Happiness and Economics

I just finished reading an excellent book called Happiness: Lessons from a New Science, by Richard Layard (Penguin, 2005).

His main points are in synchrony with ideas that I have alluded to in previous posts:

-Economic growth is a numerical measure which does not correlate consistently with well-being or health. Except for people who are living in poverty. $100 to relieve one person's poverty goes much, much, much farther to improve well-being (for both the individual and for the world) than $100 to increase a wealthy person's leisure budget.
-Despite large increases in wealth in many parts of the world, people are not any happier (in fact, they are often less so, particularly in the U.S.)
-Pursuit of wealth has an addictive quality: it produces short-term satisfaction, but the mind habituates to any short-term external satisfaction. The mind is more satisfied with stability, and is more averse to perceived loss than it is satisfied with material gain.
-If economic growth is optimized, it leads to "pollution" of various sorts. Literal, environmental pollution is one type (actually Layard could do well to include more ideas about environmental care in his thesis). Most economists do not measure this "pollution" in their calculations. But there is other "pollution" as well: a culture which values accumulation of financial wealth as the main priority may do so while "polluting" its social fabric. For example, optimal financial output may require longer workweeks and more worker mobility, which then becomes a social norm, leading to everyone spending less time with family & friends & culture, leading to declining morale and a declining sense of community, increased crime, etc. Once again, this type of social "pollution" from maximizing financial performance in society is often not included in economists' calculations.

The wisdom of his book lies in his attempt to combine the field of economics with psychology and the other social sciences, a combination which I think is badly needed. He encourages economists' calculations to be "weighted" by consideration of emotional well-being, not simply by optimization of simple financial measures.

Some of his specific ideas could be challenged (e.g. see the following paper: http://bpp.wharton.upenn.edu/jwolfers/Papers/EasterlinParadox.pdf). He advocates increased taxation as a deterrent to over-work, as a cost to pay for "pollution". I think the idea deserves attention, but it has certainly been challenged as a specific policy (the "cost" of feeling more burdened by the state may be a different psychological factor to include; furthermore, I think one of his stronger points is that motivations should be best drawn from inner sources, rather than from external incentives or disincentives).

However, the spirit of his ideas encourages us to do the following, as individuals, and as a society, for the sake of improving our lives & happiness:
1) avoid the "rat race" -- i.e. be wary of choosing a lifestyle in which you have to do more and more, to get more and more stuff, in the name of supposedly improving your life, when in fact you are sacrificing not only your own personal, family, social, and cultural life, but also participating in establishing a competitive social norm which others will want to follow, at their own expense, and at the expense of society itself. Let hard work be done for its intrinsic satisfaction, and as a satisfying way of life, rather than as a means to "get ahead" or to "get rich".
2) Pay close attention to nourishing aspects of personal culture which improve personal and collective happiness:
-be involved in helping others & be involved in your community
-avoid making choices just to keep up with someone else
-avoid criticizing or judging yourself in comparison to someone else; the modern world is set up to make you feel needlessly bad about yourself, or needlessly competitive to change something about yourself that needs affirmation rather than change
-educate oneself, and participate in the education of others, about emotional self-care
3) Watch less TV. The TV is a specific device which has clearly been shown to reduce happiness, through a similar process by which wealth itself can reduce happiness: it is an external source of pleasure, to which we become habituated, at the expense of relationships, community, physical fitness, and personal culture. Also it desensitizes us to violence, which is a further factor leading to increased aggression. Also it feeds, through advertising, the rat-race mentality of acquiring more and more stuff; much of this advertising is directed at children. He quotes an interesting study which supports his view: http://jcc.sagepub.com/cgi/content/refs/16/3/263). I might add the internet is another example of something similar.

Addendum: actually, as with many things, I think modern technology can have positive influences too. I remember many experiences of joy, humour, and togetherness watching movies or good TV series. Sometimes the TV can enhance education about the world, history, nature, current events, etc. And TV can introduce us to new aspects of personal culture, and therefore be a cultural enhancement. But I do think that TV can become an addictive and isolative habit; I guess the key is moderation, choosing wisely when and what you watch, and considering carefully why you're watching it.

I especially agree with Layard's ideas about encouraging children to learn from an early age about ways to manage and understand emotion, to practice compassion and empathy (yes, compassion and empathy can be "practiced" and "learned"), and to be involved in community-building. It often concerns me that many supposed community-building activities involving children (e.g. sports, academics, or even music lessons) end up being subverted into yet another rat-race or competition. Ideas from cognitive therapy could be introduced in elementary school, and I'm pretty sure that this could help prevent, or lessen the severity of, many cases of mood and anxiety disorder.

I also especially agree with certain other public policy points: for example, I think it is unconscionable that governments encourage gambling as a form of revenue. To encourage, and advertise, an addictive behaviour which takes individuals away from their families, loved ones, and communities, and leaves some in a miserable state of addiction, just because it is an efficient source of revenue, is extremely poor public policy. It is poor economic policy too, since more people spending more time gambling surely does not lead to increased economic success for individuals or communities, except for the people running the casinos.

I think his ideas about limiting commercial advertising directed at children warrants serious attention. Apparently Sweden has banned such advertising; the Scandinavian countries appear to be a good example to follow in terms of public policy which considers well-being above mere economic optimization.