

The Economics of Happiness - mapleoin
http://www.adbusters.org/magazine/77/economics_of_happiness.html
"It seems almost unimaginable that economists would be now thinking of ways to design the tax system so that we work less, consume less and value each other and the planet more. But Layard would not stop there. (Advertising executives be forewarned.)"
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nazgulnarsil
well, $10,000 is surely the average. I believe it would be more accurate to
say that once peoples income exceeds their basic living expenses by some
factor it does not make them any happier.

how can I take this article seriously when it has "experts" spouting this? _So
most economists worry about how taxes discourage people from working, but in
fact, taxes can be encouraging people to have a less feverish pace of life and
to focus more on time with friends and family rather than consumption._

I don't even know how to respond to that sentence.

then there is this: _a dollar is worth 10 times more to a poor person than to
a rich person whose income is 10 times higher_

the idea of a decreasing marginal utility for money is not based on any
scientific research.

~~~
mkn
_< snip>how can I take this article seriously when it has "experts"
spouting</snip> [that] $10,000 is surely the average [income per capita] is
the average [and that] once peoples income exceeds their basic living
expenses...it does not make them any happier._

This seems to square well with Daniel Gilbert's work on happiness as well.
$40k/year for a family of four it $10k/capita. And I think we can at least
take it seriously (even if we disagree) because there really is research
behind these claims. Maybe we don't like the policies that the conclusions
seem to warrant, or maybe we can point to methodological flaws in that
research, but dismissing the claims outright is a bit premature.

 _So most economists worry about how taxes discourage people from working, but
in fact, taxes can be encouraging people to have a less feverish pace of life
and to focus more on time with friends and family rather than consumption._

 _I don't even know how to respond to that sentence._

Though the construction is a little awkward, he seems to be saying that taxes
do reduce the incentive to work, but that this is a good thing, because they
are inadvertently spending their time on the things that do empirically
increase happiness. In other words, the proposed indirect approach of _reduce
taxes - > increase hours -> higher income ->increase happiness_ may be less
effective than the proposed _raise taxes - > more free time ->increase
happiness_. I'm not saying I agree with either one, just that it's not
incoherent.

 _the [sic] idea of a decreasing marginal utility for money is not based on
any scientific research._

From the article: _We now have evidence that shows the extent of the
difference, which is roughly that a dollar is worth 10 times more to a poor
person than to a rich person whose income is 10 times higher._ Remember, we're
not talking about the power of a dollar to buy goods, but rather its power to
buy happiness. Marginal utility certainly applies to the goods purchased, and
the starving man's steak brings more happiness to him than does the CEO's.

~~~
nazgulnarsil
Since when are populist arguments about starvation? last I checked the
majority of poor Americans are fat.

"we now have evidence" counts as evidence? I'm sorry but I need to see that
evidence because it is exactly the type of study that can lead to wildly
different conclusions based on priors.

I've said this many times: relief should go primarily to the children of
outright destitute people. Children should not pay for the ignorance of their
parents. If we have any money left over? great. But the kids need to come
before the drug addicts.

My mother is on government assistance and vacations in europe every year while
children go hungry.

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mkn
This research immediately reminded my of Daniel Gilbert's _Stumbling On
Happiness_ , which is a wonderful read. The book details many of the myriad
ways in which we fail at predicting the affective result of various outcomes.
For example, people will predict that they'll feel just awful for months after
an election if the opposing candidate wins, yet report no change in happiness
in as little as a month after their candidate loses. Amazing stuff.

Another salient point is that we almost never take into account the fact that
we accommodate to the conditions around us. We truly believe that if we win
the lottery we will be happy forever, even in the face of mountains of data to
the contrary.

The most surprising result, I thought, was that (in the late 1990s U.S.
dollars) happiness begins at $40k per year, and increases only slightly for
incomes up to $100k per year, and then is essentially flat. One of the drivers
for this was that, at $40k per year, you typically get health insurance
through work, and this removes the primary worry that brings people's
happiness down.

I think the really interesting thing would be to see if you could convince
rich people of this so that they voluntarily, without legal compulsion, would
give up some of their wealth to make others happy. I'd be interested to see if
I would do this, if I ever became a .com/web 2.0 zillionaire.

~~~
toby
The problem is that most people spend the money they have, expecting more
possessions to improve their subjective well-being.

There are some exceptions to the "money doesn't buy you happiness" rule, my
favorite of which are: \- Spending a lot of money on loved ones or favored
charities does tend to make people happier \- Having a lot of savings makes
people more apt to handle negative shocks

It is, however, extremely difficult to resist the temptation to spend excess
cash even if you know of and believe the research that it doesn't make you
feel any better.

~~~
hugh
The real problem: asking people "are you happy?" isn't a good metric of their
well-being. The answer you get is determined mostly by (a) their personality
and (b) what's happened in their lives over the past few days (whether good or
bad).

But that isn't the same as saying that there are no differences in well-being
throughout someone's life. If I lose both my legs tomorrow I'll probably feel
bad for a while but after a couple of years learn to cope with my new
situation and return to my baseline level of happiness. That doesn't mean that
chopping off my legs is essentially a cost-free exercise to me though.

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Tichy
It seems to me anyone interpreting economics in such a literal sense is
entirely missing the point. I would expect true economics to be not about
people maximizing their monetary income, just as mathematics is not about
numbers. The reason that many economics papers talk about money is that it is
a convenient substitute for a measurement of well-being. But you can just
factor any other measurement into the economic models and the outcome should
be the same. The gist is, people make decisions to somehow maximize their
"whatever it is, happiness, well-being, whatever". It is entirely feasible to
think that individuals have individual "whatever it is things" - one might
strive to have more time for his family, the other might strive for a luxury
house and a Ferrari. Contrary to what the article suggests Economic theory has
no problem with that at all.

It is also untrue that 50 million $ could make ever so many people in Africa
happy - the problem is not raising the money, the problem is getting it to the
people.

Finally, I would have wished for more details on how the happiness for people
was determined. Maybe there is some kind of "bootstrapping fallacy" in it - if
"1 dollar makes a poor person 10 times as happy as a rich person", the poor
person is likely to give a higher rating for it's own happiness than the rich
person - in turn distorting the scale the happiness researchers is trying to
create.

Maybe brain scans would be a way for objective measurement of happiness, but
even with that I would remain skeptic for a very long time.

Another thing that should be taken into consideration is competition. It is
fine if your goal in life is to raise fine flowers in your garden, but if your
neighbor's goal is to build a 50 story skyscraper at the place where your
garden is, just seeding flowers won't be sufficient to maintain your
happiness. You might still be forced to move to where the money is so that you
can keep your flower hobby. In other words, evolution theory has to be
considered when trying to determine people's goals - only "evolutionary
stable" goals can prevail. People whose goal in life is to commit suicide
don't stand much of a chance in the long run.

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jcl
The conclusion -- that we can tax most of a CEO's income and he will be just
as happy -- ignores the fact that people do what they do because they _think_
it will make them happy, not because it actually makes them happy.

Sure, you can tax that CEO down to a base-level salary, then prove via a
survey that he was just as happy in a year's time. But what about the next
CEO-to-be? He is willing to do extraordinary work for extraordinary rewards,
because he thinks it will make him happier -- even though it won't. He may
take a look at the heavily taxed existing CEO and decide that the
extraordinary effort is not worth the modest rewards, even though he'd have
been just as happy having made the effort. So he doesn't try as hard, and
society as a whole is denied whatever product or service he would have
created.

In general, some level of dissatisfaction is what drives us to better
ourselves, and it's suspiciously convenient that we humans don't need much to
be happy and yet always expect to be happier with more. Legislatively removing
the incentive to pursue greater happiness -- even though it can be shown that
we don't need it and can't get it -- is playing with a complex process that
could have unintended consequences. Society's happiness as a whole could
suffer.

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mynameishere
I'll throw something because, why not?

Years ago, with a bunch of college buddies, I was watching the "Howard Stern
Show" and a caller came on and Stern was evidentally in a bad mood and the
caller was somewhat incoherent and eventually Stern hung up on him because of
the combination thereof...

Anyway, the producer (baba boey) came in an explained what the caller was
trying to ask [paraphrase]:

"That guy wanted to arrange a surgeon to install an electrode into his brain
so that electricity could be shot into his pleasure nerves (like rats in
various experiments)"

!!!

I had thought about this long ago as a potential SUPER drug. Just turn on the
juice, and you've got a 1000 hits of cocaine at 15 cents a KW/hour. I'm still
pissed that Stern hung up on that guy, because he probably could have arranged
an experiment. Can you imagine if that became popular?

Just think.....

~~~
Tichy
That experiment was done, google for it. It is quite amazing/shocking. The guy
with the electrode apparently pushed the button thousands of times within a
short period of time. It's just scary to think - I suspect nobody would have
the will power to escape that drug. Which in turn shows how clever nature has
programmed us (somehow making us DO things), and how little we really
determine our fates.

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anamax
The data doesn't support the conclusion. The authors don't understand why we
pay people.

I don't want someone to produce more because it makes them happier, I want
everyone to produce more so I have more.

For some reason, they won't produce more unless they get more money. If they
don't get more money, they do silly things that don't benefit me at all.

------
rw
Let's note that there is a difference (whatever it is) between _happiness_ and
_fulfillment._

------
rw
Let's note that there is a difference (whatever it is) between _happiness_ and
_fulfillment._

------
DanielBMarkham
Voted up for conversation potential.

In my opinion, its inane, but provocative.

Happiness is best studied at an individual's cognitive level. I don't think
that by the time you aggregate it and compare it to income the numbers have
any meaning whatsoever. Lots of correlation in the world. Lots of folks who
don't know science. Lots of folks who don't know the history of various
governmental schemes and how they failed (or worked).

In a way, because it's provocative, it's really kind of sad. A commentary on
the average state of discourse.

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time_management
For these sorts of questions, the water is very muddy in the US, due to the
proliferation of consumer goods. That's the thing that happens in a rich
society; people who are unhappy for social and economic reasons (shitty health
coverage, unable to afford ridiculous housing/higher education costs) are
still able to buy a lot of trinkets which, of course, fail to deliver on the
hedonic promise. Rich is definitely better than poor, but clutter does not
equate to wealth, and often makes a person worse off rather than happier.

Someone might be unhappy because of his mediocre health coverage (even the
insured are screwed), low occupational autonomy, meager two weeks' vacation
allowance, inability to reach the level of stability necessary to responsibly
procreate, et al. He's 35 and not really poor; he has enough discretionary
income to buy a $30,000 SUV-- which would be considered a luxury outside of
the US (in Europe, because of the high gas prices moreso than the cost of the
car). He does this to procure "happiness". It fails him (he returns to
baseline) after three weeks. Why did he buy it? Because he lacks the power to
make meaningful improvements to his life, whereas trinkets are cheap.

"Consumption" is a poor predictor of happiness because most consumptive
activity is utterly devoid of hedonic value. On the other hand, increased
security and autonomy would make people legitimately happier.

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kingkongrevenge
The commies just won't give up. After the obvious failure of state planning in
the 20th century they were short on angles. First they tried their government
heavy brand of "environmentalism" as a way to boss everyone around. Now
they've found "happiness research" as a propaganda tool.

~~~
ced
\- Unjustified name-calling irrelevant to the point of the article.

\- Compared to the other groups influencing society (marketing departments,
political parties, artists, The Media), modern environmentalists and "commies"
are 1. powerless 2. arguably beneficial, if perhaps not trustworthy as a
factual source.

\- Calling your point-of-view "obvious" on a complex topic is Proof By
Intimidation.

[http://www.maths.uwa.edu.au/~berwin/humour/invalid.proofs.ht...](http://www.maths.uwa.edu.au/~berwin/humour/invalid.proofs.html#1.2Proofbyintimidation)

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newt0311
Just wondering, why the obsession with happiness? As a society, shouldn't we
be out for the greatest output so that we can crush all other societies and
take over their resources (violently or not)?

~~~
rw
Hahaha. No.

~~~
Tichy
Are you sure? What if the other societies do that and crush us? How do you
eliminate competition? And would we really thrive without competition? I doubt
it, as it has many healthy side effects.

