Transcript Diapositiva 1

The economics of happiness
Jorge Guardiola Wanden-Berghe
Universidad de Granada
Bremen, June 2013
German Constitution, 1949
Article 56 [Oath of office]
On assuming his office, the Federal President shall
take the following oath before the assembled
Members of the Bundestag and the Bundesrat:
• “I swear that I will dedicate my efforts to the
well-being of the German people, promote their
welfare, protect them from harm, uphold and
defend the Basic Law and the laws of the
Federation, perform my duties conscientiously,
and do justice to all. So help me God.”
Scheme
1. Understanding happiness
2. What makes people happy (in general,
maybe you too)
3. Happiness and prosperity of nations
1. Understanding happiness
Universalism vs relativism
• Different conceptions of happiness.
• Different cultures.
• Different moments of time.
Could we find an universal idea of
happiness?
Paul Ekman
Kinds of happiness (SWB)
• Many kinds: Mariano Rojas’ classification:
– Hedonic
– Emotional
– Cognitive
– Mystical
• Contradictions could hold. Examples:
Methods to measure well-being
• Direct question
– Life satisfaction
– Domain satisfaction
• Day reconstruction method
• Life stories
• Brain scanner
Direct question
• In general terms, are you satisfied with
your life? Would you say that you are....?
• Cantril’s ladder
• Likert scale
• Did you experienced any emotion
yesterday? Yes or no
SWB and domains of life
It captures all aspects
of well-being,
assuming that life
consist in an aggregate
construction of some
specific domains that
determine satisfaction
Health
Work
Happiness
Family
This is bottom-up, but
top down also exist
Income
Couple
Disadvantages
• Adaptation (Sen), hedonic treadmill
• Order of the question influences answers
• Circunstantial and mood factors (Schwartz)
– Weather
– Finding money before answering
Kahneman et al., 2004
Life stories
• Write your own bibliography
• Observe the frequency in the use of certain
words
– Related with positive emotions (cheerfulness,
happiness and the like)
– Related with negative emotions (fear, guilt,
constrain and the like)
Scanner
• Brain as a map for positive and negative
emotions
2. What makes people happy
(in general, maybe you too)
What brings happiness?
Sonja Lyubomirsky
Correlates of happiness
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Age
Gender
Marriage
Employment
Income
Does money bring happiness?
Relationship income happiness
• Far from being perfect
• Diminishing marginal returns. More important
when income is low
• Basic needs satisfaction
• Interactions:
– Culture, psychological traits
– How money is devoted (efficiency)
Starting point
Material needs and satisfactors
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Hunger (food)
Water (access to the resource, pipes)
Sanitation (pipes, water)
Health (medicines, hospitals)
Refugee (house, electricity)
Education (school, notebooks)
Play opportunities (toys)
Being seduced by the market
• Marcuse (1964): Real needs and false
needs (publicity and manipulation)
• Galbraith (1977): Needs can be
created (idem, dependence effect)
• Keynes (1963): Absolute and relative
needs (You can satiate the first, but
the second depends on others)
Seducing example
• “For the man that have discovered us needs
that we did not know we had”
Scientific evidence
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Focusing illusion (Kahneman)
American dream (Kahneman)
Comparison with others (Duesenberry, Frank)
Satisfactors vs maximizers (Schwartz)
High income and lack of ethic (Piff, Frank)
Loss aversion and marginal returns
3. Happiness and prosperity of nations
Development indicators
• Gross National Income
• Human Development Report
• Other, more new (including happiness):
– Happy Planet Index (NEF)
– OECD Better Life Index
GDP
• Monetary value of production in a given place
and time
• Its increase can cause or produce:
– Inequality and poverty
– Environmental destruction
– Slavery and/or child work
– A war or a genocide
– Weapon production
Better life index
GDP/Income-happiness
• Easterlin paradox
• Paradox of unhappy growth
• Paradox of happy peasants and miserable
millionaires
Easterlin paradox
• In the cross section there is a positive
relationship income happiness
• However, longitudinal studies find that this
relationship does not hold, at least in rich
countries
Easterlin Paradox: UK
Easterlin Paradox: US
Paradox of unhappy growth
• Negative or insignificant relationship between
satisfaction with lfe and economic growth
Possible explanations
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Comparison effect
Gap aspirations-achievements
Greater consumism and working hours
Lack of relational goods
Flaws on providing public goods
Inequality
Happy peasants and miserable
milionaires
• In spite of material deprivation, cases in India,
Tibet, Bangladesh, Mexico and Kenia have
high satisfaction. Economic theory is wrong?
• Adaptation, lack of comparison
• Should we idealize poverty?
What makes you happy?