Is happiness inequality falling?

by on September 14, 2016 at 1:50 pm in Data Source, Economics, Philosophy | Permalink

It seems so, at least subject to the usual caveats about happiness studies:

In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has fallen in countries that have experienced income growth (but not in those that did not). Modern growth has reduced the share of both the “very unhappy” and the “perfectly happy”. Lower happiness inequality is found both between and within countries, and between and within individuals. Our cross-country regression results argue that the extension of various public goods helps to explain this greater happiness homogeneity. This new stylised fact arguably comes as a bonus to the Easterlin paradox, offering a somewhat brighter perspective for developing countries.

That is from a new paper by Clark AE1, Flèche S2, Senik C3. via Neuroskeptic.  In other words, for the variable that really matters for welfarism, inequality is down not up.  Shout it from the rooftops…

1 D John September 14, 2016 at 2:04 pm

I would, but the roof of my shanty might give way.

2 prior_test2 September 14, 2016 at 4:09 pm

Come now, in the average is over world, your American favela dwelling will not suffer such problems – “What if someone proposed that in a few parts of the United States, in warmer states, some city neighborhoods would be set aside for cheap living? We would build some ‘tiny homes’ [that]…might be about 400 square feet and cost in the range of $20,000 to $40,000. We would build some very modest dwellings there, as we used to build in the 1920s. We would also build some makeshift structures there, similar to the better dwellings you might find in a Rio de Janeiro favela. The quality of the water and electrical standards might be low by American standards, but we could supplement the neighborhood with free municipal wireless…”

Though considering the maze of American laws forbidding free municipal wireless, this seems a less than likely vision for the future. Nonetheless, Prof. Cowen expects you to have a better class of shanty in the future.

3 Alan September 15, 2016 at 6:34 am

So long as they are happy, what business is it of yours? Remember, he is talking about happiness, not income, wealth, or any other measure.

4 Doug September 14, 2016 at 2:42 pm

> Modern growth has reduced the share of both the “very unhappy” and the “perfectly happy”.

Wonder how much of this is attributable to population aging. Young emotions are more prone to passionate extremes. Older folks tend to have a more temperate mood, and do better at framing life’s ups and downs in a longer context.

5 Thor September 14, 2016 at 11:37 pm

Get off my lawn! You are making the grass unhappy!

6 Pshrnk September 14, 2016 at 3:03 pm

@Doug

Most, perhaps all.

7 msgkings September 14, 2016 at 6:09 pm

Yep. You can count on most of the big trends going on (low growth, low interest rates, reduced crime, more moderate emotional self-reporting, falling employment participation ratios, increasing deficits, etc) being driven by demographics.

8 coupon_clipper September 14, 2016 at 3:26 pm

Sorry, but why is happiness inequality bad? You’re not allowed to say “because it lowers happiness”, ’cause then you’d just measure average happiness instead.

I thought the whole reason *income* inequality was bad was because it lowered happiness. What’s the corresponding story for happiness inequality?

9 Li Zhi September 14, 2016 at 3:52 pm

One of TC’s better posts, 1. Referenced paper is paywalled 2. TC makes zero mention of the fact that it is a metastudy of ONLY 6 studies 3. Exactly zero quantitative measures of statistical strength he provides. Well done! By the way, what is a “stylised fact”? (and yeah, I did look up (and understand) OEDs definition of stylized, damned if I can figure why a serious author would use it in an abstract, nor what they are trying to say) But thank goodness both the “inequality” problem and the “happiness” question have be laid to rest. I smell a Nobel Prize…Oh, wait. Was TC being as sarcastic as me?

10 RPLong September 14, 2016 at 3:56 pm

So economic growth produces more GDM, or Gross Domestic “Meh.”

11 Barkley Rosser September 14, 2016 at 4:03 pm

Anybody cover China in those studies? While it has turned around more recently, China had falling happiness for awhile despite having one of the highest growth rates in the world and also substantially increasing income inequality. I have seen no studies on its happiness inequality.

There is a person who deserves a Nobel in all this and is unquestionably Richard Easterlin, who has done other important work as well in demography and economic history, although I am not forecasting who will get it this year, at least not yet.

12 Scott Mauldin September 14, 2016 at 4:11 pm

Interesting how reliably all indicators of falling inequality are posted on MR, and how rarely indicators of rising inequality are posted

13 Anonymous September 14, 2016 at 4:42 pm

Easterlin deserves a Nobel Prize ? For what, pray tell?

Happiness might not increase with economic growth, who cares. Happiness is an ill defined mental state that has a strong correlation to things we liberals hate anyways: well defined social roles, strong religious affiliation, nationalism, community institutions (church, Masonic lodges) and lack of diversity. Maximizing an elusive measure of happiness is chasing a ghost, and a sexist, homophobic, transphobic ghost at that.

New York City is consistently rated one of the most unhappy and neurotic places to live. Revealed preferences say people still want to live there.

Replace happiness research with where people move to, and we’ll get an accurate portrayal without the bullshit.

14 Thomas Taylor September 14, 2016 at 6:07 pm

“Maximizing an elusive measure of happiness is chasing a ghost, and a sexist, homophobic, transphobic ghost at that.”

Either Trump is slipping on the polls or Super Mario went on strike. Anyway the crazies are back.

15 Anonymous September 14, 2016 at 6:23 pm

It’s true, look at the regression results. Happiness is correlated with conservative religious idiots and lack of a belief in global warming and police murdering African Americans. Ignorance is bliss, am I right ?

Like I said, when Americans start moving to Malaysia and Indonesia en masse, or even moving to places which score higher domestically in happiness then we can take this seriously.

Revealed preference says people rather live in NYC and SF rather than the happiness centers of the Midwest.

Composition fallacy and sampling bias: garbage in, garbage out.

Hillary 2016

16 Thomas Taylor September 14, 2016 at 6:29 pm

Maybe we are just not giving the rich enough money yet.

17 Anonymous September 14, 2016 at 6:37 pm

I don’t follow. The places people prefer to live in have progressive policies. NYC, DC and SF are famous for their high taxes and commitment to social justice. The demand for housing is so high in these areas it’s almost unaffordable. Revealed preference shows people would rather pay a large premium and live in these places than be “happy” and live In small town Indiana.

If people preferred to live in “happy” areas, they would be steaming out of NYC and DC and filling up St Louis. What’s the average rent in these cities ? Oh yeah. Progressives win again.

18 Thomas Taylor September 14, 2016 at 8:08 pm

But it takes a country! We must make America great again, not just NYC. And of course Denmark and Norwayare doing nicely in happiness reports. Maybe they should give more money to the rich, too!

19 Lord Action September 15, 2016 at 9:38 am

“Revealed preference shows people would rather pay a large premium and live in these places than be “happy” and live In small town Indiana.”

That’s not right. Prices are highest in NYC and SF. Not sure why you’d include DC in the mix. Anyway, prices indicate _someone_ prefers to live in those places and the supply of penthouse apartments is small.

If you count total dollars (i.e., price x volume) spent on real estate, or if you count noses, suburbs are the winner by a landslide. People prefer medium density to high density or low density, at least that’s the revealed preference.

You’re making the argument that people prefer diamonds to water because diamonds have higher prices.

20 Lord Action September 15, 2016 at 9:45 am

“If people preferred to live in “happy” areas, they would be steaming out of NYC and DC and filling up St Louis. ”

I don’t agree with your methodology (to the extent that you have one), but, this movement is exactly what you see in the US, right? There’s massive flight from the northeast and California into the middle of the country, particularly the south and southwest. Places like NYC and LA are kept going by immigration, presumably because they’re seen as more like the places the immigrants come from.

This is just the first link Google turned up:

http://www.governing.com/gov-data/census/2010-census-state-migration-statistics.html

21 So Much For Subtlety September 14, 2016 at 7:04 pm

Anonymous September 14, 2016 at 6:23 pm

It’s true, look at the regression results. Happiness is correlated with conservative religious idiots and lack of a belief in global warming and police murdering African Americans. Ignorance is bliss, am I right ?

No you’re not right. Happiness is correlated with a lack of police shooting African Americans. That happens in diverse neighborhoods. And Detroit. New York is miserable because it is so ethnically diverse. Detroit is so unhappy because it is not so diverse but that is another matter.

Nowhere, except perhaps Detroit, are the police murdering people. Saying that makes me think you are not very happy. Have you thought of moving out to the suburbs? Maybe a small mid-Western town?

22 Barkley Rosser September 15, 2016 at 1:49 pm

Besides coming up with the Easterlin Paradox, which you dismiss with a “who cares?” (sorry “Anonymous,” but lots of people care), he completely founded the modern social scientific study of happiness that cuts across most of the social science disciplines. He did so initially in a now very heavily cited paper in 1974 that he could not even get published in a journal and it came out as a book chapter. He got things going more vigorously with another paper 20 years later, which appeared in the journal I used to edit, JEBO. I may be prejudiced because he was the major prof of my major prof, but in fact the case is strong for him to get it, and absolutely if economics of happiness gets the prize.

23 Unanimous September 14, 2016 at 5:59 pm

While you’re shouting, don’t forget to shout this bit: “Our cross-country regression results argue that the extension of various public goods helps to explain this greater happiness homogeneity.”

24 Benny Lava September 14, 2016 at 6:58 pm

“Shout it from the rooftops…”

Motivated reasoning strikes again.

25 Gavin Roberts September 15, 2016 at 8:31 am

I should shout from the rooftops that fewer people are very happy or perfectly happy? Decreases in inequality are bad if they are the result of fewer people at the top…Right?

26 Barkley Rosser September 15, 2016 at 1:51 pm

Regarding data in happiness studies, (which I have only seen about 10 million of as a journal editor), cross-country is the worst due to cultural differences, time-series within a nation is next best, but with problems as different people from different generations roll through. Best is panel data on a fixed set of people.

27 Paul Barnsley September 15, 2016 at 10:11 pm

Happiness data is ordinal. It’s really hard to measure the distributional properties of ordinal data, unless you can observe or infer the underlying cardinal phenomenon and how respondents are mapping it to the bounded, ordinal scale. As a result, most studies simply assume it can be treated cardinally.

Methodologically, happiness equality research is a mess, even if you take happiness data pretty seriously.

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