Oh so happy….

Maybe the universe is trying to send me a message. Last week I read a self-help book (about how to solve problems) that I’d been sent, [amazon_link id=”1250042038″ target=”_blank” ]It’s Not About the Shark[/amazon_link] by David Niven. This past couple of days I’ve read Paul Dolan’s [amazon_link id=”0141977531″ target=”_blank” ]Happiness by Design: Finding pleasure and purpose in everyday life[/amazon_link]. Although somewhat sceptical about happiness economics, I’d heard him talk about his work and thought it sounded interesting. Well, the first half of the book is indeed interesting – more below – but the second half is a self-help manual. Who knows what it says about me, but I’m just not interested. As far as I can tell, not having read many of them, it seems thoroughly sensible.

[amazon_image id=”0141977531″ link=”true” target=”_blank” size=”medium” ]Happiness by Design: Finding Pleasure and Purpose in Everyday Life[/amazon_image]

Back to the first half of the book. There are several things about Dolan’s approach that make it far more plausible than the conventional approach to happiness. One is that he defines ‘happiness’ as the combination of pleasure and a sense of purpose, and not just the first of these as is standard. This must surely be right; and he argues that the evidence indicates people need a mix of both. You then have to read the rest of the book remembering that ‘happiness’ is not just ‘pleasure’.

Another is that he distinguishes people’s retrospective evaluation of their ‘happiness’ from their experience through time, and argues – again, I think convincingly – that the latter is more reliable for empirical research. He therefore prefers the data collected from the day reconstruction method as coming closer to experienced ‘happiness’ rather than the surveys that ask people to evaluate their state: “overall, would you say on a scale of one to six that ….” The evidence suggests that: “The circumstances of your life (income, marital status, age etc) matter much more to your evaluating self, and what you do matters more to your experiencing self.” So for example, unemployment clearly leads to lower evaluations of happiness but makes little difference to people’s DRM responses because mostly being at work is not a pleasurable experience (although it does give people a sense of purpose).

The third point he makes is that: “Your happiness is determined by how you allocate your attention.” Attention is a scarce resource. In place of the conventional approach which seeks to relate inputs (income, health, sunshine, marriage) to the final output, happiness, Dolan sees these inputs as stimuli in competition for your attention, with attention determining how they affect your ‘happiness’. The same inputs (income, health, sunshine, marriage) can lead to a different output depending on your attentional ‘production function’. He suggests that you can change your production function by directing your attention differently (and in the second half offers advice about how to do it). As he notes: “There are surprisingly few researchers who think about happiness in terms of your time use.” But time is the ultimate scarce resource.

This seems plausible, although I don’t know enough of the psychology literature – dating back to [amazon_link id=”1604590661″ target=”_blank” ]William James[/amazon_link] – to really evaluate it. It strikes a chord with me though since attending a couple of years ago a fascinating workshop in Toulouse on the attention question, when it was clear from the way the cognitive scientists and psychologists talked that a standard economics model of competition subject to a budget constraint (brain energy) could offer real insight into thinking about attention.

Oh no, not happiness again!

There are some things some people so fervently want to believe that no amount of evidence or logic will persuade them otherwise, no matter how brilliant they are. Adair Turner’s book [amazon_link id=”026201744X” target=”_blank” ]Economics After the Crisis[/amazon_link] is a good book, and I’m a great admirer of his. But my heart sank when I read this new review of it in the TLS by Robert Skidelsky. Lord S writes:

“The case against making increased GDP per capita the overriding policy objective is that it doesn’t deliver the increased happiness or welfare if promises. In 1974, the economist Richard Easterlin published a famous paper, “Does Economic Growth Improve the Human Lot?”. The answer, he concluded, after correlating per capita incomes and self-reported happiness levels across a number of countries is probably “no”. In a refinement dating from 1995, Easterlin found no relationship between income and happiness above an average per capita income level of between $15,000 and $20,000. Other findings confirm Easterlin. Data from the UK show that from 1973 to 2009, there was a continuous rise in GDP per head, but no increase in reported life-satisfaction.”

Er, no. The error of logic is that if you compare a stationary (reported life-satisfaction) and non-stationary (level of GDP) time series via a chart or regression, they will as a matter of construction not be correlated with each other. And the evidence has recently flowed in that GDP growth and reported happiness are positively and strongly correlated with each other – for example, Stevenson and Wolfers. Finally, common sense should tell everyone that abandoning economic growth as a policy objective is a political and practical no-hoper: we have that now and it’s called recession. It cements current inequalities, reduced job opportunities, and voters just hate it. So actually, the task of achieving satisfying and sustainable growth is a pretty difficult one (it’s why I wrote the [amazon_link id=”0691145180″ target=”_blank” ]Economics of Enough[/amazon_link]…).

[amazon_image id=”026201744X” link=”true” target=”_blank” size=”medium” ]Economics After the Crisis: Objectives and Means (Lionel Robbins Lectures)[/amazon_image]

Update: broken link replaced 5/11/14