Recessions not good for happiness (but not that bad either)

Anti-prosperity thinkers have long pointed to flat levels of happiness as proof that more income doesn’t make us happier. The more adventurous, such as Clive Hamilton, use this as part of their argument for cutting economic growth. Last year I reported Barry Schwartz’s argument that the US recession may have a positive effect on happiness as people realise that they don’t need the latest in consumer goods.

I take the view that while voluntary downshifting can be good for happiness, recessions are bad for subjective well-being (though because believing that your standard of living is going to improve in future is generally good for happiness, happiness is likely to recover more quickly than the economy).

Some US evidence on the happiness effects of their recession is starting to be published. Since 1972 the General Social Survey has asked its respondents ‘taken all together, how would you say things are these days would you say that you are very happy, pretty happy, or not too happy?. In 2008 13.9% of Americans said they were ‘not too happy’, the second highest number ever recorded (the worst was 17.2% in 1972). ‘Very happy’ was on 31.7%, the worst result since 1994 and equal fourth worst.

The GSS is an annual poll, but the Gallup-Healthways Well-being Index surveys most days. It found that using an average of these results 2009 was slightly worse than 2008 for ‘happiness and enjoyment without worry’ (down .8% to 47.4%) and ‘stress and worry without enjoyment’ was up .7% to 11.7%.

Though the trend is in the direction I expected, the more important point is that these numbers are remarkably stable. This has been the pattern over the 60 or so years that happiness surveys have been conducted. Major events affect the results at the margins, but over time they head back to their normal level.

8 thoughts on “Recessions not good for happiness (but not that bad either)

  1. FWIW, Justin Wolfers had a post on this in Freakonomics a while back.

    And of course, one shouldn’t forget the Stevenson-Wolfers paper showing that income buys happiness just about everywhere except the US.

    (That paper, and similar work by Deaton and Krueger, has led plenty of people to drop the Easterlin paradox – so I’m mildly surprised you’re still sticking with it.)


  2. AL – I would not call myself a supporter of the Easterlin paradox. Rather, I am persuaded by the research arguing that most people have a happiness setpoint, a personality-driven base level of happiness from which they can fluctuate but which they will normally return to over time. Further, there are a number of life domains that contribute to happiness, of which material well-being is only one. By the time happiness surveys started 60 or so years ago, most Western countries had already created the economic, social and political conditions in which most people could expect to achieve something near their ‘natural’ level of well-being. So from a theoretical point of view, I would consider it unlikely that changes in one domain could lead to lasting large differences in average happiness across an entire population.

    What I see in the international data is generally fluctuation within a a fairly narrow range. Even if we can find a trend in some countries, the anti-materialists can fairly say it is modest given the transformation in living standards.


  3. John – I’m not sure whether it does. While it is plausible that an increase in unhappy people creates a larger population with a suicide risk factor, I don’t recall reading any papers showing that there is in fact an empirical association.


  4. And what of the events which surely must entail unhappines – divorce, stillbirh, deaths, bankruptsies, losing etc.
    Asking people if they are happy seems as nonsensical as asking them are they patriotic.
    The answer is prone to reflect the most comfortable situation. If you say you are unhappy then next is “Why?”
    Better to give a bland response.
    By their deeds shall you know them. Betting and gambling show a general belief in wealth and happiness.
    If you think money can’t buy you happiness you are not shopping at the right place.l


  5. John – Unsurprisingly, people who have recently experienced such events report lower well-being.

    The issue here is the balance within a life. If you devote all your time to building wealth at the expense of all else you are probably not going to be very happy. But all other things being equal, more money would be a marginal benefit to many people.


  6. Well being and wellness is a balance of a number of things including one’s ability to cope with and effectively manage stress and emotions. Think about the emotional realm of wellness–it includes your ability to express your emotions (all of them–anger, happiness, sadness, etc) as well as your ability to deal with these emotions in a healthy and meaningful way. This is not to say that we are not supposed to get mad or sad, nor that we should be happy all the time. Just that part of living in wellness is coping and managing our emotions in a positive way.

    One should reflect on good times and bad and use these reflections as guidance in future situations that are comparative. Another huge factor in our own well being is reflection!


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