How much happiness do we get from freedom to travel?

This post is really just an excuse to write something about what I have been doing over the last few weeks.

I have been touring in the Canadian Rockies and Alaska by bus, train and cruise ship - and loving every minute of the experience.

What is it that makes this kind of activity so pleasant? The first thing that comes to mind is the scenery. We saw some truly magnificent scenery. I suppose anyone could see the same kind of thing by watching a TV program or doing an internet search. They might even get to see more of the wildlife than we saw without leaving the comfort of home. But the virtual experience is never as good as the real experience.

I will give you an example. As we were travelling between Lake Louise and Jasper our bus driver noticed a car stopped beside the road. He thought there might be something worth seeing and stopped the bus to let us have a look. That gave us the opportunity to see a couple of grizzlies in their natural environment and to take photos of them. It was just a matter of chance that these bears happened to be there when we passed by. I think all members of our tour group felt that we were privileged to have had that experience.

The second thing that comes to mind is travelling companions. It was great to have been able to share this touring experience with my wife and other people we knew, and to have had the opportunity to travel with a good bunch of people. Some other things that made the holiday pleasant included an excellent tour guide, the opportunity to stay in very comfortable hotels, fine food and professional organisation (by APT).

However, the most important thing that makes touring enjoyable has to be the novelty of the experience. As much as we enjoyed visiting the Canadian Rockies and Alaska, it is not likely that we will return. If we can afford to travel again, we will no doubt be looking for a new experience.

How does inner freedom vary with per capita income level?

In earlier posts about inner freedom - the feeling of choice or control over the way life turns out - I have discussed some implications of the observation that humans have a passion for control of their lives (here), the correlation at a country level between inner freedom and life satisfaction (here) and the extent to which inner freedom varies with economic freedom (here).

In this post I present a chart showing how the probability of feeling in control of life varies with average income levels of countries. Data sources are the same as those used in posts referred to above.

The graph presents a similar picture to that shown in the post on inner freedom and economic freedom. The probability of inner freedom tends to rise more gradually with per capita income levels than does the probability of being satisfied with life.

Is there evidence that institutionalised transparency reduces the political power of narrow interest groups?

Recent posts by Richard Posner and Gary Becker on their blog (May 4 ) discuss US farm subsidies that apparently amount, on average, to of the order of $50,000 per farmer. Posner suggests that these subsidies are outlandish and that “their firm entrenchment in American public policy illustrates the limitations of the American democratic system”. Becker points out that the subsidies are a consequence of interest group competition that tends to favour small groups of producers (who gain substantial benefits per person) at the expense of large groups of taxpayers and consumers (whose losses are relatively small in per capita terms).

I left a couple of comments on Becker’s post, the second of which was as follows:

“... it seems to me that some political outcomes are outlandish even though they can be explained in terms of democratic politics e.g. in terms of the relative power of different pressure groups associated with differential rational ignorance and free-rider problems.
The interesting question is whether better outcomes could be achieved through institutional changes e.g. through procedures to promote greater transparency and thus reduce rational ignorance problems.”

I must confess that the question of whether transparency institutions have the capacity to reduce rational ignorance problems is something that I have thought about quite frequently over the last 35 years, having worked in such a transparency organisation for a considerable part of that time.

The latest WTO Trade Policy Review of Australia makes the following observation:

The high degree of transparency in the formulation and evaluation of Australia’s economic policies in relation to their rationale, nature, and economic effects, enhances government accountability and public debate over the merits of these policies. Hence, transparency has contributed greatly to the continued process of reform, which began in the 1980s, and in which trade liberalization, much of it unilateral, has played an important part. (WTO 2007, p. vii)

The TPRM report emphasised that the transparency function had become
institutionalised in Australia, notably through the role of the Productivity
Commission (and its predecessor organisations) as an independent review and
advisory body on microeconomic policy and regulation.

The role of the Productivity Commission and its predecessor organisations has been discussed in a recent paper by Gary Banks and Bill Carmichael, available here.

In discussing the possible relevance of the Productivity Commission as a model for other countries, Banks and Carmichael suggest that Australia’s experience demonstrates that institutionalised transparency can help promote reforms. They do not suggest, however, that institutionalised transparency is a magic wand.

“Expectations need to be tempered: transparency is unlikely to transform the policy environment overnight. Building a pro-reform constituency in government and the wider community is a gradual process. It took Australia four decades to get tariffs down and more than a decade tackling sources of underperformance in economic infrastructure services. And neither reform program is yet complete.

That said, reforms once made in Australia have tended to stick, having stronger foundations of support or acceptance within the community precisely because the basis for reform was transparent. The programs of tariff liberalisation and regulatory reform initiated under one government have generally been maintained by new governments of different political complexions”.

Banks and Carmichael conclude as follows:

“We recognise that Australia’s transparency arrangements may not suit other countries. There can be no ‘one size fits all’ approach. Arrangements in other countries must necessarily reflect their cultural and political systems, and ensure domestic ownership of national trade policy. However, finding ways of achieving the broad principles of domestic transparency in other countries’ institutional settings is an objective to which Australia’s experience lends considerable support”.

Is inner freedom related to economic freedom?

In earlier posts about inner freedom - the feeling of choice or control over the way life turns out - I have discussed some implications of the observation that humans have a passion for control of their lives (here) and the correlation at a country level between inner freedom and life satisfaction (here).

In this post I want to consider the extent to which inner freedom varies with economic freedom i.e. the extent to which people are free to undertake economic activities without excessive government regulation or taxation.

What reasons do we have to expect that inner freedom and economic freedom might be correlated? First, it is possible that people might feel that they have greater control over their lives when they have greater freedom to engage in economic activities without government interference. Second, economic freedom provides incentives for wealth creation; and greater wealth may give people a feeling of greater control over their lives. Third, it is possible that causation may run in the other direction. When people feel in control of their lives they may feel less threatened by competition and hence less supportive of restrictions on economic freedom.

Economic freedom data used in compiling the chart below has been derived from the Fraser Institute’s Economic Freedom of the World project (here). After matching with inner freedom data (sourced from “Human Beliefs and Values” by Ronald Inglehart et al) data were available for 66 countries for the year 2000. After ranking by level of economic freedom, averages were calculated for each quintile of the percentage of people in the countries concerned who feel in control of their lives and who feel satisfied with their lives.


The chart shows that, on average, the percentages who feel in control of their lives are substantially higher in countries with high levels of economic freedom than in countries with lower levels of economic freedom. The chart suggests, however, that life satisfaction tends to rise more steeply with higher economic freedom.