Growing Happiness

[Originaly published at The Daily]

Rapid economic growth in the world’s less developed countries is the best thing that could happen to human life on earth. Nothing would do more to help people the world over live healthier, longer and happier lives. But you wouldn’t know that if you read the World Happiness Report, a new study overseen by superstar economist Jeffrey Sachs of Columbia University (along with two other economists) and aimed at using happiness research to shape the United Nation’s future “Sustainable Development Goals.”

For about a decade now, the attempt to quantify happiness and its various causes has been the height of fashion in psychology and economics. Yet survey research on happiness has failed to gain traction as a trusted tool of policy evaluation. Easy to see why: its basic findings are misreported or distorted to support preconceived political agendas. The World Happiness Report is the latest entry in this disreputable tradition.

The founding factoid of happiness economics is something called “the Easterlin Paradox.”

In the early 1970s, Richard Easterlin, an economist at the University of Southern California, inspected the modest survey data available at the time and observed that, within any given country, people with higher incomes tended to say they were more satisfied with life than those with lower incomes. However–and this is the source of the alleged paradox–a country’s total average life satisfaction did not seem to rise with rising national income. Why not? A cottage industry sprang up attempting to explain this. And it produced many fascinating explanations. The problem is, there never was an Easterlin Paradox.

In a series of game-changing papers, Betsey Stevenson and Justin Wolfers of the University of Pennsylvania analyzed bigger, better data-sets with the most sophisticated available statistical techniques and found “a clear positive link between average levels of subjective well-being and GDP per capita across countries” and “economic growth associated with rising happiness.” Indeed, according to Stevenson and Wolfers, a 20 percent increase in income has the same impact on subjective well-being regardless of the initial level of income: rising from $500 to $600 of income per year yields the same impact on well-being as rising from $50,000 to $60,000.

The World Happiness report addresses Stevenson and Wolfers’ work, but only in a perfunctory way. Drawing on the Easterlin Pararadox paradigm, the report repeatedly suggests that once past extreme poverty, income growth is of secondary import to happiness. “While basic living standards are essential for happiness, after the baseline has been met happiness varies more with quality of human relationships than income,” its authors write Yet even if you accept the Easterlin Paradox as true, even if you make an article of faith the notion that income does nothing to boost happiness past $15,000 to $20,000 (a common paradox-paradigm estimate), we’ve got a long way to go before even half the world’s people meet that threshold – something else the Report fails to note.

Indeed, most people on Earth live in brutal poverty. Slightly less than half (48 percent) our globe’s 7 billion people live on less than $2 a day. That’s about 3.3 billion – more than 10 times the population of the United States – who daily scrape by on just two bucks. Sadly, not everyone lives so well. According to the World Bank, in 2008 about 1.2 billion, or 22 percent of the people on Earth, lived on less than $1.25 a day.

And believe it or not, that’s progress. In 1990, about 43 percent of our planetary brethren, slightly fewer than 2 billion, survived on just a dollar and a quarter per diem. What happened? Rapid growth in East Asia, especially China, in the intervening years lifted over 600 million people out of the ranks extreme poverty – the biggest happiness boom, in other words, in recent memory. One might think information like this would get more attention in a report allegedly concerned with the happiness of the whole world. This selective blindness to the prevalence of dire poverty, and therefore to the profound ongoing importance of economic growth to world happiness suggests thatSachs et al. are less concerned with sound socioeconomic analysis than with writing a brief for what is called “sustainable development,” an eco-centric philosophy of growth at odds with, for example, the skyrocketing prosperity we’ve seen in Asia over the past decades. Indeed, sustainable development, as it is it usually understood, generally requires a slowdown in global economic growth, especially in rapidly developing poorer countries, which are the world’s heaviest per capita polluters.

In light of Stevenson and Wolfers’ research, it seems increasingly that rising oceans may be the price of rising happiness. Who wants to tell the 3-plus billion people living on less than two dollars a day it’s not worth the risk? Any volunteers?

Will Wilkinson is writes about American politics for The Economist..