Posting has been very light this last week because I have been at the Sydney meeting of the Mont Pelerin Society, an international (36 countries represented at this meeting) organisation of classical liberals started by Hayek and Friedman in the late 1940s.
I was a discussant on Jason Potts‘ paper on happiness economics. Jason’s paper was on an aspect of what I see as the conflict between the classical liberal and social democratic views on happiness research.
Social democrats (eg Richard Layard) look for statistical associations between happiness levels and social or economic conditions, with the hope that by manipulating those conditions they can increase happiness. In Jason’s perspective, this is happiness Keynesianism – a confidence in the ability of government to identify and manipulate macro social and economic indicators to maximise gross national happiness.
Jason took what might be called a Hayekian view of happiness – that knowledge of what makes people happy in specific social circumstances is highly decentralised. We receive information from our own feelings and from observing those around us – information not readily available to the happiness central planners. Adaptation of attitudes and behaviour at this micro level is the key to achieving individual happiness.
Despite the large literature on happiness, I don’t believe this debate can yet conclusively be settled empirically, though I don’t think the social democratic case is looking very strong.
The social democrats haven’t shown that countries that adopt the changes – such as higher taxes to discourage status competition and reduce inequality – they propose improve their happiness levels in a lasting way. But this will always be very difficult to do, given that major changes are rare and causation difficult to prove given that there will be many other things going on at the same time.
But the fact that most Western societies have experienced gradual but cumulatively very significant changes in the post-WW2 period, including big increases in the size of goverment and the welfare state, without significant lasting increases in happiness seems to count against the social democratic hope. On the other hand, the welfare state has not (on average) caused happiness to decline significantly either.
Longitudinal research shows that people’s self-reported assessment of their lives as a whole does go up and down, sometimes in long-term ways. While Jason’s explanation of the informational processes behind these changes is plausible enough, he did not establish it empirically or deal directly with the informational critiques – that we can acquire wrong ideas about happiness from misleading social signals, such as ‘keeping up with the Jones’ social competition; or from short-term pleasures that lead to long-term loss of well-being, eg eating too much, risky behaviour, etc.
Of course, as I noted in my comments, there are important philosophical issues here as well. For liberals there are many possible ways to lead a good life, including ways that don’t maximise personal happiness. We should not fall for a shallow utilitarianism that insists that we must all be as happy as we can be.