Suppose you wanted to establish whether children’s height increased with age, but you couldn’t measure height directly.
One way to respond to this problem
would be to interview groups of children in different classes at
school, and asked them the question Don suggests “On a scale of 1 to
10, how tall are you?”. My guess is that the data would look pretty
much like reported data on the relationship between happiness and
income.
That is, within the groups, you’d find that kids who
were old relative to their classmates tended to be report higher
numbers than those who were young relative to their classmates (for the
obvious reason that, on average, the older ones would in fact be taller
than their classmates).
But, for all groups, I suspect you’d
find that the median response was something like 7. Even though average
age is higher for higher classes, average reported height would not
change (or not change much).
So you’d reach the conclusion
that height was a subjective construct depending on relative, rather
than absolute, age. If you wanted, you could establish some sort of
metaphorical link between being old relative to your classmates and
being “looked up to”.
But in reality, height does increase
with (absolute) age and the problem is with the scaling of the
question. A question of this kind can only give relative answers.
Here is the link.
Addendum: Here is Will Wilkinson on same.
The problem with your hypothetical is that we CAN measure height directly, but we cannot measure happiness directly. You are begging the question of whether the reason we cannot measure happiness directly is because it is a subjective construct based on relative factors, or because each individual has an absolute level of happiness, but some other limitation prevents direct measure of that level.
Why would anyone suppose that happiness is one-dimensional?
Because most economists are?
Isn’t happiness defined by our own perception of it? I don’t grow taller in absolute terms because I think that I am taller than most. However, am I not happy if I believe that I am? I know that anecdotal evidence accounts for nothing, but from my personal experience (not me personally, but my surroundings), there has actually been a postive correlation between depression (as in I have been ordered to take anti-depressants-depressed) and income. I believe there’s a weak correlation between income and perceived happiness, and that it is a standard normal distribution. As I said, I have no empirical data to back that up, just personal observations.
To get back on topic, the problem is that people are using flawed analogies due to a poor definition of happy. Height is how many centimeters you are from head to toe. You can think that you are really tall, or really short, but looking at the definition we can find out by measuring. Happiness on the other hand, is not so easily defined. I personally see it as my own perception on my wellbeing, and general state of mind. Until we come up with a standardized and measurable way to define happiness, we aren’t really going to see any good measurements of it.
Consumption almost certainly increases happiness, but income does not (directly) because it is only the yearly increment to wealth, and wealth does not (directly) because it is only the claim on resources, not the actual consumption of resources: if wealth (and income) is not expressed in consumption, it has no effect on the experience of the consumer (except for misers who get satisfaction from wealth for its own sake). Most important, even consumption can have only limited effects on happiness, because even the most profligate consumers have only 16 hours a day to garner the experiences resulting from their consumption, and can only do one thing at a time. exactly the same as all the other consumers. A $300 meal does not give 30 times the experiential satisfaction of a $10 meal, especially if the latter consumer is hungry and the former is not. Having 10 cars or 10 houses is not 10 times as experientially satisfying as one car or one house because you can only drive one car at a time and live in one house at a time (not to mention the declining marginal utility of consumption). So the function relating happiness to money consumption is much steeper than that relating happpiness to the experiences resulting from consumption.
I wonder: has anyone actually thought about the actual physiological basis
of happiness? Serotonin levels or such? It’d make the question of income
vs. happiness easier to measure.
madsocialscientist:
Some people have actually proposed the revealed preferences way of going about things, as you have. One way would be to look at immigration/emmigration numbers, and that would reveal peoples preferences. Where do people get the highest utility? The problem is that there are so many unkown factors (some are easier to find than others, but the level of beaurocracy (sp?) is one. Anyway, I don’t think that revealed preferences gives us any information about happiness at all (emmigration _might_ show misery, but immigration does not show happiness). That would mean that people are a lot more happy in Sweden than Finland, and I doubt that there is any difference at all. Revealed preferences is a great tool and can help us economists with a lot of things, like for example how much more we should spend on road construction to statistically save one more life.
This is mostly speculation on my part, but I hold my stance of criticism on this issue.
whoops, first sentence should have read “income, wealth and consumption all appear to have separate effects…”
p.s. there’s lots of good discussion of this over at CT.
conchis: I agree, and you eloquantly put forth what I was trying to say. Maybe I wasn’t clear on what I was trying to say, but revealed preferences is not a good way of measuring things like this, especially not through immigration (this was suggested by someone on the original paged that is linked).
There’s pretty strong evidence that the ideal conditions for creating growth (such as insecurity, high labor mobility, and increased inequality) are not conducive to happiness.
There is strong evidence that the lack of growth is not conducive to happiness and that countries where people anticipate a future that is worse (or no better) than the past is neither a happy country, nor an open, tolerant country. See The Moral Consequences of Economic Growth. And nor is there evidence that levels of happiness are low in countries with dynamic economies (the U.S. and Ireland for example) nor that those levels are high in lower growth, more statist European economies. Quite the reverse seems to be the case: Americans Remain More Optimistic and Satisfied with Life than Europeans.
But you’re right that there is a very strong political undercurrent to this purportedly scientific debate. The old lefty belief was, “Centrally planned, statist economies will eliminate the inefficiencies of capitalist competition and grow faster.” The new lefty belief is, “Although statist economies grow more slowly, they make people happier.” Both claims are seductive but neither turns out to be true.
I think how happy people behave is the best measure of how happy people are. How often people smile and laugh suggest a great deal about how happy they really are. Yeah there are movies and stories about people that appear to be happy and are really sad. But we make stories about exceptions rather than rules. Things are usually how they appear. I think people have pretty solid knowledge of how happy they are. People have seriously flawed knowledge about how happy they were. And people, I would guess, would consistently undervalue the happiness of others. Kind of like how everyone thinks that they’re above average at driving. Only worse.
So in a way it seems like a child knowing how tall they are but not knowing how tall anyone else is or how tall they were before.
Even if inequality, for instance, made people unhappy, should we care (on an ethical level)? The fact that I’m jealous of my neighbor’s Ferrari is not a good reason to impose a social system where he doesn’t have a Ferrari and neither of us are materially any different, isn’t it?
Further, the mapping of utility to “happiness” is making a philosophical leap that I’m not ready to accept. ‘More satisfaction’ might be a better term for what we mean by “Agent A prefers Bundle A to Bundle B.”
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