Happiness Flashcards
Why use happiness (2)
Which country use happiness
Income-based measures (GDP) omits important aspects affecting wellbeing.
Also can overlook distribution of income i.e inequality not captured in GDP per capita
Bhutan
What do income-based measures omit, examples (2 pos and 2 neg
B) How do we typically measure wellbeing, and issue with this
Improved health (quality of life)
Improved life expectancy
Increased pollution
Longer commuting times
B) utility - problems with reliability of survey data
Easterlin paradox
b) who does this concern in particular
At a certain point wellbeing stops rising along with economic growth. (We then get negligible gains i.e insignificant)
B - developed nations - economic growth does not increase wellbeing
So what would this look like visually
What is the threshold for negligible gains approximately
Concave curve, since marginal utility (mean life satisfaction) diminishes as growth increases
B) Around £30k
Main takeaways of easterlin paradox
Happiness and income go up together in the short run.
In long run - unrelated
How to measure happiness (2)
Surveys - as can’t be directly observed! (Reliability issues)
US general social survey (very happy, pretty happy, not too happy)
Eurobarometer Survey
Findings
Mean life satisfaction 3.16 (out of 4)
31% reported themselves very happy (the highest one)
What does this imply
Difficult to achieve significant increases in average happiness, since almost 1/3 unable to report themselves higher than already.
What does this say for research design
Needs a finer scale, to be able to see improvements/disimprovements.
(Only 3 possible options, so implies people who pick the top cannot be improved. (The 31% that picked very happy!)
Issues with measuring happiness (4)
Subjective - define happiness differently.
Distinguishing between transitory variations
(mood vs underlying happiness)
(Even if holistic measure) Can it be conveyed to the researcher?
Comparability
Well-being function
r = h(u(y,Z,t)) + e
r is reported wellbeing
happiness (h) is just a function of…
u is true utility which is determined by
y: income
z: other factors e.g married/unmarried
t: time
e: error
Relationship between r and u
B) Draw diagram for the wellbeing function too! (Pg 20)
Key: given level of r (reported wellbeing) is associated with a range of different u (utility)
since there is an error term e.g to account for measurement errors
B) diagram captures error term by having different u’s for the given r (on the Y axis)
So some economists reject using happiness since survey data too unreliable.
Blanchflower and Oswald oppose this & use psychology.
What did they say happiness is affected by (4)
Circumstances e.g job, marital status
Aspirations
Comparisons with others (keeping up)
Baseline happiness (naturally happier than others)
Using econometric t-tests:
What factors were significant on happiness (5)
Age
Gender
Work status
Marital status
Income
Age relationship with life satisfaction
Non-monotonic relationship with life satisfaction (getting older isn’t ALWAYS better)
Positive coefficent on Age² implications
B) what age does it hit this point for men vs women
Life satisfaction reaches a minimum at a certain point
Aroud 36 for men, 40 women
U shaped happiness: 3 stages
Youthful optimism > middle aged realisation (so hit minimum satisfaction)>old age acceptance/satisfaction,
Gender on life satisfaction
Men are slightly less satisfied with their lives than women (Same results in APS, genders are similar)
Work status on life satisfaction (unemployment and retirement)
Unemployment (and keeping house) has a large negative impact on life satisfaction, especially men!
Nothing on retirement impacting happiness (in APS they find life satisfaction increases during retirement but has an upper limit i.e stops increasing at 80!)
Marital status, divorce and widowhood on life satisfaction
Marriage has positive impact on life satisfaction
Divorce and widowhood has a negative effect
Income on life satisfaction (2)
Y in the wellbeing function
Higher income = higher life satisfaction
Relative income also matters to life satisfaction (comparison and keeping up matters!)
Main issues with these results (3)
Person-specific fixed effects - we cannot account for them
Reverse causality e.g unhappy people may choose to divorce, and so causality changes: now life satisfaction>events rather than events impacting life satisfaction
Time - perception of happiness varies overtime (olden day we weren’t aware of mental health or as informed on illnesses, so may have assumed that condition to be normal!)
So what should we also focus on?
General well-being (GWP)
How is national wellbeing measured in the UK (following 2010 election!)
Annual population survey
4 questions of the annual population survey (APS)
1) How satisfied life nowadays
2) To what extend do you feel things you do are worthwhile
3) How happy yesterday?
4) How anxious yesterday
Scored 0-10
Findings overall for questions (FOR FIRST SET OF RESULTS 2011/12)
Q1 and Q2) around 75% voted 7+/10 (happy, and life worthwhile)
Q3 - 11% rated below 5/10 for happiness yesterday (less happy)
Q4 - 22% rated MORE than 5/10 for anxiety yesterday (more anxiety)
Findings between age
Life satisfaction and worthwhile (q1,2) highest ratings among 16-19 year olds and 65-79, but 80+ rated lower (very old so health deteriorates)
(Supports u-shape curve, where life satisfaction is high, then falls during mid age realisation, then increases, BUT THEN UPPER LIMIT SINCE HEALTH STARTS TO DECLINE AS GET TOO OLD I.E 80+)
Did results vary within country?
No, different nations/regions had similar levels of life satisfaction
(Supports idea later of between country inequality being an issue)
Findings on health and anxiety relationship
Health is linked to anxiety. Because
50% of people who described health as “very bad” also rated anxiety score 7+
Whereas only 16% of those who describe health as “very good” rated anxiety 7+
Life satisfaction results by labour market status
When are we most satisfied (2)
When are we least satisfied (1)
More satisfied when employed, or economically inactive (retired etc)
Least satisfied when unemployed
Overall results in 2020: following COVID
B) Other alternatives to GDP: 3 EXAMPLES
Q1: Satisfaction has fallen.
Q2: Worthwhileness had fallen
Q3: Happiness yesterday fallen
Q4: Anxious yesterday increased (peak in 2nd wave)
So overall negative!
B) Human development index (HDI)
Index of Sustainable economic welfare
Genuine progress indicator (GPI)
What does Genuine Progress Indicator (GPI) measure
Considers economic, environmental and social factors (26 indicators)
What has happened to WORLD GDP and GPI overtime
While world GDP increased, GPI has stagnated.
What has happened to GPI and HDI in UK
Both have increased (so while world GPI stagnated)
4 Arguments in defence of GDP: Oulton
Unfair to ask GDP to measure welfare, it measures output, but it is does correlates with infant mortality & life expectancy! (So still can be useful)
Downplays inequality concerns
Questions Easterlin paradox, i.e arguing GDP DOES make us happier
Dismisses environmental concerns - as we focus on GDP more investment improves and discover better green tech
Jevon’s paradox
Mainstream belief:
Tech improvements in efficiency should reduce resource use. I.e use coal better, use less of it!
Instead, increasing efficiency in coal use did NOT correspond to diminished consumption of coal.
So why did coal usage not fall?
Developed countries were outsourcing production, not reducing resource consumption overall
Delusion of the glory of globalisation (Lucas)
What were we wrong about.
And what is the actual causes of globalisation (2)
Wrong about capital flowing from rich to poor countries, instead it is rich to rich.
Instead, it is the low wages that attract FDI and cause convergence of income
Institutional quality is the key, more important than wages e.g corruption
Main limit to growth
Planet boundaries; some evidence shows limit could be reached by end of 21st century!
Delusion of environmental Kuznets curves
2 stages of the model, and the criticism/delusion/reality
B) 2 Diagrams for kuznet curve vs reality
U-shaped pollution - first pollution increases since disregard environment and poor cannot pay to address environmental quality.
As incomes increase, they address pollution issues so pollution falls.
The delusion: Rich people actually pollute more!
Top 10% contribute 36% footprint
B)
Delusion of invisible hand
Inequality increased gini coefficient
Previously due to within country inequality. But recall APS showing within country inequality had similar levels of life satisfaction.
Now between country inequality has risen
Solution
Migration to improve ones chances (skilled labour prefer countries with inequality)
What did Piketty believe
Economic inequality is a natural for systems focused on growth at all costs.
(So perhaps move away from growth at ALL COSTS)
Sustainable wellbeing economy - what do they measure in this model?
Human and physical wealth
Equality & fairness
Social relationships
Natural environment
Where does it obtain its framework from (3)
Ecological economics
Happiness studies
Socio-economic determinants of health
Examples of what countries with a wellbeing economy are doing
Finland:
- advocating a better work life balance - 4 day week
What does wellbeing economy suggest wellbeing is determined by? (2)
Quality of lives and relationships
Securities of our futures
