January 11, 2005

Come On, Get Happy

Economics is often called "the dismal science."  But as we've mentioned before (see our series of posts), a handful of dismal scientists are taking a closer look not at what makes the economy hum, but at what puts smiles on our faces.

Research on moods and well-being has traditionally been in the domain of psychologists.  But economists are increasingly drawn to these topics because, as this this Financial Times (UK) article details, traditional measures of economic output (including Gross Domestic Product) have become almost wholly decoupled from our sense of well-being.  To wit:

Economic output as measured by GDP has risen steeply in recent decades in the developed economies but people have not been getting significantly happier...If the link between GDP and happiness no longer exists, one of the key objectives of government policy in keeping GDP on an upward trajectory is called into question.

And interest in the topic is spreading beyond academia. The Gallup Organization, one of North America's top polling companies, is developing a phone survey to measure national well-being, based on the the work of happiness researchers.  According to one of the economists working with Gallup, "If all goes well, we should be able to implement the method a year from now. I hope it could, years from now, become as important as GDP."

Now that would be something to smile about.

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December 14, 2004

The Risk-Based Society

Sunday's New York Times Magazine highlighted what is, to my mind, one of the most important economic insights to come out of the past year:  even as our material wealth has grown over the past 30 years, our incomes have become less secure.  More so than in the past, families find that a year of high income can be followed by a financial bust.  Seen from above, "the economy" appears to be flowing along smoothly; but hidden beneath the surface is a growing turbulence in the economic fortunes of individual families.

And as this article in Sunday's Los Angeles Times points out, the problem is especially acute for the poor, whose incomes are more volatile, and for whom temporary financial setbacks can mean homelessness or worse.

Now, if people were comfortable with this kind of volatility, this wouldn't really matter.  But the evidence suggests that they're not:  for most of us, the threat of losing income looms larger than the prospect of a windfall.  (This is a phenomenon explored by the so-called "prospect theory" developed by Nobel laureate Daniel Kahneman and Amos Tversky; Kahneman was mentioned in yesterday's post on TV, kids and happiness.)  So rising volatility in income may undermine people's sense of economic security, even if, on average, they have more material wealth.

At some level, it should come as no surprise that rising incomes are accompanied by rising volatility.  Professional investors are used to the idea that, over the long haul, increased risk yields increased rewards.  That's why stocks are usually considered better long-term investments than bonds:  year to year, stocks are riskier, rising and falling more each year than bonds; but (in theory, if not always in practice) if you can manage to hold on to stocks through the roller coaster of ups and downs, the ultimate payoff is greater.

But what's natural for big-time investors is less natural for people who are living paycheck to paycheck.  For most of us, stability and predictability have every bit as much a claim on our psyches as does the potential for hitting the jackpot.  Which may be one reason why, in our increasingly risk-based society -- where individuals are expected to bear the risks of an increasingly turbulent economy, while managing for themselves their own health care and retirement plans -- people are no more satisfied with their lives than they were when they were materially poorer. (See more of our posts on this subject here.)

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December 13, 2004

TV Weak

A week or so ago, we mentioned a recent study published in the journal Science (subscription only) about a new method for measuring happiness.  The study, by Nobel economist Daniel Kahneman and colleagues, attempted to quantify which activities are most enjoyable, and which ones people find least gratifying.  (Kahneman is a pioneer of "behavioral finance,"  a discipline that mixes economics with psychology in order to understand why people don't always behave as classical economics predicts that they should.)

But when I got around to reading the original article, something seemed amiss:  the coverage of the study that I'd seen in the mainstream press didn't really match the contents the article itself. 

Most newspapers emphasized a side point -- that people were in a better mood when they watched TV than when they were caring for their kids.  Here's a sampling of the headlines:

Feeling low? Send kids away, watch TV - San Francisco Chronicle
What Makes People Happy? TV, Study Says - New York Times
Study: TV alone more fun than watching kids - LA Daily News
Feeling of good cheer? Maybe it was the TV - International Herald Tribune

Now, there's no question that the 909 Texas women studied in the article reported more positive feelings, and fewer negative ones, while watching TV than while taking care of their kids.  But it was a narrow margin.  On a scale of 1 to 6 in "positive affect", TV watching scored 4.19, taking care of kids 3.86.  In terms of positive affect, both were near the middle of the pack, not at polar extremes.

In fact, TV watching, so widely touted as the cure to the blues, was actually number 7 on a list of 16 different things you could do with your time, behind sex, socializing, relaxing, praying, eating, and exercising.  Positive affect during sex (or "intimate relations") was 5.1; while socializing with friends, it was 4.59.  By comparison, watching TV (at 4.19) is a downer.

On the down side, positive affect while commuting to work was a lowly 2.88 -- making it just about the worst thing you could do with your time.  Working at a job in which there is "pressure to work quickly" was nearly as bad.  In comparison, caring for your kids (at 3.86) is a vacation.

So the conclusion I draw from this research is not that I should shoo away the kids to spend more time with the comforting blue glow of my TV set.  Quite the contrary, the research is clear:  friends make you happier than FriendsAnd a far better strategy for increasing "positive affect" -- a measure of happiness -- is to try to spend more time socializing, and less time commuting to pressure-filled jobs.

So why did all the press coverage tout the benefits of TV over caring for kids?  It probably comes down to the press releases.  This one, from the National Institutes of Health (which funded some of the reseach), actually misstates the findings of the study, calling TV-watching the third most enjoyable activity.  (The press flack who wrote it appears to have misinterpreted a chart.)  This one, from the University of Michigan (the home institution of one of the researchers), uses the findings about children -- that parents find childrearing to be rewarding in the abstract, but often tedious from day-to-day -- to discuss the benefits of the study's methods for determining which activities improve people's moods.  So it seems that the press releases, and not the article itself, set the tone for the story.

And I suppose that some reporters got caught up in emphasizing the allegedly counter-intuitive:  that happiness is found more in a warm TV than a child's smile.  But on reflection, I don't know why the TV-kids comparison should seem counterintuitive.  I have a tantrum-throwing toddler and an infant who doesn't sleep through the night -- so I'm painfully aware that dealing with kids is tough.  And it should come as absolutely no surprise that TV -- far and away the most popular form of entertainment in the U.S. -- is, at a minimum, mildly enjoyable.

But by emphasizing a flashy factoid, the articles (or, at least, their headlines) obscured some potentially useful information about how people can actually improve their lives.

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December 02, 2004

Happiness Is a Warm TV

A study using a new method to measure happiness (we've covered this field extensively, here) turned up some surprising findings, the New York Times and the NIH report. A team of psychologists and economists--led by Nobel Prize-winning economist Daniel Kahneman of Princeton--used the so-called Day Reconstruction Method to study daily mood swings in 909 women from Texas. The women kept a diary of everything they did during the day, and then later rated how they felt during each activity.

Contrary to previous research on daily moods, the study found that the women rated TV-watching high on the list, ahead of shopping and talking on the phone, and ranked taking care of children low, below cooking and not far above housework.

Not surprisingly, commuting and spending time with one's boss anchored the low end of the pleasurability scale. And sleep affected everything: a night of poor sleep could make an activity as joyless as commuting.

Most surprising, perhaps--and consistent with several other recent studies--was that money had little to do with mood. After controlling for other factors, the researchers found that even differences in household income of more than $60,000 had little effect on daily moods.

The investigators hold that the Day Reconstruction Method allows people to more honestly assess happiness by tying moods to a specific activity, while acknowledging that mood is but one element of the complex phenomenon of human well-being. In any case, this study is yet more evidence of the maturation of the field of "happiness economics," which Kahneman and others hope will bring us closer to a national indicator of well-being as influential as the GDP. Now that would be something to smile about.

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October 18, 2004


The article itself is a ho-hum repeat of things we've been saying for a while.

But it's a sweet headline in today's Post Intelligencer

Economists now agree: 'You can't buy happiness'
Buying 'stuff' doesn't do it, survey shows

Posted by Alan Durning | Permalink | Comments (0)

July 19, 2004

What Good is Happiness, It Can't Buy You Money

Recent advances in the economics of happiness (discussed on this blog here, here, and here) are getting a little more mainstream attention, due to the growing body of research on the relationships between money and subjective wellbeing.

The bulk of the research that's been done on the subject suggests that the correlations between income and happiness are weak. In general, wealthier people are a little happier than the less well off, but it takes an awful lot of income to "buy" the happiness that companionship and community provide for free. For example, on average a long-lasting marriage is worth about $100,000 in annual income -- which means that a stable, 30-year marriage has a present value of about $1.3 million. That's quite an investment opportunity.

But an interesting trend in reporting about this research is that, rather than emphasizing how little difference money actually makes to happiness, many reporters (as well as some academics) are trumpeting the modest contribution that money does make to our sense of wellbeing. Thus, headlines like this one, on the relationships among happiness, money, and sex: "Money Buys Happiness, But Not Sex".

I expect to see more of this, as reporters on the economy beat -- who are used to seeing things in terms of hard cash -- use their own intellectual filters to understand and distill what, to them, could be a somewhat threatening area of research.

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June 18, 2004

The Economics of Un-happiness

Amish_iStock_000000112426_L1Most physical health trends have improved over the past half century. But mental health trends have diverged radically, according to this article (pdf) (Summarized in my previous post.)

For reasons that no one really understands (social isolation? pollution? competitive individualism? media saturation? secularism? modern conveniences?), as societies around the world have grown richer at a galloping pace, their mental health has plummeted. Depression rates in the United States have climbed perhaps tenfold in the span of 50 years, and the incidence of anxiety disorders has also skyrocketed. Authors Ed Diener and Martin Seligman write, “the average American child in the 1980s reported greater anxiety than the average child receiving psychiatric treatment in the 1950s.” Mental illness is striking at earlier ages, as well. The average age of depression's first onset is now in the already-vulnerable adolescent years.

Mental illness is now epidemic in the United States. Roughly one sixth of Americans suffer from clinical depression, an anxiety disorder, or another mental illness during any given month. Over a year, the figure rises to almost half of the adult population. (For comparison, roughly one third of American adults suffer obesity; roughly one quarter smoke.) Measured by the number of years of normal daily life ruined by various diseases (“quality-of-life-adjusted life expectancy,” the specialists call it), depression is on a trajectory to become the worst health problem in industrial countries by 2020.

The trend is not a fluke of better reporting; psychologists have designed their methods to prevent such biases. And cross-cultural comparisons underline how real this mental-illness upsurge has been among the affluent. Consider the case of the Old Order Amish: An ultraconversative sect living in Lancaster County, Pennsylvania, the 8,000 Amish forgo electricity and motorized transportation. They travel by horse and buggy, live the life of pre-mechanized farmers, and avoid most other amenities of industrialism. (Think of PBS’s “Pioneer House” or the children’s book Little House on the Prairie and you’ll get the picture.) It's a hard life, but it's not hard on their spirits: The Amish suffer somewhere between one-tenth and one-fifth as much depression as the “normal” Americans who dwell among and around them.

I’m not aware of Cascadia-specific mental-health data, but I’m chagrined to admit I've never looked. If anyone can assemble a reliable summary of regional trends, I’ll post your name in lights.

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June 17, 2004

Economics of Happiness, II

Further to last week’s post . . .

Ed Diener, of the University of Illinois and the Gallup Organization, and Martin Seligman, of the University of Pennsylvania have assembled a stunningly complete review of the disparities between economic indicators, on the one hand, and trends in how happy and satisfied in life people are, on the other. An uncorrected proof of their article, which is slated for publication later this year, is posted here in pdf.

This field of research has exploded in the dozen years since I wrote about it in How Much Is Enough? It’s exciting to see all the new research.

“Over the past 50 years, income has climbed steadily in the United States, with the gross domestic product (GDP) per capita tripling, and yet life satisfaction has been virtually flat,” as you can see in the graph below. Similar trends are evident in other industrial nations. Depression and mental illness have also soared, on which I'll post separately.


The article's purpose is to argue for a system of national well-being accounts to complement the economic “national accounts” system that generates such statistics as GDP. Employed as a proxy for the “pursuit of happiness,” the economic accounts are grossly misleading.

The article is long and unfortunately dense. Here are some highlights:

“Across nations, there are diminishing returns for increasing wealth above U.S. $10,000 per capita income; above that level, there are virtually no increases or only small increases in well-being. Moreover, health, quality of government, and human rights all correlate with national wealth, and when these variables are statistically controlled, the effect of income on national well-being becomes nonsignificant.” (Growth itself, in other words, obeys the law of dimishing marginal returns.)
“In rich nations, more and more income has been required over time to remain at the same level of well-being.” (Keeping up with the Joneses.)
Well-being is closely associated with social capital—with social engagement and trust in others. Social isolation is closely associated with unhappiness. Being with others is not just about getting support. In fact, giving service to others is more closely associated with well-being than is receiving support. (To give is better than to receive.)
Within a society, richer people report being happier than poorer people. But they’re no happier than the much-poorer elites of poor countries, nor than the much-poorer rich of bygone years. And other factors are far more important to happiness than income, as the mind-boggling table below illustrates. In fact, materialistic values—which tend to correlate with high incomes—are corrosive to happiness: materialistic individuals end up with “lower self-esteem and greater narcissism, greater amounts of social comparison, and less empathy, less intrinsic motivation, and more conflictual relationships.”
Compared with less-happy people, happy people earn more money (happiness buys money, even if money doesn’t always buy happiness). They also have stronger immune resistance to cold and flu viruses (think positive!), suffer fewer fatal accidents (good karma), and live longer lives (nine years longer, in one study).
The authors offer a partial formula for high well-being ·“Live in a democratic and stable society that provides material resources to meet needs ·“Have supportive friends and family [they specifically mention marriage as a huge plus for well-being] ·“Have rewarding and engaging work and an adequate income ·“Be reasonably healthy and have treatment available in case of mental problems ·“Have important goals related to one’s values ·“Have a philosophy or religion that provides guidance, purpose, and meaning to one’s life”

At last, the wisdom of the ages has been confirmed empirically, at the 95 percent confidence interval!

Seriously, the implications of this research are profound and far-reaching. At bare minimum, it reinforces my hope that well-being monitoring will some day be feasible in the Cascadia Scorecard. Over the long haul, it offers a set of indicators of human quality of life that could put into proper perspective such irrelevancies as the Dow and such statistical parlor tricks as the consumer confidence index.

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June 07, 2004

The Economics of Happiness

One of our greatest disappointments in developing the Cascadia Scorecard was our inability to include a measurement of northwesterners’ own sense of satisfaction with their lives and communities. The cost of gathering such data, and the technical challenges of reliable measurement, proved prohibitive. Someday!

But in recent years, academic research on happiness has exploded, bringing the day closer when it’ll be possible to track Cascadia’s happiness quotient. The implications of doing so would be profound, even revolutionary, according to a group of leading researchers who spoke recently at a Brookings Institution panel in Washington, DC. (Short summary here; full proceedings and papers available here.)

In essence, they argue, as a society, we’ve been scratching in the wrong place. We've been trying to maximize GNP instead of gross national happiness.

A few highlights, to entice you into reading further:

Americans’ inflation-adjusted income is three times that of their grandparents, yet Americans are no more satisfied with their lives now. In fact, young people suffer more stress and depression.
Researchers have now calculated how many extra (or fewer) dollars of income would be required to balance out the happiness effect of such life circumstances as being married, having good (or poor) health, living with aircraft noise, worrying about crime, and fretting about inflation.

Raising cigarette taxes, paradoxically, makes smokers happier. (!)

Becoming unemployment has a near-permanent impact on happiness; people may get a different job, but they don’t tend to recover their prior level of happiness. It leaves a scar of unhappiness.

Researchers have quantified the happiness impacts of a range of activities people engage in: among Texas women, for example, commuting to work is the worst. Having sex is the best. The former boosts GDP; the latter does not.

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