30 January 2010

Happy peasants and miserable millionaires

Carol Graham looks at the issue of happiness across societies/economies in an article in Voxeu ' Happy peasants and miserable millionaires'

This capacity to adapt – and the mediating role of norms and expectations – poses all sorts of measurement and comparison challenges, particularly in the study of the relationship between happiness and income. Can we really compare the happiness levels of a poor peasant in India, who reports to be very happy due to low expectations or due to a naturally cheery character, with those of a successful and very wealthy CEO, who reports to be miserable – due to his or her relative rankings compared to other CEO’s, or to a naturally curmudgeonly character? This is something that I have called the “happy peasant and miserable millionaire problem” (or the happy peasant and frustrated achiever problem). On one level it suggests that happiness is all relative. On another it suggests that some unhappiness may be necessary to achieve economic and other sorts of progress. The examples of migrants who leave their home countries – and families – to provide better futures for their children, or revolutionaries who sacrifice their lives for the broader public good, come to mind. This also raises more difficult questions, such as whether we should tell a poor peasant in India how miserable they are according to objective income measures in order to encourage that peasant to seek a “better” life; or whether we worry more about addressing the millionaire’s misery or increasing the peasant’s happiness.
This happy peasant and miserable millionaire paradox also raises the question of the appropriate definition of happiness. What makes happiness surveys such a useful research tool is their open-ended nature. The definition of happiness is left up to the respondent, and we do not impose a US conception of happiness on Chinese respondents, or a Chinese definition on Chilean ones. The open-ended nature of the definition results in the consistent patterns in the basic explanatory variables across respondents worldwide, in turn allowing us to control for those variables and explore variance in the effects of all sorts of other things on happiness, ranging from crime rates to commuting time to the nature of governing regimes.

Fulfilment or contentment?

At the same time, as we think about happiness as a measure of welfare with relevance to policy – something that is increasingly in the public debate – then the definition does matter. Are we thinking of happiness as contentment in the Benthamite sense, or as a fulfilling life in the Aristotelian sense? There is still much room for debate. My studies of happiness around the world suggest that respondents’ conceptions of happiness vary according to their norms such as expectations and ability to adapt. Our priors as economists and policymakers likely suggest that some conceptions of happiness – such as the opportunity to lead a fulfilling life – are worth pursuing as policy objectives, while others – such as contentment alone – are not. Yet that choice entails normative judgements and a debate which we have not yet had.
At the very least, this conundrum will give economists food for thought – about happiness and income, and beyond – for several years to come. Moreover, despite the difficulty it poses for both method and economic philosophy, it will also force us to think deeply about what measures of human well being are the most accurate benchmarks of economic progress and human development.

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