Can happiness surveys help us to measure progress?

I have written about similar questions here before, but I’m not sure that I managed to get the message across to many people. The issues are not all that complex. I probably just need more practice in trying to explain them in simple terms.

The most obvious way to use happiness surveys to measure progress would be to use such surveys to measure average life satisfaction at different times and then observe to what extent it has risen or fallen.

Where is the problem in that? The main problem is that as a result of changing reference norms people who value an expansion of economic opportunities cannot necessarily be expected to show rising satisfaction with their lives in successive surveys.

What do I mean by changing reference norms? When we are asked to rate our satisfaction with life we do so relative to reference norms, such as by comparing our standard of living with that of people we know. Some surveys ask people to rate their lives relative to ‘the best possible life’, but our perceptions of ‘the best possible life’ may also change. For example, education may cause people to expand their horizons so they become less satisfied with a modest standard of living. The same kind of thing can happen when people move from rural to urban areas or obtain access to TV and the internet.  

So, if education tends to make people less satisfied with a modest standard of living, does that mean that they do not value the opportunities that education provides? It obviously doesn’t. Some people make large sacrifices to obtain educational opportunities, so it would be difficult to argue that they don’t value them.

The same reasoning applies to the benefits of technological progress. No-one could expect that people living in 1950 could have felt unhappy or dissatisfied - or sad, or angry even - because they did own personal computers or any of the numerous other amenities of modern life that had not then been invented.

The fact that we do not feel dissatisfied that we do not yet possess the products of future technological progress does not mean that such products will not enhance our future wellbeing and that of our descendants. It just means that we are fortunate to have emotional systems that enable us to give a high rating to our current lives if we can attain a standard of living that is somewhere near the upper bound of what it is currently possible for humans to attain.

Changing reference norms help our emotional system to adapt to changes in external circumstances, but that doesn’t mean that we should allow them to bias our judgements about changes in the quality of our lives.

Derek Bok, former president of Harvard, unwittingly provided a good example of the distorted perception that can arise when we ignore changing reference norms when he wrote:

‘As Americans adapt and yesterday’s luxuries turn into today’s necessities, people are naturally unwilling to give them up, but that does not mean that they are any happier than they were before the process began. Neither does it suggest that the products they yearn for in future will bring them any greater pleasure. What then is the justification for future economic growth?’ See: ‘The Politics of Happiness’, 2010, p 67.

The fallacy in that argument becomes obvious if it is applied to advances in medical science. Does the fact that people in high-income countries have adapted to advances such as the development of antibiotics, and now tend to view them as a normal part of life, mean that such advances have no value? In deciding whether or not we would be happier without advances in medical science, or any other product of technological change, the pertinent question to ask is whether we are obtaining a net benefit from it now. Adaptation may cause us to take for granted the benefits of technological progress, but it is our judgement of where our interests lie that makes us unwilling to give up the those benefits.

One way to eliminate the possible impact of changing reference norms is to ask survey participants to rate their lives at some point in the past (for example, five years ago) at the same time as they are asked to rate their current lives. Responses to such questions enable levels of individual flourishing to be gauged against historical benchmarks to show to what extent people feel that their lives have improved over time. My analysis of such data collected by the World Gallup Poll suggests that people tend to perceive the greatest improvement in their lives over the previous five years in countries where a high percentage of people consider that the national economy is ‘getting better’ and where rates of economic growth have been relatively high.*

Happiness surveys can help us to measure progress if they are used in the right way.

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*The estimated regression equation is as follows:

LIFETODAY = -0.330 + 1.003*PASTLIFE + 0.015*ECONOMY + 0.037*GROWTH + 0.299*IMPGOV

                       0.290)  (0.044)                     (0.003)                      (0.017)                    (0.243)

Adjusted R² = 0.84. The figures in brackets are standard errors of the estimated coefficients.

102 countries were included in the analysis.

LIFETODAY is the average rating ‘life today’ from the Gallup World Poll (around 2008) which asks respondents to rate their current lives on a ladder scale with the ‘best possible life’ as the top rung.

PASTLIFE is the average rating of ‘life five years ago’ from the Gallup World Poll.

ECONOMY is percentage of participants in the Gallup World Poll who perceive that economic conditions in their country are getting better.

GROWTH is the estimated rate of growth in per capita GDP (rgdpl) from Penn World Tables over the preceding five years (2002-07).

IMPGOV is the improvement over the period 2002-07 in the average of the six World Bank Governance Indicators.

How should we describe the current imbalances within western democracies?

Nicholas Eberstadt’s answer to this question is fairly clear from the title of his recently published book, ‘A Nation of Takers, America’s Entitlement Epidemic’. Eberstadt describes the growth of welfare payments in the US, the decline of stigma against accepting help from the government and the growth of dependence on entitlements. He establishes that about half of the US population now live in households receiving some government benefits and more than 30 percent now receive means-tested benefits. He suggests that, with the growing numbers living on disability benefits, ‘gaming and defrauding of the entitlement system have emerged as a mass phenomenon in modern America’. He also suggests that the ‘taker mentality’ has gravitated toward ‘taking from a pool of citizens who can offer no resistance to such schemes: the unborn descendants of today’s entitlement-seeking population’.

The book also presents two dissenting views. William Galston argues that although many people have come to depend on entitlements to fund their living expenses, they have not become ‘dependent’ in the way that children are dependent on their parents. He suggests that much of the growth of welfare entitlements rests on ‘temporally extended interdependence’. One generation consents to helping to fund the retirement of their parents, with the expectation that the next generation will do the same for them. He acknowledges, however, that ‘something has gone awry’ when the current generation discharges its obligations by imposing heavier sacrifices on the next generation. He suggests that the moral issue is ‘generational selfishness’ rather than dependence. He agrees with Eberstadt that disability benefits are subject to serious abuse, but suggests that the willingness of people to take advantage of the system is not necessarily evidence of deep cultural change.

The main point made by Yuval Levin is that differences in vision about the relationship between government and the citizen – collectivism versus radical individualism – overlook the importance of the ‘space between the individual and the state’, which is occupied by the family, civil society and the private economy. He argues that the state gravely threatens the space for private life. He suggests that rather than dependence, the problem is more ‘a draining away’ of ‘civic energies by the effort required to sustain the liberal welfare state. The country ‘is increasingly exhausting itself’ not just because of the size of the entitlement and benefit regime but also because of its ‘immense inefficiency’. Levin suggests that rather than a nation of takers, America is ‘a nation at risk of becoming incapable of rising to the challenge of self-government’.

The different viewpoints presented in this book are highly relevant to some issues discussed in the book I am writing. One of the points I am making is that when governments relieve us of the need to exercise our power of self-direction, then our skills in running our lives will not develop properly and we are likely to remain dependent on government throughout our lives. That means I am in sympathy with the points that Nicholas Eberstadt is making. At the same time, the US does not seem to me to be a particularly promising place to look for evidence of dependence on welfare having a widespread adverse impact on the social fabric.

I also suggest in the book I am writing that there is a growing gap in many wealthy countries between the responsibilities that many people expect democratic governments to discharge and what governments are actually capable of delivering. Perhaps it could be described as a problem of dependence, in the sense of governments becoming addicted to ever more spending (despite rising debt levels or increased reliance on unstable revenue sources).

At times, I have described the problem as an expectations gap, implying that it has arisen because of inflated public expectations of what governments can do. But it isn’t particularly helpful to blame ‘the public’. The underlying problem is that political leaders who seek to place responsibilities on government that are beyond its capability do not suffer appropriate political consequences. So, we should be thinking about how political leaders could be persuaded to moderate their promises and focus more effort on delivering efficient government.

The diagram presented below seems to me to be a useful way to think of the issues involved.

It is interesting to consider where particular countries should be located on the diagram. The countries of southern Europe should obviously be placed near the bottom right hand side and the Scandinavian countries would be at the top right. Hong Kong might be toward the left at the top. But where should we place the US, or Australia?

Is there more economic freedom in Australia than in 'the land of the free'?

It is difficult to believe that there could be less economic freedom in the United States than in Australia, but that is what economic freedom indexes seem to show.

The Heritage Foundation’s index currently has Australia in 3^rd place, behind Singapore and Hong Kong, and the US in 10^th place. The Fraser Institute’s index currently has Australia in 5^th place and the US in 18^th place.

Both the Heritage Foundation and the Fraser Institute have economic freedom in the US declining below that of Australia around 2008.  See Figures 1 and 2 below.

The timing of the decline in US economic freedom as indicated by the Heritage Foundation’s index suggests that it may be largely associated with the aftermath of the Global Financial Crisis, but the Fraser Institute’s index has the decline beginning around the turn of the century. According to the Heritage index the main decline in recent years has been with respect to financial and investment regulation, but the Fraser index also shows a decline in other areas, including freedom to trade internationally.

If the decline in US economic freedom was related solely to re-regulation of financial markets, it might be tempting to dismiss it as some kind of necessary evil. Well, it isn’t, but that will not stop me from suggesting that financial re-regulation has been far from benign in any case. Rather than side-track myself on that issue, however, I will just link to a highly relevant recent article by Ken Rogoff.

There are several reasons why Australians should not take comfort from indexes suggesting that we now have greater economic freedom that the US. The most obvious is that it has occurred as a result of a decline in economic freedom in the US, rather than any recent reform efforts in Australia.

The second reason is because the measurement of economic freedom is difficult. I think the Fraser Institute and Heritage Foundation should be applauded for their efforts to define economic freedom precisely enough to enable it to be measured, but I don’t think their indicators adequately capture all relevant aspects of the regulatory environment. For example, in 2008, just before he left Australia, Phil Burgess made some important points about the regulatory environment in this country that would be difficult to capture adequately in economic freedom indexes.

Before I proceed further, I should remind you that Phil Burgess was one of the ‘three amigos’ who came here to help Telstra through a difficult period. If that doesn’t ring any bells, you might remember the very wise - and very public – investment advice he gave to his mother about not buying Telstra shares because of what the government was then doing to squeeze profit out of that company, not long after selling it to gullible investors.

  

The comment that Burgess made concerns the degree to which the ‘public order’ tends to dominate the ‘civic order’ in Australia. What he was talking about was that, compared with other liberal democracies, government leaders in Australia have a very high capacity to frame and control the public dialogue by virtue of agenda setting, money and expectations management. Counterbalancing voices of legitimacy and authority in the civic order – including business - are, by contrast, often muted and ineffectual. He suggests that is associated with a greater tendency for the civic leadership groups to play an insider’s game and focus on influencing politicians.

I think Phil Burgess is probably correct in his judgement, but I don’t have sufficient knowledge of the US to be sure. If he is correct, it would be fair to say that economic freedom indexes tend to over-state the extent of economic freedom in Australia relative to the US.

My third reason for not taking comfort from indexes showing economic freedom higher in Australia than in the US is that public attitudes are still more supportive of economic freedom in the US than in Australia. Data from the World Values Survey suggests that Americans are more strongly in favour of the existence of large income disparities as incentives (i.e. less in favour of redistribution to make incomes more equal), less in favour of public ownership of business, somewhat more inclined to say that competition is good and less cynical on the question of whether success comes from luck and connections rather than hard work.

   

All that suggests to me that it would not make sense to bet my life savings that the economic freedom will be greater in Australia than in the US over the next few decades. The only problem is that my modest life savings are actually almost exclusively allocated towards investment in Australia. It might be time for a re-think!

Is the 'trial narrative' integral to emergence of the modern view of happiness?

‘Our own concept of happiness is, in its essentials, the eighteenth-century concept that emerges after the trial narrative has wrought its effects on the classical idea’

-                                                                       Vivasvan Soni, ‘Mourning Happiness’ (2010).

 Soni argues that happiness has come to be viewed as ‘a mere emotion or subjective state’ and that this view of happiness is ‘hopelessly and inescapably private’. He contrasts that with the classical view in which happiness was ‘held to be the highest good for an individual, almost without question’.

The author argues that the trial narrative, referred to in the quoted passage, was introduced by Samuel Richardson’s novel, ‘Pamela: Or Virtue Rewarded’, first published in 1740. The novel tells the story of Pamela, a young servant girl, who resists harassment by her sexually predatory master until he comes to recognize her virtue and marries her. It is appropriate to describe it as a trial narrative because it involves the trial of the virtue of an innocent girl who suffers a great deal of misery and eventually obtains happiness (so readers are told) through an elevation in social status (brought about by marriage to the man who almost raped her). There are similar narrative themes in other novels in this period. I suppose a novelist could tell a similar story in the modern world, but the reward for virtue would more likely come in the form of an out-of-court settlement of a large sum of money.

How could our modern concept of happiness emerge from the trial narrative? Soni’s answer is ‘reification’. The main point he is making is that when happiness is viewed as a reward it becomes identified with specific things such as positive feelings, wealth and marriage, rather than being the subject of a narrative which responds to the question of whether an individual has had a happy life (without specifying in advance what that might mean). The author spends a few hundred pages explaining this, so please don’t rush to judgement about the quality of the argument on the basis of my attempt to sum it up in a few words.

The general line of argument seems to me to be plausible. Trial narratives might not have been invented in the 18^th century, but the author seems to be successful in establishing that they became common around that time. His explanation for reification of happiness makes sense. 

However, there is an alternative, less complex, explanation for reification of happiness. With advances in science and technology and the spread of education following the Enlightenment it is reasonable to expect that people in Europe would generally have tended to became more aware of the consequences of the choices that they were making in all aspects of their lives.

The author seems to me to draw a long bow when he attributes the choices that some people currently make, for example the choice to work longer or harder now in order to obtain greater happiness later in their lives, to the power of the trial narrative in modern thinking. People may see themselves as making sacrifices now in order to obtain greater rewards later, but that is no reason to question their capacity for self-direction by implying that they are subconsciously following some kind of script which requires them to undergo a trial of their virtue.

The author attempts to link the trial narrative to Immanuel Kant’s argument that ‘the sovereign who wants to make the people happy according to his concepts’ is likely to become a despot. Surely Kant’s argument that people differ in their thinking about happiness to such an extent that it cannot be ‘brought under any common principle’ deserves to be considered on its merits. If pursuit of happiness is viewed as a collective goal, rather than an individual right, is there not a real possibility that collective efforts to make individuals happy will end up making them miserable?

I found Soni’s discussion of what he describes as ‘the erasing’ of the political concept of happiness during and following the American revolution to be interesting and illuminating. However, I don’t think he is correct in his view of the consequences of failure to include collective pursuit of happiness via government as an explicit goal in the US Constitution. He suggests that ‘without the open and indeterminate horizon of happiness to guide our politics, the state of legitimacy in which we live can have no other purpose beyond maintaining itself’ (p 479). That seems to me to devalue the intended role of the state in defending the rights of citizens to pursue happiness as they see fit and the contribution of civil society to the pursuit of public happiness. And I doubt whether he is correct in implying that Jefferson, the main author of the Declaration of Independence, saw individual pursuit of happiness as a purely private and domestic matter. It seems likely, as suggested by Darrin McMahon (‘Happiness’, p 325-6), that Jefferson's view of the individual pursuit of happiness included a strong dose of doing publicly useful things. McMahon notes that Jefferson was familiar with the work of Francis Hutcheson who argued that people tend to obtain ‘private pleasure’ by ‘constant pursuit of publick Good’.

It is interesting to speculate what effect the inclusion of a goal of pursuit of collective happiness in political constitutions might actually have on public policies. Bhutan’s experiment with gross national happiness (GNH) suggests to me that it would be likely to result in further reification of happiness. Applying a national happiness yardstick to all aspects of public policy tends to make the happiness objective more specific. Pursuit of GNH seems to be evolving increasingly toward specific policies such as discouraging smoking and encouraging organic farming. The niggling concern, lurking at the back of my mind, is that pursuit of GNH could actually impact negatively on the ability of individuals to live happy lives. Sending people to jail for possessing tobacco products or pesticides seems to me to be unlikely to help them to live happy lives.

Finally, I don’t think our modern view of happiness is quite as shallow as Soni implies. While it is common to view happiness as purely an emotion, when you ask people whether they have had a happy life the response you are likely to get is a narrative – a story of flourishing or languishing, or more likely periods of both flourishing and languishing. I am reminded at this point of the findings of Dan McAdams’ narrative research (discussed briefly on this blog here and here) which suggests that the life stories of many people involve redemption themes. In these stories the narrator encounters many obstacles and suffers many setbacks but eventually develops toward actualization of an inner destiny.

Having read and thought about ‘Mourning Happiness’ I admire the ambitious attempt made in this book to identify the dominant narrative theme in our modern lives. In the end, however, I am not persuaded that the dominant narrative themes in our modern lives stem from Richardson’s ‘Pamela’ and similar 18^th century novels. Perhaps it might be just as valid to argue that the dominant narrative themes in our modern lives stem from Homer’s ‘Odyssey’or the biblical story of Job. I suspect it might be an impossible task to identify the different themes in mutually exclusive ways and to disentangle their influence from other factors that impact on on the way we currently view happiness.