Theories of Happiness

This interview with economist Betsy Stevenson was linked from the NYTimes Freakonomics blog. It’s very interesting reading, but here’s a nice quotation:

Jon Gruber and Sendhil Mullainathan found that excise taxes make potential smokers happier. The intuition is that because some people actually quit smoking when the price goes up, they are made better off. And so it is possible to improve welfare by raising a tax that encourages us to kick bad habits.

So, it’s quite possible that raising gasoline taxes may actually make people happier too. I have long suspected that server outages make MMORPG players happier.

One item that I found a little surprising was this:

wealthier people are the happiest people in society and happiness rises quite steadily with income … it turns out that GDP and happiness are highly correlated, so despite its theoretical limitations, GDP continues to be a pretty good barometer of social progress. … I should note, however, that there is one exception. The United States has gotten wealthier over the last 40 years and we haven’t gotten any happier on average. (My emphasis.)

Maybe it’s the lack of a social safety net that makes us special.

Most of the stuff I’ve seen on this topic suggests that people have a “happiness set point” to which they basically return pretty much independent of their circumstances. The classic example is lottery winners who, according to research I’ve read, are generally no happier a year after winning the lottery than before. But then that’s a much easier thing to measure than the gradual, long-term effects of slowly improving one’s income through hard work.

There have been enormous strides in civil rights for African Americans in the United States since the 1970s, and we’ve seen African Americans in the United States are getting much happier. …

… women had higher reported happiness than men in the 1970s, that’s no longer true … Moreover, in 12 out of the 13 countries that we looked at, we find that the growth in happiness has been smaller for women than for men. … There has been an increase in the amount of housework men have been doing over the last 40 years, and a decrease in the amount of housework that women have been doing. …

It also could be women’s changed expectations. … women expect a lot today and their expectations have moved faster than society has been able to deliver, and so we have a bigger gap between expectations and what society is actually delivering. … women might be expecting themselves to succeed in many different domains, and it is simply harder to have a truly blissful life in many, many domains. … To be really happy, I need to be thriving in all those dimensions, and that’s just harder to achieve.

Low expectations is the key!

Post Script

I’ve been thinking a bit about happiness being strongly correlated to wealth and then I discussed it with my wife. Psychologists who try to measure mental states with questionnaires have pretty clever methods for determining the usefulness of their measures. E.g. are the results repeatable?

It seems to me that the problem with Dr. Stevenson’s measure of happiness (she discusses her methodology in the interview) is that the question she asks (it involves thinking of your life as being a rung on a ladder from lousy to fabulous) is that it seems to presuppose the kind of outcome she is finding. If I’m the wealthiest guy on the planet and I don’t think of myself as being on the top rung then aren’t I essentially turning my entire world-view upside down? The problem with mental states is that you need to sneak up on them. You don’t find out if a person is racist by asking them “are you racist”? So, unfortunately, I think that this wealth ~ happiness outcome is an artifact of the methodology.