Happiness economics (Wikipedia article) is all the rage at the moment. I have read Happiness: Lessons from a New Science by Layard and it piqued my interest with a few things he said:
Happiness DOES exist. If you look at the brain activity of people who look at ‘happy’ pictures, regions of their brains light up.
You can measure happiness by asking people how happy they are.
Using this measure, Americans and British people are no more happy than they were 50 years ago.
Using this measure, we can rank activities from most to least happiness-giving: 1. Sex, 2. Socialising, 3. Relaxing […] 12. Housework, 13. Work, 14. Commuting
Richer countries are happier than poorer ones. But to an extent:
The solutions Layard gives are higher taxation to steer us away from unhappy activities (namely work). The aim of government should be to persue policies that will maximise happiness. There are other branches of happiness econ. that may believe otherwise.
I think happiness economics is just neo-utilitarianism / neo-Keynesianism in another form. Does anyone agree? Disagree? Thoughts and refutations please.
Does he explain how you can accurately measure peoples happiness? Seems like it would be very subjective to me, for example someone in a 3rd world country might say they are “very happy” because they have a shack to live in and a cow and two chickens, while a “poor” person in America, who has a modern American house with all its conveniences (like electricity and running water), color TV, cell phone, etc. may claim not to be happy because they don’t have a Nintendo Wii or a car.
I think #3 is related to this as well, maybe the American and British happiness level has remained constant because the bar is continuously being raised for what people expect to be happy. What my grandparents needed to be “happy” when they were my age is quit a bit different than what I expect.
This is ridiculous. It’s just another way for economists to pretend that they are real scientists with a bunch of mathematical garbage to show off.
So the government should steer people away from work? Yeah, that’s really great for productivity and economic growth. How about those people that derive happiness and pleasure from being productive? I believe many more people like that exist than this author theorizes. Economic growth is product of people and firms maximizing productivity. Where does this person believe that taxes come from anyway? The government steals from those who work to fund socialist policies, unless the government decides to just print more paper.
The data he uses is compiled from answers to questions like: “taking all things together, how happy are you with your life as a whole?”. Happiness is also relative to who you compare yourself to. For example, after the Berlin Wall fell, the East Germans’ happiness levels fell because they began comparing themselves to the more affluent West Germans.
True. Layard dislikes the "keeping up with the Jones’ mentality and suggests curbing the rat race. It’s like when one person in a stadium stands up because he can’t see the game. Soon everybody follows suit and nobody can see the game and we are all standing.
That’s the thing. Apparently we are not happy at work, so we should be working less. When I read it I thought “wouldn’t lowering tax mean we would choose to work LESS?”. He believes redistribution will increase national/overall happiness.
Also, from what I see from the graph, happiness isn’t correlated with economic growth. [^o)]
It’s pseudo-scientific garbage. It is attempting to treat happiness as objectively measurable. Its basis? Asking people. Fine, and how exactly does one quantify their response, by what standard does one measure it, how does one compare it with the happiness of others and how does it weigh the outcomes in terms of happiness of various actions? If people value “happiness” over work more, they will elect to work less for lower salaries. The idea that the government must force their salaries down to make them “happier” is more paternalistic hogwash. What is it that makes people miserable? Usually, less money with which to acquire goods they desire. Does Layard also believe individuals should be forced to attain a certain kind of happiness, e.g. one that involves not smoking or binge drinking? He seems paternalistic enough to.
Oh, and as for the nonsense that the rich value each dollar less, that is untrue and is an abuse of marginal utility theory. The truth of the matter is they value each dollar for consumptive purposes less. What about investment/saving though? Marginal utility theory only states that as a matter of logical necessity an individual will tend to their most urgent needs/wants first, not that these will necessarily be their most highly valued needs/wants. So, it is a non sequitur to say that DMU implies the rich value their holdings less than the poor. In fact, based on such a faulty view, one can seriously damage prosperity by implementing policies that takes wealth from those who value it more highly for investment purposes and put it in the hands of those who will merely consume it.
You know what the logical conclusion of “happiness economics” is? Everybody should be forced to have sex. Lots and lots and lots of sex. Plus lots and lots of sex toys and pornography. And I’m not talking about one kind of sex. I’m talking about all the different positions, with different genders, and with varying amounts of people.
After all, according to “happiness economics” the number one pleasure is sex…
I think that the most important point to be taken away from the study of happiness economics is that there is no clear policy conclusion supported by its findings. Accordingly, it may still be most reasonable to search for voluntary, decentralized ways to organize society in the ways that seem appropriate to us. The centralized model still requires that it be reasonable or desirable for us to all get together and impose a solution on everyone, and happiness research does not change the fact that there are serious problems with that model. But I think it would be unwise to completely ignore the value of happiness research in economics (thanks Frey and Stutzer); in determining what kinds of societies we want to live in, it seems extremely important that we take into consideration the value of being happy. It’s just that there’s no one way to do this; decentralized ordering remains a completely viable alternative, and given what we know about central planning, perhaps it remains the most desirable way to do things.
I’m confused. He makes a chart directly relating GNP to happiness and then suggests a solution that would drastically hurt GNP, and thereby lower happiness?
He believes that any additional GDP/head will not increase happiness any further in “deveoped nation”. The red line in the graph flatens out as GDP increases.
There is a small pattern… Prosperity seems to always push happiness up, but yeah it doesn’t seem to be possible to really correlate the two, so the red line is meaningless. I think the reason why you can be sure people will be more happy in rich countries is because things like child mortality, chronic diseases, etc are greatly reduced. Possibly, the religiousity of the people can affect how well they cope with events such as their baby dying, explaining the differences in happiness between dirt poor countries. (Or maybe these people get lots of sex. :/)
Another explanation is the all thing is just pseudo-science. I mean, how can they say that Americans and English people are just as happy now as when they were out of WW2. What happiness data do they have from then?
If it were that simple then we could distribute everything so that everyone had equal amounts of each good - thus “maximizing” happiness across the economy. But it’s not that simple is it. What would I do with a baby seat? I don’t even have any babies… clearly baby seats need to be distributed according to people’s needs. So this is a problem of social calculation and, as Mises demonstrated way back in the 1920s, that is a problem that we only know how to solve - at present - using a market based pricing system.
One of the consequences of a market pricing system that DOES ensure people who need baby seats most get them first is that some people will have more money than others. However some people will actually need more money than others… money is not happiness. Money is a fungible commodity that can be readily traded for various economic goods and services that can potentially be directed to satisfy human needs. But some people value solitude, for example, more than play stations and all the various other things you can buy with a fungible good like money. The theologically inclined among us sometimes value meditation and reflection more than they value, for example, BMWs (much less baby seats). Other people, with 18 children, could probably put a bit of extra cash to good use (buying things like people movers and baby seats) so it wouldn’t seem unreasonable to suggest that people with large families might need more money than priests.
At the end of the day though, Happiness Economics basically boils down to a logical falacy. If people would be happier not working than they are presently working, well they wouldn’t go to work would they? We don’t need the government to force us to do things that we want to do in the first place. Sure, there is a cost associated with going to work - it’s time that could be spent having sex - so there’s an opportunity cost associated with working, to be sure. However there are clearly benefits as well. People go to work because they value the benefits more greatly than they value the costs… which in the simple example I just cited means that the whoever is going to work, and thus foregoing the possibility of having sex all day, values another “unit of money and satisfaction in a job well done” (or whatever the benefits of going to work are for them) more highly than they value another “unit of sex”.
Using a similar argument, the benefits of going to work outweigh the costs for everyone that works… which means they’d rather be working than doing anything else - all things being equal (once you’ve taken all the benefits and all of the costs into account). If this was not the case, they’d simply stop working - and we hardly need the government to step in and force us to do something as simple as that.
This is a fallacy, because: 1. people will not always tell you whether they are happy or not truthfully (why say that you are unhappy if you want to be humiliated), 2. happiness is subjective, try measuring all consumer prefrence (yet people will spend on what they want, and companies respond to that well)
For #3:
PROVE IT! Otherwise, this falls to the same fallacy above.
For #4:
This is a fallacy, because of the reasons above (in regard to specific things)
For #5:
See #2 for why I don’t believe in this.
As for the solution, do not use higher taxation to steer people away from unhappy activities. Rather, let people choose how they want to be happy themselves, with their freedom.