Sunday, October 29, 2006

What good is happiness? It can't buy you money.

Robert H. Frank is a distinguished left-leaning Economist. In "Passions within Reason", he invented an explanation for why emotions exist. In this "Economic Scene" article, he argues that
1. Economic Growth does not make a society happier over time

Many critics of economic growth interpret this finding to imply that continued economic growth should no longer be a policy goal in developed countries. They argue that if money buys happiness, it is relative, not absolute, income that matters. As incomes grow, people quickly adapt to their new circumstances, showing no enduring gains in measured happiness. Growth makes the poor happier in low-income countries, critics concede, but not in developed countries, where those at the bottom continue to experience relative deprivation.

but
2. Economic Growth is still important because happiness is not the point of growth.

Subjective well-being is typically measured from responses to survey questions like, “All things considered, how satisfied are you with your life these days?” People’s responses are informative. They tend to be consistent over time and are highly correlated with assessments of them made by their friends. Positive self-assessments are strongly linked with behaviors indicating psychological health. Thus, people who report high levels of subjective well-being are more likely to initiate social contacts with friends and more likely to respond to requests for assistance from strangers. They are less likely than others to suffer from psychosomatic illnesses, seek psychological counseling or attempt suicide.
In short, self-assessments of subjective well-being tell us something important about human welfare. Yet the mere fact that they do not ratchet up over time provides little reason to question the desirability of economic growth.

Why is this? Because our emotions (motivational system) evolved to ensure that we can never be permanently happy- we are survival machines for our genes.

The purpose of the human motivational system, according to psychologists, is not to make people feel happy, but rather to motivate actions that promote successful life outcomes. To be effective, this system should be flexible and adaptive, which it is. For example, people who become disabled typically experience deep depression after their accidents, but often adapt surprisingly quickly, soon reporting a mix of moods similar to what they had experienced before. Lottery winners invariably experience joy on receiving their windfalls, but often describe such feelings as fleeting.

Since life is a continuing competitive struggle, this is as it should be. Accident victims who can recover their psychological footing quickly will function more effectively in their new circumstances than those who dwell unhappily on their misfortune. Windfall recipients who quickly recover their hunger for more will compete more effectively than those who linger in complacent euphoria.

A Holocaust survivor once told me that his existence in the camps took place in two separate psychological spaces. In one, he was acutely aware of the unspeakable horror of his situation. But in the other, life seemed eerily normal. In this second space, each day presented challenges, and days in which he coped relatively successfully with them felt much like the good days of the past. To survive, he explained, it was critical to spend as much time as possible in the second space and as little as possible in the first.

These observations highlight the weakness of subjective well-being as a metric of welfare. The fact that people adapt quickly to new circumstances, good or bad, is just a design feature of the brain’s motivational system. The fact that a paraplegic may continue to be happy does not imply that his condition has not reduced his welfare.

Indeed, many well-adjusted paraplegics report that they would undergo surgery entailing substantial risk of death if doing so promised to restore their mobility. Similarly, the fact that people may adapt quickly to higher incomes says nothing about whether economic growth makes them better off.

This is a profound observation. Tyler Cowen quotes Daniel Ariely making a similar point about his life after suffering severe burn over his entire body

...my personal reflections are only in partial agreement with the literature on well being (see also Levav 2002). In terms of agreement with adaptation, I find myself to be relatively happy in day-to-day life – beyond the level predicted (by others as well as by myself) for someone with this type of injury. Mostly, this relative happiness can be attributed to the human flexibility of finding activities and outlets that can be experienced and finding in these, fulfillment, interest, and satisfaction. For example, I found a profession that provides me with a wide-ranging flexibility in my daily life, reducing the adverse effects of my limitations on my ability. Being able to find happiness in new ways and to adjust one’s dreams and aspirations to a new direction is clearly an important human ability that muffles the hardship of wrong turns in life circumstances. It is possible that individuals who are injured at later stages of their lives, when they are more set in terms of their goals, have a more difficult time adjusting to such life-changing events.

However, these reflections also point to substantial disagreements with the current literature on well-being. For example, there is no way that I can convince myself that I am as happy as I would have been without the injury. There is not a day in which I do not feel pain, or realize the disadvantages in my situation. Despite this daily awareness, if I had participated in a study on well-being and had been asked to rate my daily happiness on a scale from 0 (not at all happy) to 100 (extremely happy), I would have probably provided a high number, probably as high as I would have given if I had not had this injury. Yet, such high ratings of daily happiness would have been high only relative to the top of my privately defined scale, which has been adjusted downward to accommodate the new circumstances and possibilities (Grice 1975). Thus, while it is possible to show that ratings of happiness are not influenced much based on large life events, it is not clear that this measure reflects similar affective states.

As a mental experiment, imagine yourself in the following situation. How you would rate your overall life satisfaction a few years after you had sustained a serious injury. How would your ratings reflect the impact of these new circumstances? Now imagine that you had a choice to make whether you would want this injury. Imagine further that you were asked how much you would have paid not to have this injury. I propose that in such cases, the ratings of overall satisfaction would not be substantially influenced by the injury, while the choice and willingness to pay would be - and to a very large degree. Thus, while I believe that there is some adaptation and adjustment to new life circumstances, I also believe that the extent to which such adjustments can be seen as reflecting true adaptation (such as in the physiological sense of adaptation to light for example) is overstated. Happiness can be found in many places, and individuals cannot always predict their ability to do so. Yet, this should not undermine our understanding of horrific life events, or reduce our effort to eliminate them.

Economic growth is not about making people happier, but about increasing their freedom of action. People (individually and collectively) get to make choices that would otherwise have been infeasible. Without the economic growth of the past 50 years, Dan Ariely would not have survived his burns, and society would not have been able to spare the effort and skill that went into rehabilitating him.

4 comments:

gaddeswarup said...

I vaguely remember similar ideas expressed by Yama when questioned by Narada on a trip to Yamaloka.

gaverick said...

What is welfare if not “subjective well-being”? Ariely may be right that his self-reports of happiness “would have been high only relative to the top of my privately defined scale, which has been adjusted downward.” But this doesn’t suggest that subjective well-being is not his goal; only that it’s hard to measure when life events make your scale change. “Without the economic growth of the past 50 years, Dan Ariely would not have survived his burns.” And without surviving his burns, Dan Ariely would not have been happy. So even if we accept subjective well-being as the only good, economic growth has benefits.

Rajeev Ramachandran said...

re Gaddeswarup- let me know the details if it comes back to you? Should be interesting. re Gaverick: I agree that what matters for each of us is the subjective quality of life. I think the point Frank is trying to make is that economic growth permits us to enjoy many experiences that would otherwise be unavailable- neither Queen Elizabeth I nor the Emperor of China could ever have enjoyed a holiday in Bali- but that does not make society happier in aggregate because we tend to compare ourselves with others. That has usually been considered a failure of growth- what good is it if does not make us happier- but it may be a feature of the human psyche in which case there is no point bewailing it..Enjoy the cornucopia which growth is producing, and stop wondering if the neighbours are having a better time.

gaddeswarup said...

I googled and could not find it. Most of the Indian mythology I know I learnt from Harikatha recitals in Anfhra villages (I grew up in different villages and do not remember which village) in my school days; that was before 1954. It is possible that the the recitor embellished it or perhaps I am doing it. Vaguely the story is this; for some reason it stayed with me. Narada expected lot of unhappiness and misery in Naraka. To his surprise, it was as if people were going about their business and he queried Yama. Yama replied that is how life is; people adjust and get used to any thing. But I never read any mythology books and may be one of the religious people may remember the exact version. I too would like to know more about the story.
Coming to Frank's comments is he ignoring the diseases like obesity,diabetes that prosperity brings? May be his arguent would be, with prosperity, we will find new medicines and techniques to handle such things. Overall, the coments in the post seem fine to me.