Happiness doesn't make good policy

By Charles Kenny, Center for Global Development

If you want to understand how far the craze for measuring happiness has spread, look no further than that venerable U.S. institution, the Girl Scouts. Last week they rolled out a new badge for excellence in understanding “the science of happiness.” And that should help the aspiring statisticians in their ranks, at least; politicians have taken to happiness polls like kids after another package of Thin Mints.

French President Nicolas Sarkozy recently suggested adjusting traditional economic indicators with a measure for happiness. Charles Seaford of Britain’s New Economics Foundation notes that government officials in Australia, Britain, China, Ecuador, Germany, Italy, Spain and the United States are joining France in moving toward tracking measures of the subjective quality of life. In Britain, the Office for National Statistics’ Integrated Household Survey now asks how satisfied people are with their lives; Labour Party advisor Richard Layard has called for subjective well-being polls to replace GDP altogether as the measure of a country’s progress.

Happiness polls certainly measure something that matters, and results regarding “what makes you happy” are consistent across countries. Those who say they are happy smile more than average; they sleep better and are seen as happier by friends, family, and psychologists. People who say they are happier go on to live longer, healthier lives. Not least, the polls suggest the value to happiness of short commutes and long holidays, two things we can all get behind. But wonderful though it may be to imagine calculating the costs and benefits of government action in giga-smiles per minute, there are real problems with using measures of happiness as the basis for policymaking.

Consider the much-discussed link between happiness and income. We know with a fair degree of certainty that recessions make people unhappy, unemployment makes them even more so, and unusually rapid growth can lead to a temporary boost in reported well-being in a country. But while more money makes people happier in the short term, they may not stay that way: The link between long-term income growth and happiness is hotly debated. A 2002 study by economists Ada Ferrer-i-Carbonell and Paul Frijters looked at changes in the happiness of Germans over time, asking subjects about both income changes and how satisfied with life they were on a scale of zero to 10. The results suggested that it would take an 800,000 percent increase in income to raise the average German’s reported satisfaction by one point on that 10-point scale. (In fact, happy people earn more as a result of their good humor: Who would you rather hire — Eeyore or Tigger? So governments might want to encourage happiness to improve economic performance, rather than the other way around.)

One conclusion from that evidence could be to say long-term GDP growth really doesn’t matter and we should be focusing our attention elsewhere. But it is also worth asking why so few people go around asking for a pay cut from their employers or refusing to accept their lottery winnings. Perhaps we care about other things in life than improving our answer to a pollster about how happy we are. We might value the prestige or the experiences money can bring, even if those things don’t make us declare we are ecstatic in a poll. The same applies to children: Analysis of the relationship between kids and life satisfaction suggests that people with kids are less happy than those without kids, but that doesn’t mean kids aren’t important to their parents.

In fact, over the short term, happiness poll averages vary as a result of all sorts of daily hassles and small pleasures rather than anything we really want policymakers to focus on. Princeton University economist Angus Deaton has looked at daily tracking polls of subjective well-being in the United States during the financial crisis and suggests that, while they did track the performance of the U.S. stock market, scores were nevertheless “affected more by the arrival of St. Valentine’s day than a doubling of unemployment.” He concludes, “In a world of bread and circuses,” monitoring changes in happiness polls “picks up the circuses but miss the bread.”

Adding to the difficulties of using happiness to guide policy is the fact that it has more to do with humans’ inherently social nature than with the kind of absolutes that government policies can easily affect. Happiness researcher Carol Graham at the Brookings Institution reports that unemployment matters to happiness scores in general but matters less so when many others are unemployed. And being thin makes you happy in the United States and sad in Russia. Being absolutely rich matters a little, but what really matters is being richer than your peers and neighbors. These kinds of complex and context-dependent relationships are tough to manipulate from Washington.

In fact, the nature of happiness can actually be a barrier to sensible policies. Over the long term, individual happiness reports just don’t change very much; people have a “set point of happiness” they return close to even after disability or bereavement, for example. And Graham notes that people’s immense ability to be happy even in grim circumstances means that they end up tolerating conditions that they shouldn’t; high death rates from easily preventable disease or kleptocratic rulers, for instance. How else to explain Nigeria ranking above Germany in average happiness or Colombia above Canada and the United States? Is the policy conclusion that Nigeria is doing better on what really counts than Germany?

This isn’t to say that politicians shouldn’t care whether their people are happy. But life is complicated and so is what makes up a good one. It is time to give up looking for a single indicator to capture how we’re doing at it. And if leaders still really want to help raise national reported well-being, Deaton’s results do suggest one approach. He reports that just thinking about politics makes Americans absolutely miserable, far more down in the mouth than the entire impact of the financial crisis. The implication: Maybe politicians should talk a little less — about happiness and about everything else, too.

Charles Kenny is a senior fellow at the Center for Global Development, a Schwartz fellow at the New America Foundation, and author of “Getting Better: Why Global Development Is Succeeding and How We Can Improve the World Even More.”