Components of Happiness

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness” (US Declaration of Independence, 4 July 1776)

The idea that the pursuit of happiness was an objective equal in importance to life and liberty quite blew my mind when I first read it as a teenager. Today, without wishing to disparage this brave and wonderful statement by the American Founders (who were no doubt still giddy to have got away from the English), I would question its political and historical basis. Firstly, I would suggest that, on the whole, and throughout civilised history, most people have been more often unhappy than happy. Secondly, I don’t think we can have any rights in the matter, just because we’re born. It is enough to be lucky — to be born in a peaceful period in a reasonably happy culture.

Certainly the life of the peasant — which has been the lot of the vast majority for most of mankind’s past since about 8-10,000BC — has been an arduous one, with only occasional levities to relieve the pain and the boredom. Besides exploiting them, the governing establishments from former times also furnished their populaces with religions which taught them to accept their lot fatalistically. Perhaps ordinary people didn’t really think whether they were really happy or unhappy. Today, of course, billions of people in what are termed the undeveloped countries are unhappy and, because of the radio and TV media which seeps into even those countries, their inhabitants are aware that they’re relatively deprived. And all the more unhappier because of it.

In the following article from a recent Financial Times, the writers summarise modern findings about happiness and caused me to search for further papers on the Internet. There’s not a great deal to be found because research into happiness is a fairly recent fashion, hitherto being thought outside the economist’s proper field, but there are quite a numbers of researchers in the field, mainly psychologists, sociologists but also a few economsts. Much of it is summarised, and further researched, by a well-known economist in the happiness field, Prof Andrew Oswald of Warwick University, and reading several of his papers has raised what I think are a couple of important issues in my mind.

But before I mention these, let me comment on a particular chart which accompanied the FT article which I cannot show here. This was a chart of a “Life Satisfaction Score” from maybe 40 or 50 countries as carried out by the UK Cabinet Office in 2002 (World Value Survey: Life Satisfaction). The chart also arranged the scores on a horizontal axis according to GDP per capita. As perhaps might be expected, a bunch of high-scoring countries appeared at the high income end. These included Iceland, Holland, Switzerland, the US, Sweden, Norway, UK, and West Germany (but not East Germany — see later). From slightly less wealthy countries, but still scoring in the highest happiness band, were people from Ireland and New Zealand. But the shock came from much further to the left of the chart because here, also in the uppermost life-satisfaction band, were Mexico and Ghana where average per capita incomes are one fifth and one-twentieth of the average in developed countries.

So happiness is not about income per se. A good income helps but there appears to be a limit to its effectiveness. A psychologist from Illinois University, Edward Diener, has spent a lifetime of research on happiness and his work shows very clearly that wellbeing rises with income, but only up to a modest middle-class level. After then, money decouples from happiness. Also, researchers in Holland actually give a number to this — in their country, happiness appears to flattens out at about a salary of US$10,000. Actually this relationship between income and happiness is the basis for much of Prof Oswald’s research. If someone on a particular income has a typical “happiness score” of say 5 to a particular question and then, if he’s tested again a year or so later when he’s had a salary rise of, say £5,000, and his score becomes 6 then the test starts to mean something. If, then, many other individuals of approximately the same ages, salary levels and in the same culture are tested then the scores are found to become very reliable, even predictable, as different life events are considered. This type of scoring can be used for reliable compensation payments. For example, if two well-matched groups are tested on their happiness scores with and without proposed enhancements to their environment on the one hand or detriments on the other, then the change in their scores can be calibrated in monetary values.

Two of the most dramatic results from Prof Oswald’s research between matched groups is that between married and divorced people, and between those with jobs and those without. They both register right off the income scale, the deprived halves of both groups feeling that they would need about US$150,000 to compensate them for their losses. This is perhaps not so surprising in the case of the unhappiness caused by divorce but it’s almost ridiculous when thinking of jobs because the compensation is several times more than the average income. Thus, on this basis, almost whatever job a person took — even sweeping the streets on a minimal wage — would be a huge bonus in monetary terms, far more than the job paid. So there has got to be much more in a job than the monetary gain. There are psychic parameters involved here. In particular, I would suggest that the loss of a job also means the loss of community and it is this that is the major penalty when someone is made redundant.

I can think of two anecdotal examples of no scientific value that have struck me quite forcibly in times past. The first is that, so very often, I have noticed that people who have retired from their jobs sometimes return to visit their former colleagues, sometimes quite frequently. Some of these retirees bravely say that they are enjoying retirement but, for some weeks or months, it is almost as if they are in a state of grief and needing the consolation of their former comrades, even if only briefly. My second example is that of the millions of people who put up with hours of commuting every day into the cities. I see hundreds of them every day stuck in traffic jams along my road, which has become a rat-run instead of the main London Road further down the hill. Many of these commuters, I am sure, could find a job nearer home and save themselves hours of time and very possibly make a net saving on total expenses after saving on travel costs. They might have originally found their city/factory/clerical jobs when they were younger and more ambitious but, once embedded in a group — their only real community — then they will put up with a huge amount of pollution, stress and time-wasting every day just to continue to be a member of it.

But although Prof Oswald’s monetary correlations may be reliable enough when reading within the scale of happiness, this doesn’t take us a great deal further in understanding happiness as a whole. We have already seen that it goes wildly off-scale for some matters like job losses and the monetary method is hardly reliable when dealing with people with high salaries. However, I think the same psychic component applies in both cases — it’s a community factor. In the case of a person who is contented on a modest salary then it is the social inclusion in his normal work group that is important. In the case of the more ambitious person it is the rank he has that is important. His level of salary is important not so much for the happiness it brings him but as a useful measure of his status compared with his colleagues at work or his neighbour.

It is this sort of consideration that can finally make sense of the apparent anomaly in the Cabinet Office’s survey mentioned at the beginning of this posting — that people from entirely different cultures and countries with entirely different incomes can be quite as well contented as another. It is much more a matter of their inclusion and ranking within their own particular type of culture that is important. There is a lot of further research from psychology and game theory which confirm that absolute amounts of rewards are much less important that the relative rewards one receives compared with others who are known to you and are in similar conditions. Here it might be mentioned that, even after 15 years, East Germans are nowhere near as contented as West Germans despite the fact they are now generally far better-off than they were in communist times. It is because they are now comparing themselves with fellow Germans instead of with their communist peers in the former Soviet Union — when they were far better off relatively.

Finally, bringing Andrew Oswald’s reseaches in aid of my own economic hypothesis of the prime importance of status-giving stratum goods, it can be clearly shown that the general happiness in America, the most advanced and the most prosperous country in the world, has been at a standstill, if not declining slightly, since the 70s. (Will anybody make a bet that happiness is going to increase in the future? The bet is that life-satisfaction will continue to decline. Even if it only a slow decline it is a serious portent.) It is fair to make this comparison because the culture has not change greatly during that period when the built environment and civic values have been much the same (though it would be greatly unfair to make a comparison between the average American of 2003 with that of 1903, of course). The general happiness quotient has declined slightly mainly because the general happiness of women has declined quite steeply as described in the FT article below. Women’s liberationists would say that this is understandable because women have not yet gained the same rights as men. But, bearing in mind the monetary-compensation methods of Oswald and others, the decrease in happiness of women would require compensatory payments far more than the present income differentials that exist between the sexes.

This fact of declining life-satisfaction, bearing in mind the contemporaneous decline in family size since the 70s means, to me, that family is also a significant component to women’s happiness. Modern life is now becoming too stressful and costly in time and money to raise more than just over one child per family. For the single mother on average or, more usually, less than average income, even the raising of one child is an extremely stressful task in our day and age. And there is a substantial number of career young women these days in our modern commercial world who delay having children from year to year so repeatedly that they find themselves close to, or beyond, a comfortable child-rearing age all too soon. Or, if they decide to have a child in their late 30s or early 40s, they then become aware that the chances of giving birth to a defective child is many times higher than if they had borne children in their 20s.

All in all, therefore, our modern way of life, even with oodles more apparent prosperity doesn’t augur well for a happy life and this runs counter to almost all that the economics text books of the past 100 years have been saying. We can forgive the classical economists such as Adam Smith and David Ricardo of more than a century ago because they were considering populations in which basic issues of survival, such as sufficient food, were importantly involved. It is less difficult to forgive economists of, say, the last 30 years who still assume that the compilation of consumer goods leads to contentment. Despite the Declaration of Independence, happiness is not a right that you can go to court to obtain. If we wish to be happy in the future then something will have to be done in a very radical way about having more real leisure, more community, and more status and social inclusion. These previous commodities cannot be bought with ever-higher incomes or the purchase of expensive consumer goods.

Perhaps we ought to pack-off all the academic and governmental economists and send them to the undeveloped world where their nostrums still have some validity while their economies catch up and indeed produce a better preceived life for their people. But for us in the developed world we need to create Faculties of Happiness in our universities and set about reconstructing our society. This won’t happen, of course, but I am foolish enough to believe that some entrepreneurs will start to discover this immense market niche waiting for them. I think there are signs already in the recent phenomena of managed and gated communities. Given that we are living in an increasingly information-based society and that we already have the basic technology for distance methods of work, I think this is quite feasible quite soon once the formula is arrived at (mainly that of the built environment that the entrepreneurs may offer — the social side can be safely left to the inhabitants). But these products are, at the moment, only for the reasonably well-off, and can thus be considered possible candidates for the concept of stratum goods according to my own modest economics hypothesis.