.
Why don't you guys come out here and publish the most poor countries all over the world have low economic freedom and refused free-market policies in their recent pasts, bringing forth poverty?
The deeper underlying problem is that all of modern economic theory is deeply flawed - their econometric models are based on false assumptions and fail to include basic physical facts, such as the conservation of energy, thermodynamics, and the like.
What is needed is a new ecology-based theory of economics. After all, every year the grass grows - but it also stops growing every year, and some individuals pass away, and some come into being. A forest can be growing continually, but stay the same size - because new trees grow as old trees fall down. This is the definition of healthy growth in ecological terms.
Ecology also shows why growth rates matter. A redwood tree grows steadily but slowly and lives a thousand years, while a corn plant springs up, reproduces and dies in a single year. Businesses and corporations should also have such natural life cycles - immortal corporations are not a good idea.
Unlike economists, ecologists are trained in the basic physical sciences and therefore understand the limits of ecological productivity. Economists, on the other hand, largely live in a make-believe land of infinite resources and robotic wealth-seeking humans. Those are the basic assumptions of "econometric models" which are used to produce things like electricity demand forecasts for World Bank/IMF loan programs. They were also used to "prove" that NAFTA would benefit U.S. and Mexican labor back in the 1990s - nothing but fluff.
We also need to remember the physical aspects. The past 100 years has been a time of resource abundance - a 100-year flood of cheap oil that fueled the most rapid industrial development in human history. At the same time, medical advances defeated age-old diseases and led to longer lifespans and a rapidly growing global population that used even more natural resources and land.
All modern economic theories are based on this era of abundant cheap oil and limitless agricultural production - they never considered the opposite situation. They cheered "consumer confidence" because it meant that more of the oil was being bought, more money was circulating, more agricultural land was active, and more wealth was accumulating. This mentality has brought us to the edge of disaster for human civilization.
The physical world cannot sustain modern consumer culture for much longer - we are entering a new era of scarcity, as opposed to the past 100 years of surplus. This is going to turn global economics upside down, along with the impact of the steadily warming climate.
Consumer culture isn't very good for social or mental well-being either. An economic system based on ever-increasing consumption is a dead end, no matter which way you look at it - and ditching the traditional economic indicators (GDP, Dow, etc.) as indicators of progress is a necessary first step in reforming it.
Very well said--one of the best comments I've read on any blog in a very long time.
Current day economics is so flawed. Those making most of the political and economic decisions today have no understanding these concepts.
The flawed assumption isn't that the reason people are put on earth is to be happy, which is a not even a question by a metaphysical hyperbole. Neither is the flaw of economics that it does not account for finite reasources as the scarcity of reasources is one of the many things that stimulate economic growth and higher efficiency standards. If the world ran out of fossil fuels on tuesday, by wednesday there would be a whole new fuel for the earths population to propel themselves about with -- and retain a similar paradigm for day to day life as they formerly had. That isn't because humanity is inevitable but because that is how we make sense of reality as sentient beasts.
The presumption in these criticisms is that the world is hurling towards disaster, which is quite simply hyperbole.
That being said -- the flawed assumption of this article is that "happiness" can be a policy direction. That's just asinine. Is there only one happiness? Whose happiness should it be? Mine? What if my happiness is at the expense of another persons happiness? It's just a philosophical nightmare and a logistical non-entity. Moreover positing the idea as though it's grounded on some kind of consumption paradigm is equally silly. If consumption does not make people happy -- then why the concern for the impovershed? If it is to be treated within limitations, who get's to decide on those limits? Such questions would require the government to establish an "ideal rate of consmption", which would invariably reflect the values of the individuals within the government measuring these rates of happiness. Does that sound socially just?
Ultimately I can really think of only a few items on which happiness could be (near) universally accepted and they are far too vague to represent viable policy options. "Fun is good" and "people like food". The degrees to which these items apply and methods through which these ideals can be obtained...far less coherent, uniform or plausible to administrate.
smells of communism. which is a good thing after all.
Couldn't agree with you more - and thank you!
In Civilization and Its Discontents, Freud, love him or hate him, describes happiness thusly:
"what we call happiness in the strictest sense comes from the (preferably sudden) satisfaction of needs which have been dammed up to a high degree, and it is from nature only possible as an episodic phenomena." From this definition it is easy to work Consumerism into the equation.
He goes on to discuss the matter of happiness in greater detail and it is all quite relevant. But he also identifies that Unhappiness is much more easy to achieve and identifies three sources of unhappiness: Our own bodies, 'The external world', and our relations to other [people]. Now, I would sincerely argue, with Freud at my side, that it is not happiness we want to achieve but the avoidance of unhappiness. We need a public health care system to address the inevitable decay of our bodies, an economy that can protect us from 'the external world' and for the last one, a government, for lack of a better word, that can keep us from unhappy relations with other [people]. This should also involve economic relations with other people. That there is one person that can have such a great deal more than another is a source of unhappiness, especially when that person has better access to better health, and shelter.
So maybe happiness isn't the greatest goal. Especially if we equate happiness with consumption. Although, this is starting to sound like Positive and Negative Utilitarianism, oh bugger. For the time being I'm in favour of reducing Gross Domestic Unhappiness. I also like that better because I want an economy at Zero productivity.
Your mind is recordable media.
Well said... but shouldn't that "then" in the second sentence of the final paragraph be a "than"???
[Comment removed because it was written in all caps - Eds.]