The economics of happiness

Washington Post: The economics of happiness

… For the past 10 years, I have been studying happiness around the world, in countries as different as Afghanistan, Chile and the United States. It has been an amazing foray into the complexity of the human psyche and the simplicity of what makes us happy. What is most remarkable is how similar the forces driving happiness are in various countries, regardless of a nation's level of development.

Wherever I look, some simple patterns hold: A stable marriage, good health and enough (but not too much) income are good for happiness. Unemployment, divorce and economic instability are terrible for it. On average, happier people are also healthier, with the causal arrows probably pointing in both directions. Finally, age and happiness have a consistent U-shaped relationship, with the turning point in the mid- to late-40s, when happiness begins to increase, as long as health and domestic partnerships stay sound.

All of this seems rather logical, suggesting that if a government wants to get into the business of promoting happiness, it can pursue some straightforward policy goals, such as emphasizing health, jobs and economic stability as much as economic growth.

But here's the complicated part. While there are stable patterns in what leads to happiness, there is also a remarkable human capacity to adapt to both prosperity and adversity. Thus people in Afghanistan — a war-stricken country with poverty like that of sub-Saharan Africa — are as happy as people in Latin America, where typical social and economic indicators are a good deal stronger. Kenyans, meanwhile, are as satisfied with their health care as Americans are with theirs. Being a victim of crime makes people unhappy, but the impact is smaller if crime is a common occurrence in their society; the same goes for corruption and obesity. Freedom and democracy make people happy, but the effect is greater when they're used to such liberties than when they're not.

The bottom line is that people can adapt to tremendous adversity and retain their cheerfulness, while they can also have virtually everything — including good health — and be miserable. …

…One thing that people have a hard time adapting to, however, is uncertainty. People seem to be much better at dealing with unpleasant certainty than with the uncertainty of how bad a particular health condition or economic downturn will get. My most recent survey research — with colleagues Soumya Chattopadhyay and Mario Picon — shows, for example, that average happiness in the United States declined significantly as the Dow dropped with the onset of the financial crisis in 2008. According to our calculations, happiness fell 11 percent compared with its pre-crisis levels, reaching its lowest point in mid-November 2008.

But when the market stopped falling and some stability was restored in March, average happiness recovered much faster than the Dow; by June, it exceeded its pre-crisis level — even though living standards and reported satisfaction with those standards remained markedly lower than they were before the crisis. Once the uncertainty ended, people seemed to be able to return to previous happiness levels, while making do with less income or wealth.

Yet if people can stay happy with less money, they can also become discontent with more. This is the paradox of unhappy growth. In research with economist Eduardo Lora, we found that, in countries with similar levels of per capita income, respondents experiencing higher economic growth rates are, on average, less happy than those with less growth. One explanation: Rapid economic growth typically brings greater instability and inequality with it, and that makes people unhappy. …

Fascinating article. Is maximum happiness really the objective of society? If more people are happier by keeping the status quo, what keeps society from stagnating? If people simply accepted the status quo 100 years ago, think of the technological, economic, and medical advances that would not have been experienced. Are dystopias like Fahrenheit 451 and Brave New World, where the objective is to keep the masses content really the answer? 

While economic growth and happiness both have their place, neither can be the ultimate standard against which societal health is measured for Christians. Our mission is to pursue shalom and realize God's Kingdom.