Daily Bulletin

The Conversation

  • Written by The Conversation
imageHappiness about a new car is relative - it depends on your expectations and on what other people have. Shutterstock/Minerva Studio

This article is part of a series, On Happiness, examining what it means and how it might be achieved in the 21st century.

All happy families are alike; each unhappy family is unhappy in its own way.

– Tolstoy, Anna Karenina

Money doesn’t buy you happiness, but it does buy you a better class of unhappiness.

– unsourced, but perhaps a modification of a remark by Spike Milligan

Over the past 20 years or so, the study of the economics of happiness has boomed. By contrast, the economics of unhappiness has been almost entirely neglected.

The neglect of happiness is not simply a quirk of nomenclature, like the use of “health economics” to describe a field that is almost entirely concerned with responses to illness and disability. The central problem in the economics of happiness has been to determine how people’s answers to questions of the form “How happy are you?” are related to economic variables like income and employment. Unhappiness is never considered, except as the absence of happiness.

Even the most basic results of the economic theory of happiness are, to a substantial extent, spurious artefacts of the analytical framework rather than genuine facts about how people experience happiness.

The crucial finding is this:

Cross-country data shows pretty consistently that on average happiness increases with income, but at a certain point diminishing returns set in. In the developed world, people are not on average happier than they were in the 1960s.

Self-assessed happiness ratings are relative

The data that supports this consists of surveys that ask people to rate their happiness on a scale, typically from 1 to 10. Within any given society, happiness tends to rise with all the obvious variables: income, health, family relationships and so on. But between societies, or in Western societies like Australia over time, there’s not much difference even though both income and health (life expectancy, for example) have improved pretty steadily for a long time.

This sounds like a striking discovery, but actually it tells us little. An example illustrates the point. Suppose you wanted to establish whether children’s height increased with age, but you couldn’t directly measure height.

One way to respond to this problem would be to interview groups of children in different classes at school and ask them the question: “On a scale of 1 to 10, how tall are you?”

imageA class of children’s ratings of how tall they are don’t even tell us whether their group is tall or short overall.Shutterstock/Tyler Olson

The data would look pretty much like reported data on the relationship between happiness and income. That is, within the groups, you’d find that kids who were old relative to their classmates tended to be report higher numbers than those who were young relative to their classmates (for the obvious reason that, on average, the older ones would be taller than their classmates).

But, for all groups, the median response would be something like 7. Even though average age is higher for higher classes, average reported height would not change (or not change much).

So you’d reach the conclusion that height was a subjective construct depending on relative, rather than absolute, age. If you wanted, you could establish some sort of metaphorical link between being old relative to your classmates and being “looked up to”. But in reality height does increase with (absolute) age.

The problem is with the scaling of the question. A question of this kind can only give relative answers. Since we have no internal scale of happiness that would allow us to say “I feel 6.3 today”, the only way to answer the question we have been asked is with reference to some implicit expectation of what constitutes, for example, an above-average level of happiness, which might justify the answer 7 or 8.

In a society where most people are hungry most of the time, having a full belly might justify such an answer. If everyone has enough to eat, but mostly rice or beans, you might consider yourself happy to be eating roast chicken. And so on.

Inevitably, therefore, the income and health status needed to report yourself as more than averagely happy will depend on what you consider average. Critically, this is true whether or not people in rich societies are in fact happier, and whether or not the average person is happier now than the average person in 1960. A relative scale tells us nothing one way or the other.

Why unhappiness is more revealing

imageWith objective causes such as hunger, unhappiness may reveal more about well-being than happiness.Flickr/Filipe Moreira, CC BY-SA

If we think instead about unhappiness, a very different set of research questions emerges. While happiness is an elusive and subjective concept, there are plenty of objective sources of unhappiness: hunger, illness, the premature death of loved ones, family breakdown and so on. We can measure the way these sources of unhappiness change over time, and compare this to subjective evidence.

The shift of focus from happiness to unhappiness has important implications – most notably with respect to the central dividing line of modern politics, the welfare state.

The welfare state is not an institution much associated with happiness. Few people, if asked to list the sources of happiness in their life, would nominate the receipt of unemployment benefits, or a stay in a public hospital. What the welfare state does, or tries to do, is to remove or ameliorate many of the sources of unhappiness in a market economy: illness, loss of income through unemployment or inability to work, homelessness and so on.

The track record of the welfare state has been one of remarkable success. This can be seen by comparing outcomes in modern welfare states with those in the United States, where the New Deal produced only a stunted, and stinting, version of the welfare state. Despite its technological leadership and its founders' endorsement of the pursuit of happiness, the US leads the developed world on numerous measures of unhappiness, including premature mortality, food insecurity, incarceration and inadequate access to health care.

These achievements have not earned the welfare state much love on the political right. Whatever the ostensible concerns about fiscal sustainability, the real motive for most attacks on the welfare state is the feeling that unhappiness is good for us, or at least good for other people. Malcolm Fraser, in his now-forgotten incarnation as an admirer of Ayn Rand, put this sentiment as well as anyone when he opined that “life wasn’t meant to be easy”.

Despite decades of relentless attacks from the political right, with the support of “Third Way” converts from social democracy, the welfare state remains largely intact, and remarkably popular. We have even seen some limited expansions: examples include Medicare Part D and Obamacare in the US and the National Disability Insurance Scheme (NDIS) in Australia.

Nevertheless, a renewal of the social democratic project will require new theoretical foundations. Hopes that such a foundation could be found in the economics of happiness have so far not been fulfilled. What we need is an improved understanding of the economics of unhappiness.

This article is based on an essay by the author, What Happiness Conceals, which is part of a newly published collection, On Happiness: New Ideas for the Twenty-First Century (UWA Publishing, June 2015).

You can read other articles in the series here.

John Quiggin does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

Authors: The Conversation

Read more http://theconversation.com/measures-of-happiness-tell-us-less-than-economics-of-unhappiness-42817

Writers Wanted

How to encourage cyber-safe behaviour at work without becoming the office grouch


COVID's mental health fallout will last a long time. Here's how we're targeting pandemic depression and anxiety


Fake news was a thing long before Donald Trump — just ask the ancient Greeks


The Conversation


Morrison Government commits record $9B to social security safety net

The Morrison Government is enhancing our social security safety net by increasing support for unemployed Australians while strengthening their obligations to search for work.   From March the ...

Scott Morrison - avatar Scott Morrison

Ray Hadley's interview with Scott Morrison

RAY HADLEY: Prime Minister, good morning.    PRIME MINISTER: G’day Ray.   HADLEY: I was just referring to this story from the Courier Mail, which you’ve probably caught up with today about t...

Ray Hadley & Scott Morrison - avatar Ray Hadley & Scott Morrison

Prime Minister's Remarks to Joint Party Room

PRIME MINISTER: Well, it is great to be back in the party room, the joint party room. It’s great to have everybody back here. It’s great to officially welcome Garth who joins us. Welcome, Garth...

Scott Morrison - avatar Scott Morrison

Business News

Parental support is about more than time off, says Multiplex

Premier construction company Multiplex has launched a new parental leave and support policy which aims to support parents during periods of leave, and bolster their longer-term career progression an...

The PR Partnership - avatar The PR Partnership

6 Fundamentals to Know When Running A Business

You started a business or stayed in business for a year. Excellent, but do you know how to build a thriving business, especially in these tough times? Below are tips that will help guide you in stee...

News Co Media - avatar News Co Media

TransferWise changes name to Wise after 10 years

Works towards meeting international banking needs of Aussie consumers, businesses and banks beyond money transfers   Melbourne, Australia, 23 February 2021 - TransferWise, the global technolog...

Wise - avatar Wise