Paul Frijtersâ inaugural post last week raised several interlocking issues around the theme of growth fetish. Iâd like to revisit one of them, namely the contribution of income to happiness. The timing is good, because one of our honours students is doing a dissertation on the topic. He and I are both sympathetic to the thesis outlined in Happiness: Lessons from a New Science by Richard Layard.
But we donât want to dodge any of the tough criticisms, so Iâd like help from readers in identifying the weaknesses in the theory, to help sharpen our arguments.
This is the thesis:
1. Happiness is a tangible component of human experience, and can be measured, reliably if not very precisely, by self-rated scores.
2. Humans are genetically programmed to pursue happiness. This is a survival mechanism: that is, things that make us happy are conducive to good health, a longer life, more babies and so on.
3. Cross country data shows pretty consistently that on average happiness increases with income, but at a certain point diminishing returns set in. In the developed world, people are not on average happier than they were in the 1960s.
4. In the short run, increasing income makes people happier, but the effect is short lasting for two reasons. First, we become quickly habituated to improved material circumstances, and their happiness returns to its original level. Second, we are hard-wired to be status conscious, so an increase in income only makes us happier until everyone else catches up.
5. Some variables have at least as large an impact on happiness but a more durable one than income: in particular, health, family relationships, employment, the level of trust in the community, and the degree of personal freedom.
6. In pursuit of the short term payoff we get from higher income, we tend to sacrifice health, family relationships and community building, and in doing so fail to maximise happiness in the long run.
7. Happiness is a self-evident good. Other things that are good, like freedom, morality or affluence, are ultimately justified in terms of their ability to make us happier. But happiness is an end in itself, and can’t be justified in terms of anything else.
8. The highest goal of government policies should be to make us happier on aggregate, and therefore some index of happiness rather than one of material production should be the benchmark of national performance.
For readers who are new to these arguments and eager to follow them up, there are useful links at the Wikipedia entry on Layard, especially his three Lionel Robbins lectures that formed the basis for the book.
But most Troppo readers are familiar with this line of argument. However, many — perhaps the majority — are unsympathetic to it, from what I’ve gathered. I want to exploit this, and get a sense of what they regard as the main stumbling blocks. Making a quick inventory, I’ve identified seven kinds of objections to this whole argument, which I have numbered A to G for easy reference:
A. Self-rated happiness is not a reliable indicator at all, and useless for comparing happiness between times, people and societies. People might say they are not happier than they were forty years ago, but perhaps they simply don’t remember correctly. Or in any case their expectations might be higher. That is, happiness itself may be subject to habituation in the same way that material comforts allegedly are; and in that case happiness is no more useful as a gauge of progress than the material comforts themselves are.
B. Where government actions produce winners and losers, there is no satisfactory way to determine the net benefit, because the happiness of two or more individuals cannot be aggregated. Society might arrive at a consensus as to who was most deserving – the poor more than the rich, the old more than the young, and so on – and devise a set of weights. But these would always be arbitrary, and certainly not self evident.
C. Even if the promotion of happiness is an important objective in the development of moral principles, legislation and public policy, it may conflict with other basic principles like truth, honesty, property rights, contractual obligations, and so on. Attempts to resolve this through a concept of rule utilitarianism are doomed to failure.
D. Freedom is more important than happiness. Each individual should judge what’s best for himself, and governments have to govern as if people were competent to pursue their own happiness, regardless of what the experts think. Paternalistic measures that modify people’s behaviour for their own good, can only be justified in the cases of children, convicted criminals, and the intellectually handicapped.
E. The empirical studies claiming to show that happiness doesn’t rise permanently with income are contradicted by others showing that it does.
F. Even if it’s true that our happiness is affected by other people’s income, this is not a healthy or noble motivation. Envy should never be a basis for public policy.
G. You only ever hear these arguments from people like Clive Hamilton and Ross Gittens who already have everything they want. The whole thing is just about rich, aging yuppy down-shifters projecting their own priorities onto everyone else.
These issues have been aired before on CT: Don Arthur puts a version of objection E; Ken Parish here and here seems in effect to interpret point 5 as a rebuttal of point 8, although I may not have understood correctly. And John Quiggin years ago challenged point 1. Other bloggers are sure to have taken up the topic, and I’d be grateful for any links.
If readers are good enough to respond in the comments box, I would like you to be as specific as possible which bits of the argument (1-8) you find unpersuasive, and why. Let me know whether your objections are covered in A-F — in which case you might like to flesh out or improve on my summary — or whether indeed there are additional counter-arguments that Iâve overlooked altogether.
As for objection G, Iâm only including it in case anyone thinks I havenât heard it before. I have, thanks (most recently from Gerard Henderson in a discussion on ABC radio), but it doesnât address the substance of the argument.