Happiness and Wellbeing- Becker

Research on happiness entered the economics literature about 40 years ago, and the number of articles and books on this subject by economists has exploded during the past 15 years. Various surveys in countries all over the world have asked individuals to indicate how “happy” they are, where they are usually given 4-10 possibilities, ranging from very unhappy to very happy. Then these answers are related in various ways to income level, age, gender, degree of health, and many other characteristics. I will concentrate on the results by income.

The earliest studies had data only for a few mainly developed countries. They found that richer individuals within a country were generally happier than poorer individuals, but that average degree of happiness was not greater in richer countries than in poorer ones. This led to various attempted explanations, but the most common was the claim that happiness depends on how rich a person is relative to others in the same country or region. This was supposed to be the reason why average happiness did not appear to be higher in richer than poorer countries since one’s peers also have higher incomes in richer countries. Such a relative income hypothesis was not implausible, but like many other seemingly plausible theories based on limited data, it turned out to be wrong when happiness data became available for many countries at very different stages of economic development.

Stevenson and Wolfers’ “Economic Growth and Subjective Well-Being”, published in Brookings Papers, Spring 2008, is the best discussion I have seen of happiness data for a large number of countries (I comment on their paper in the same volume). They reproduce the result found with the early data that high-income persons within a country are much happier on average than poor persons. They also find, however, contrary to earlier findings, that average degree of happiness is higher in countries with higher average per capita incomes, and that the relation between income and happiness among countries appears to be about as strong as the relation within countries.

Happiness in the United States does not appear to be exceptional in these cross-country comparisons since Americans are much happier on average than are individuals in much poorer nations. The US data show the high average degree of happiness that is appropriate to its high average incomes. Technically, what I mean is that the US falls about on the curve that bests fits the relation between happiness measures and incomes –see Stevenson and Wolfers, Figures 4 and 5. They argue, correctly I believe, that it is best, as in these figures, to compare the relation between changes in degree of happiness with percentage, not absolute, changes in levels of average incomes across countries. A $1000 increase in per capita income means a lot more to persons in poor countries than to those in rich countries.

On the whole, the data also indicate that reported average happiness tends to rise over time within a country as per capita incomes rise, or falls when per capita incomes fall, as in countries after the fall of communism. One apparent exception is the United States, where reported average happiness did not increase during the past three decades even though average incomes did. Stevenson and Wolfers provide a number of possible reasons why this occurred, including non-comparable data over time, and increasing income inequality in the US during this period. Still, this result remains something of a puzzle, given all the other evidence on the positive relation between reported happiness and income.

The big question that is not answered by their results, or by those of other economists who have used happiness data, is what happiness data tell us about wellbeing. That is, about lifetime “utility” of persons who differ by income and other characteristics? Virtually all economists who have written on happiness automatically assume that it is a quantitative measure of utility, and that this provides a way to make interpersonal comparisons of utility and wellbeing. But I argue in my comment on the Stevenson-Wolfers paper that “happiness”, even if accurately measured by these surveys, is not the same as utility or wellbeing. Rather, happiness may be an important component of utility that often, but not always, moves in the same direction as utility.

I use health as an analogy to happiness. Individuals generally get more utility when they expect to live longer and are in better health. However, they do not try to simply maximize how long they live and the quality of their health since they may trade off lower life expectancy for higher income by taking jobs with greater risks to their lives, or for pleasures of food, drink, driving fast, and other activities. The same is true for “happiness. Yes, individuals generally prefer to be happier, but sometimes they are willing to trade off happiness for other behavior that gives them greater utility.

This distinction helps explain why so many persons want to immigrate, and many have immigrated, to the United States (and other richer countries). Their lives are often very difficult for a number of years since they usually come with little money, do not have jobs, may not know English, encounter discrimination, and experience other obstacles and difficulties. They may be quite unhappy for a number of years-I have not found happiness data for immigrants- but many of them stick it out, while the unhappiest immigrants may return to the countries they came from. The immigrants who remain do not believe they made the wrong decision to immigrate, but anticipate that their lives will get better, and especially that their children will have much better opportunities in the United States than they could have had in their home countries.

I am also doubtful that the decline since 1970 in reported happiness of women compared to men in many countries is an indicator that the utility of women has declined, either absolutely or relatively. Many women who work as well as do most of the housework and childcare do not report themselves as happy, but they reveal a preference for the higher income and status that comes from working compared to staying home full time.

My conclusion is that happiness data have been useful, and the relation with income is plausible. Yet happiness data do not enable us to directly measure utility and wellbeing. I admit I do not know why average degree of happiness has not risen in recent decades in the US as incomes rose. Perhaps the considerations advanced by Stephenson and Wolfers explain why, or perhaps utility has in fact not improved over time, or perhaps more likely happiness statistics are deviating from unmeasured increases in utility.

Comments

[oliver]

Even were there a reliable standard means by which to assess happiness that has been applied over time and across cultures, which I doubt, as a human being I find it easy to imagine reasons why the GDP would not correlate with it. We aspire according to how much we have in relation to others, not according to how much the pool of everybody together has achieved. With a possible exception for North Korea, we're not actually in this together--not in spirit. The distribution of wealth must matter as much as the average. It's not the same Pareto everywhere, is it?

[Chuck Toombs]

Please consider the feminist movement as a contributor to the decline in womens happiness

[Peter]

Are there not cultural differences which would change how people report their happiness? Do people respond truthfully to the question "Are you happy?".

How about looking at suicide rates?

[MIke A.]

I am not so sure I fully trust this sort of survey. One change I have noticed over the longer term is that today people (esp. women) are encouraged more to express their discontent if they feel. Whereas once many women might behave stocially they keep their unhappiness to themselves today this seems far less the case.

[David]

If you're interested in a new approach to boost your happiness based on the latest positive psychology research, check out our iPhone app: Live Happy; it's based on the work of Dr. Sonja Lyubomirsky, author of "The How of Happiness" and provides a unique method to create a personalized program to increase your happiness.

You can also learn more about the iPhone app on our Facebook page.

[Ryan W.]

Becker's immigration and health examples run the risk of conflating the distinction he draws in his commments in the Stevenson and Wolfers paper between happiness and preferability with the distinction between *current* happiness (or preferability) and *future* happiness (or preferability). This seems to leaves his position vulnerable to the claim that once the future
happiness at stake in utility is accounted for, it may yet be acceptable to treat 'happiness' synonomously with total utility. I suspect powers and abilities (to break habits that bring about unhappiness, for example) do more to underwrite the distinction. Unhappily enough, whatever other differences there may be, a
maximally preferable state of affairs is surely preferable to a maximally happy state of affairs. This is so even if hypothetical 'regret studies' were to provide good evidence that a preferable future comes about as a consequence of acting contrary to our current preferences. Those are the key points he seems to be getting at anyhow.

[Gray, Germany]

"I admit I do not know why average degree of happiness has not risen in recent decades in the US as incomes rose."
For heaven's sake, why the cluelessness? It's a widely reported fact that the income inequality has risen in the US in the last decades! So, looking at the average income is useless, you at least hav to use the median income, if not looking at the distribution in more detail. Most people aren't really that better off nowadays, and as a percentage of the top 1% they even fell behind. Unequal societies make people unhappy. That's the simple explanation.

[Ray Gardner]

It is refreshing to hear someone of such eminence to say "I don't know." Hat's off.

And it should always be noted that "happiness" itself is a subjective topic, and no matter how rigorous the study, the core subject is still subjective by definition.

Having said that we do know reliably enough that we become acclimated fairly quickly to the various ingredients of happiness. So in such an affluent society as America the average home has quite a bit of material comfort, and there comes a point of saturation.

From there happiness or perhaps contentment will hinge more and more on things spiritual or philosophical - depending on the individual's personal beliefs. Two working parents with the kids under the care of unrelated adults from day care through high school graduation does not afford the home the same depth of personal interaction as was typically experienced in the past.

So it seems highly plausible that two cars, two kids, a nice house in the burbs and a pricey vacation every year comes at a cultural price not fully appreciated in the late 60s and early 70s.

[Caz]

Mentions in this article were made to status, but it didn't seem to get as much attention as utility and preference. I understand this, but I think it is looking at things through an overly scientific lens. Utility and preference can be valued through econometrics much more easily than the obvious subjective key issue, which is status.
People are hierarchical. They typically, although not always, approximate success and satisfaction with the path of their lives based on how high they make it on the food chain. Take this as a starting point, and then think about some other related things: Relative rise in status from youth until adulthood (if you start out poor and become, say upper middle class, you will be proud and pleased with yourself. starting in the upper middle class and becoming lower middle class, different story), social attitudes towards people in your social class (Asian and European societies tend to treat those in the lower classes more as valued and worthy of respect than America does), and various indicators of economic security (low in America, where layoffs are more common than in other wealthy nations) are probably very important factors in getting an overall picture of how a society thinks when it comes to hierarchy.
The article starts to say this with the earliest hypothesis: Relative income is more important than absolute income. Then it seems to get bogged down trying to utilize objective utility measurements on something an subjective as 'happiness'. Economics is a social science and doesn't happen in a laboratory. Factors that would otherwise be within the realm of sociology and psychology need to be applied if you ever want to formulate a theory that fits the data.
Quick, someone call a behavioral economist!

[abercrombie and fitch]

even if accurately measured by these surveys, is not the same as utility or wellbeing. Rather, happiness may be an important component of utility that often, but not always, moves in the same direction as utility.

[Adem Öztaş]

i think the Turkish proverb explains great the relation economy and happiness:
IF THE MONEY EXİSTS, THAN THE PEACE EXİSTS. (PARA VAR, HUZUR VAR...)

[pariuri sportive]

Indeed, as a reader to this blog I am truly impressed by it`s content, have been coming across posts that are so very informative for me, keep impressing us! well worth the read.I found it very informative as I have been researching a lot lately on practical matters such as you talk about.

[Soccer Shoes]

thank you for presenting the news that I needed ,....

[World Cup Merchandise]

thank you for presenting the news that I needed ,....

[Soccer Gear]

I love the article on this site. Thanks for sharing,.... good site. May be next time i always visit

[Soccer Merchandise]

I do not regret visiting this site, ... really good

[sesli chat]

Becker's immigration and health examples run the risk of conflating the distinction he draws in his commments in the Stevenson and Wolfers paper between happiness and preferability with the distinction between *current* happiness (or preferability) and *future* happiness (or preferability). This seems to leaves his position vulnerable to the claim that once the future
happiness at stake in utility is accounted for, it may yet be acceptable to treat 'happiness' synonomously with total utility. I suspect powers and abilities (to break habits that bring about unhappiness, for example) do more to underwrite the distinction. Unhappily enough, whatever other differences there may be, a
maximally preferable state of affairs is surely preferable to a maximally happy state of affairs. This is so even if hypothetical 'regret studies' were to provide good evidence that a preferable future comes about as a consequence of acting contrary to our current preferences. Those are the key points he seems to be getting at anyhow.

[B&B Portugal]

Happiness is a state of mind. It is possible to be happy without having anything if you never have had anything.
You can change your state of mind in a second if you choose to.

[50PlusSam]

The comparison between happiness levels in different countries or in different sectors, mainly depends on the definition of the expression because it is perceived differently in different cultures . And lets not forget the phrase: Who is rich? He who is happy with his lot.

[mp3 dinle]

I like the news contained in this site, ... tomorrow I will visit again ...

[Holy Land tours]

You may be surprised, but one of the most happy countries in the world is actually Israel. Despite all the problems and concerns. the people there are great the real happy happy.

[Air Jordan shoes]

he law cannot make all men equal, but they are all equal before the law. (Frederick Pollck, British jurist)

[Air yeezy shoes]

The comparison in between happiness amounts in diverse nations or in diverse sectors, generally is dependent about the definition in the expression since it is perceived in different ways in diverse cultures .
And lets not neglect the phrase: Who is rich? He who is content with his lot.

[Bank Loans]

I love the article on this site. Thanks for sharing,..

[Nike Shox Clearance]

You might have it if it belongs to you,whereas you don't kvetch for it if it doesn't look within your life.