Archive for October 16th, 2014

Maximising happiness does not maximise welfare…

October 16, 2014

Well, one cannot do anything  in excess. Earlier we said growth alone is enough. Now we just want to push happiness. The idea is be balanced. Both are important in their own ways.

Edward Glaeser, Joshua Gottlieb and Oren Ziv point why maximising happiness is not enough.

Governments are now measuring happiness, or subjective wellbeing, and some have begun trying to maximise it. This column discusses recent research showing that happiness is not the same thing as utility. The choices people make suggest that they have desires and objectives other than happiness. It is therefore possible to make people worse off while increasing their reported subjective wellbeing.

The authors show why people stay in cities which are not as happy:

In Glaeser et al. (2014), we measure subjective wellbeing across US regions using a large national survey. We use responses to a question in the Behavioral Risk Factor Surveillance System (BRFSS) conducted by the US Centers for Disease Control and Prevention (2005–2010), which asks,

“In general, how satisfied are you with your life?”

Possible answers are “very dissatisfied”, “dissatisfied”, “satisfied”, and “very satisfied”. We adjust the responses for demographic characteristics and sampling error.1 We can then determine each area’s subjective wellbeing for a comparable person.

We map these adjusted measures for each US metropolitan area and non-metropolitan region in Figure 1. (The Washington Post has produced another version of this map here.) We see that the Rust Belt, which includes areas such as Detroit and much of the Midwest, generally has lower subjective wellbeing than the rest of the country. From the mid-19th century the Rust Belt developed extensive manufacturing, but it declined significantly during the second half of the 20th century. New York City and much of California also have lower reported happiness, while the happiest areas are concentrated in the West, Upper Midwest, and rural South.2

When we examine relationships between life satisfaction and a range of area characteristics, the most striking fact relates to urban decline. As Figure 2 shows, cities experiencing the lowest population growth rates from 1950 to 2000 report significantly lower life satisfaction. This pattern shows up in our regressions with very strong statistical significance. It is robust to numerous specification checks and different assumptions about functional forms.

The welfare consequences of these differences depend on whether people are actively choosing where to live. If people are choosing to live in less happy areas when they have other options, this would suggest that they are making a conscious choice in favour of an area despite its low happiness. Figure 3 shows the distribution of population based on the happiness of the area where each person lives (as measured above). We show two distributions, one for people who moved between metropolitan areas from 2010 to 2011, and one for non-movers. For the movers, we use the adjusted life satisfaction of the new areas where they chose to live after the move.

The idea is less happy places are compensating you for the same.

Given that areas have different happiness levels, and some movers nonetheless migrate towards less happy locations, they appear to be looking for something other than pure happiness. Otherwise we might expect everyone to move to Charlottesville, Virginia – the happiest metropolitan area according to our measure. What are less happy areas offering to offset their sadness?

Our paper presents evidence that unhappy areas can compensate their residents with higher real incomes. We use historical survey data to show that larger, more productive cities were unhappy even during their more successful days. Residents were compensated for this unhappiness with better job opportunities and higher incomes. During the Rust Belt’s heyday, firms located in these cities for their natural advantages, such as access to waterways, that made up for the loss in happiness.

When the value of these natural advantages fell, and the cities became less productive, their populations declined significantly. These areas remain unhappy, but the population decline drove significant decreases in housing prices. This lowers the cost of living, so declining cities can offer surprisingly high real incomes to partly compensate for their lower reported wellbeing. This tradeoff is consistent with a model in which happiness is one component of utility. It is harder to reconcile with the idea that happiness is equivalent to utility, or is individuals’ ultimate objective.

Hmmm..

Well, the idea behind happiness research is to show growth alone does not matter. One should not say that happiness alone matters..

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How did history forget its role in public debate and the History manifesto

October 16, 2014

I had pointed to this book review of History Maifesto. The book is written by  and Jo Guldi.

Interestingly, the book is put up for free and looks like a great read. The conclusion chapter says:

(more…)


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