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Dinners. HOW TO MAKE. with the. Reader. The Economics of Happiness. #3. A woollen coat. www.theseymourreader.com. Ed Diener. Martin Seligman. Scientists can measure people’s happiness. We finally can do it. Happiness is the goal of public policy. We’ve always meant to do it. - PowerPoint PPT Presentation
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The Economic
sof
Happiness
#3
Dinners
with theRe
ader
www.theseymourreader.com
HOW TO MAKE
A woollen coat
Ed Diener
Martin Seligman
We finally can do itScientists can measure people’s happiness.
We’ve always meant to do it
So let’s do it!Therefore, happiness should be a primary policy focus.
Happiness is the goal of public policy.
The big ideaUnified,
comprehensive science of happiness
Policies to increase
public happiness
Scientists can measure people’s happiness.
Happiness is the goal of public policy.
Therefore, happiness should be a primary policy focus.
The Philoso
phyof
Happiness
Scientists can measure people’s happiness.
Happiness is the goal of public policy.
Therefore, happiness should be a primary policy focus.
The Psychologyof
Happiness
Scientists can measure people’s happiness.
Happiness is the goal of public policy.
Therefore, happiness should be a primary policy focus.
The Economicsof Happiness
What does economics promise?
What does economics deliver?
What can policy deliver?
The Economicsof Happiness
What does economics promise?
What does economics promise?
Adam Smith1723-1790
1776
WEALTH
HERE THERE
RICH
POOR
RICH
WEALTH
HERE THERE
RICH
POOR
RICH
WEALTH
HERE THERE
RICH
POOR
RICH
NOW THEN
WEALTH
HERE THERE
POOR
RICH
NOW THEN
What makes this possible?
Stuff that might meet our needs
Stuff that does meet our needs
LABOUR
DIVIDING LABOURmakes it more
productive
SMITH’S PIN FACTORY48,000 PINS PER DAY!
SMITH’S PIN FACTORY4,800 PINS PER WORKER!
SMITH’S PIN FACTORY4,800 PINS PER WORKER!
SMITH’S PIN FACTORY4,800 PINS PER WORKER!Draw out the wireStraighten the wire
Sharpen the wireGrind the wireMake the headAttach the headColour the pinPackage the pin
Cut the wire
SMITH’S
SMITH’S PIN FACTORY48,000 PINS PER DAY!
SMITH’S PIN FACTORY48,000 PINS PER DAY!
SpecialisationTime-saving
Technology
EXCHANGEenables us to divide labour
DIVIDING LABOURmakes it more
productive
Autarky
Exchange
Exchange
A way to get what you want
Exchange
A reason to make more & better
Exchange
A reason to make what others want
EXCHANGEenables us to divide labour
DIVIDING LABOURmakes it more
productive
MARKET SIZEamplifies division
of labour
Stuff that might meet our needs
Stuff that does meet our needs
LABOUR
Stuff that might meet our needs
Stuff that does meet our needs
EXCHANGEenables us to divide labour
The division of labor
The propensity to
exchange
Stuff that might meet our needs
Stuff that does meet our needs
The division of labor
DIVIDING LABOURmakes it more
productive Productive powers
The propensity to
exchange
Stuff that might meet our needs
Stuff that does meet our needs
The propensity to
exchange
The division of labor
MARKET SIZEamplifies division
of labour Productive powers
EXTENT
OF THE
MARKET
Stuff that might meet our needs
Stuff that does meet our needs
Greater outputsFewer
inputs
LABOUR
HAPPINESS IS …making good
use of your time Greater outputsFewer
inputs WEALTH IS …making your own use of your time
What does economics promise?
What does economics deliver?
What can policy deliver?
OPPORTUNITIESNOT GUARANTEES
What does economics promise?
What does economics deliver?
What can policy deliver?
OPPORTUNITIESNOT GUARANTEES
What does economics promise?
OPPORTUNITIES
NOT GUARANTEES
Gains in wealth should correlate with gains in
happiness
Any such correlation should not be
extremely tight
Not much.
GDP level & happiness?
GDP growth & happiness?
1960s 1970s 1980s 1990s 2000s 2010s
Happiness data collection begins
MORE TIME
MORE PLACES
Sacks StevensonWolfers
Easterlin
Within a country, richer people report greater well-being than poorer people.
1
1
Richer countries have higher per capita well-being than poorer countries.
2
2
GDP level & happiness
Economic growth over time is related to rising well-being.
3
3
GDP growth & happiness
There is no evidence of a satiation point.
4
There is no evidence of a satiation point.
4
Global satisfac
tion
Income & GDP
CorrelationCausati
on
vs
“I don’t actually think it’s the income per se. I think it’s the opportunities that income provides. When people have more income they are more likely to say they get treated with respect during their day; that they have choice over how they want to spend their day; that they have good-tasting food to eat. All of this describes a life where, as you have more income, you make choices to put yourself in a better situation.”
CorrelationCausati
on
vs
It would be a mistake “to look at our studies and think that if you are offered two different jobs, the higher-paying job is going to lead to greater well-being.”
MONETARY BENEFITS+ NON-MONETARY BENEFITS
COMPENSATION
CorrelationCausati
on?
HAPPINESS IS …making good
use of your time Greater outputsFewer
inputs WEALTH IS …making your own use of your time
What does economics promise?
What does economics deliver?
What can policy deliver?
OPPORTUNITIESNOT GUARANTEESOPPORTUNITIESNOT GUARANTEES
What does economics promise?
“So, how good are we at using those opportunities?”
OPPORTUNITIES
Are people really that rational?
Does trade really make people happier?
Behavioural economics
“Errors of affective
forecasting”
Common …but not
unavoidable!
“Errors of affective
forecasting”
“How happy will this choice make
me?”
“How happy will that choice make
me?”
Stuff doesn’t make us as
happy as we think it will.
EXPERIENTIALPURCHASE
MATERIALPURCHASE
SLOWER ADAPTION
Higher reported happiness
Memory elevates mood
Where we focus while shopping
What will matter more later
HAPPINESS IS …making good
use of your time Greater outputsFewer
inputs WEALTH IS …making your own use of your time
HAPPINESSINCOME
MONETARY BENEFITS+ NON-MONETARY BENEFITS
COMPENSATION
HAPPINESSINCOME
MONETARY BENEFITS+ NON-MONETARY BENEFITS
COMPENSATION
HAPPINESSINCOME
MONETARY BENEFITS+ NON-MONETARY BENEFITS
COMPENSATION
TIME
HAPP
INES
SWhat is the ideal ratio of income to happiness?
What is the ideal ratio of income to happiness?
HAPPINESSINCOME
What is the ideal ratio of income to happiness?
HAPPINESSINCOME
What is the ideal ratio of income to happiness?
HAPPINESSINCOME
Forgone gains from trade
HAPPINESSINCOME
“Taking away a greater percentage of income from the rich will affect their happiness little.”
Ed Diener
HAPPINESSINCOME
MONETARY BENEFITS+ NON-MONETARY BENEFITS
COMPENSATION
TAXES
What is the ideal ratio of income to happiness?
HAPPINESSINCOME
Forgone gains from trade
Differences between people
What is the ideal ratio of income to happiness?
HAPPINESS
Preferences
Opportunities
Plans
Priorities
INCOME
Alternatives
Commitments
Ed Diener
HAPPINESSINCOME
Ed Diener
Isn’t it also democratic to grant each individual the right to decide whether his or
her ratio is worthwhile?
HAPPINESSINCOME
The ChoicePolicy is about
OUTCOMES
Happiness is the outcome that policy is meant to provide.
Better living through policy change.
Policy is aboutOPPORTUNITIES
Happiness is the opportunity that policy is meant to provide.
Better living through cultural change.
What does economics promise?
What does economics deliver?
What can policy deliver?
OPPORTUNITIESNOT OUTCOMESOPPORTUNITIESNOT OUTCOMESOPPORTUNITIESOUTCOMES?
What can policy deliver?
OPPORTUNITIESOUTCOMES?
The Economic
sof
Happiness
#3
Dinners
with theRe
ader
www.theseymourreader.com
HOW TO MAKE
A woollen coat
