Happiness for Intl 106

UTILS AND SUCH

Bentham thought that pain and pleasure were the only intrinsic values in the world.

"nature has placed mankind under the governance of two sovereign masters, pain and pleasure.“

Effect on overall welfare is algebraically additive.

“The good is whatever brings the greatest happiness to the greatest number of people.”

Utilitarianism or the “Greatest Happiness Principle”

CONTINUED PRESENCE IN UCL

MILL AND MARSHALL

5

MAXING OUR UTILS

EDGEWORTH

EDGEWORTH BOX

EDGEWORTH’S OTHER BOX – THE HEDONIMETER A machine to measure utility, Edgeworth believed such a measurement

device to be necessary for the application of the science of economics (positive economics) to the real world.

“hedonism may still be in the state of heat or electricity before they became exact sciences”

WILHELM REICH – DISCOVERER OF THE ORGONE FIELD

AN ORGONE BOX BY WILHELM REICH

IS THAT BERNIE MADOFF?

WHAT’S IN A PICTURE

THE MODERN ECONOMIST APPROACH As economics grew more rigorous and

quantitative, more parsimonious definitions of welfare took hold.

Utility was taken to depend only on income as mediated by individual choices or preferences within a rational individual’s monetary budget constraint.

“Objective Approach” of economists: Based on Revealed Preference – we get what we

want! Assumes we always know what we want - rational

preferences Assumes we always know how to get it (rational

decision making and full information) A “Good is a Good and NOT a Bad”

A PSYCHOLOGIST’S APPROACH Hedonic Psychology

the study of what makes experiences and life pleasant or unpleasant.

It is concerned with feelings of pleasure and pain, of interest and boredom, of joy and sorrow,

and of satisfaction and dissatisfaction. It is also concerned with the whole range of

circumstances, from the biological to the societal, that occasion suffering and enjoyment.“

Subjective Approach: Self-reporting –questionnaire, survey

Physiological measurement Is there a machine to do this?

Measuring impulses in the brain or Measuring seratonin in system

THE SHAPE OF THINGS TO COME?

DANIEL KAHNEMANN

WHAT IS WRONG WITH GDP MEASURES PPP versus current X-rates Non-Market Production

Agriculture The washing paradox

Public Production How to value public production

User value or Factor prices The Gray and Black Markets

Barter, non-reporting etc – 22% in Italy, 8% in US Sustainability

Mineral depletion –oil states Pollution and Deforestation Depreciation of Public Facilities

DEFERRED MAINTENANCE

LA VIE DOUCE Increasing concerns about the adequacy of current

measures of economic performance, in particular those based on GDP figures.

Broader issues about the relevance of these figures as measures of societal well-being, as well as measures of economic, environmental, and social sustainability.

Together these identified the limits of GDP as an indicator of economic performance and social progress,

Articulated a need to consider additional information required for the production of a more relevant picture, to discuss how to present this information in the most appropriate way.

This is the charge of the Sarkozy Commission on led by Nobel laureates Stiglitz and Sen with others (Arrow) on the board.

SARKO KNOWS SOMETHING ABOUT HAPPINESS

SOCIAL TRANSFERS IN FRANCE

REAL INCOME USA AND FRANCE

IS LIFE BETTER THAN MONEY?

STIGLITZ/SEN REPORT

Individual current well-being has to do with economic factors, such as income, and with non-economic aspects of peoples’ lives what they do and what they can do, how they

feel, and the natural environment they live in. These levels of well-being can be sustained

over time if: stocks of capital that matter for our lives

(natural, physical, human, social) are passed onto future generations.

Ie the notion of “sustainability”

FROM MEASURING GDP TO ASSESSING WELLBEING

Unifying theme of the Stiglitz Sen report is: Now is the time for our measurement

system to shift emphasis from measuring economic production to measuring people’s well-being.

Changing emphasis does not mean dismissing GDP and production measures but supplementing them and

This probably means: Measurement or survey to establish well-

being

SURVEY APPROACH Happiness surveys are based on questions in

which the individual is asked, ‘Generally speaking, how happy are you with

your life’ or ‘How satisfied are you with your life’, with

possible answers on a four-to-seven point scale. Psychologists have a preference for “life

satisfaction” questions. Yet answers to happiness and life satisfaction

questions correlate quite closely. Lots of problems with surveys – mood

varies by time of day, ordering of questions, wording of questions all affect outcome.

MOOD AND HOUR

SUBJECTIVE WELL BEING

THE EASTERLIN PARADOX Most happiness studies find that within countries

wealthier/richer people are, on average, happier than poor ones,

However, studies over time find very little, if any, relationship between increases in per capita income and average happiness levels.

Wealthier countries (as a group) are happier than poor ones (as a group) – but there are obvious exceptions

Even among the less happy, poorer countries, there is not a clear relationship between average income and average happiness levels, suggesting that many other factors – including cultural traits – are at play.

“Relative income effect” Treadmill phenomenon

PART OF THE PARADOX

GDP/HEAD AND HAPPINESS 1

GDP/HEAD AND HAPPINESS 2

FACEBOOK’S METRIC

SATISFACTION WITH LIFE INDEX

BHUTAN – THE PIONEER IN GROSS NATIONAL HAPPINESS

1.   Psychological Well-being 2.   Time Use 3.   Community Vitality 4.   Culture 5.   Health 6.   Education 7.   Environmental Diversity 8.   Living Standard 9.   Governance

HAPPINESS IN DIFFERENT ACTIVITIES

HAPPINESS, PARTNERSHIP AND SEX

Oswald and Blanchflower found that to “compensate” for the loss in happiness of a major life event such as being widowed or a marital separation, it would be necessary to provide the average individual with $100,000 in extra income a year, or more than double their incomes.

On average, the amount of happiness bought by going from sex less than once a month to at least once a month is roughly equivalent to about $40,000 of annual income.

Sex brings a lot of happiness, but diminishing returns from sex does set in after that.

ENVY AND HAPPINESS

Harvard University’s Erzo Luttmer has shown that an increase of 10 percent, say, in neighbors’ earnings, or a 10percent decrease in one’s own income, have roughly the same negative effect on wellbeing.

Blanchflower found that “my happiness rises if I get a new BMW but doesn’t if my neighbors also get one. Here, neighborhoodshould be thought of broadly as any relevant comparator group,including colleagues and friends.

ENVY – OR NOT

HAPPINESS AND INCOME: 1975 AND 1998

CLASS AND HAPPINESS

WHERE ARE WE?

VENEZUELA

After 10 years as president, Hugo Chávez has polarized Venezuela, but inspired its poor.

WHO’S LAST?

WHY DENMARK Homogenous population

Solidarity, common purpose Fairly High Income

Globally #37 in GDP PPP/Head Even Distribution of Income

Relative Income is Important Good health care – universal, free Good education system – universal free High on Perceptions of Corruption Index

(#2) Fairly High on Sustainability (#32)

WHY NOT US? Falling Female Happiness

Too many challenges Declining Marriage Rate Worries About Big Things

Health payments Maybe health outcomes Life expectancies lower in US but not dramatically Worst Performance is in Infant and Maternal Mortality

Hangover after “Greatest Generations” Not good enough, no challenge Going Postal

Incompletely Offset by Higher Black Scores

TRENDS IN HAPPINESS BETWEEN GROUPS

TRENDS IN HAPPINESS BETWEEN GROUPS 2

DOES MORAL DECAY FACTOR IN

FEMALE HAPPINESS IN THE UNITED STATES

INCREASING MISTRUST

THE ROLE OF GENETICS

CHANGE IN REAL FAMILY INCOME

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