“Happiness research” studies the correlates ofsubjective well-being, generally through surveymethods. A number of psychologists and socialscientists have drawn upon this work recently toargue that the American model of relatively limit-ed government and a dynamic market economycorrodes happiness, whereas Western Europeanand Scandinavian-style social democracies pro-mote it. This paper argues that happinessresearch in fact poses no threat to the relativelylibertarian ideals embodied in the U.S. socioeco-nomic system. Happiness research is seriouslyhampered by confusion and disagreement aboutthe definition of its subject as well as the limita-tions inherent in current measurement tech-niques. In its present state happiness research

cannot be relied on as an authoritative source forempirical information about happiness, which, inany case, is not a simple empirical phenomenonbut a cultural and historical moving target. Yet,even if we accept the data of happiness research atface value, few of the alleged redistributive policyimplications actually follow from the evidence.The data show that neither higher rates of gov-ernment redistribution nor lower levels of incomeinequality make us happier, whereas high levels ofeconomic freedom and high average incomes areamong the strongest correlates of subjective well-being. Even if we table the damning charges ofquestionable science and bad moral philosophy,the American model still comes off a glowing suc-cess in terms of happiness.

In Pursuit of Happiness ResearchIs It Reliable? What Does It Imply for Policy?

by Will Wilkinson

_____________________________________________________________________________________________________

Will Wilkinson is a policy analyst at the Cato Institute and is managing editor of Cato Unbound.

Executive Summary

No. 590 April 11, 2007�������

PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1PA Masthead.indd 1 2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM2/9/06 2:08:34 PM

Introduction:Is the United States a

Failure?

“There is a paradox at the heart of our lives,”writes Richard Layard, head of the LondonSchool of Economics Center for EconomicPerformance and member of the British Houseof Lords. “As Western societies have got richer,”Layard tells us, “their people have become nohappier.”1 Psychologist of happiness DavidMyers opens his book, The American Paradox,on a Dickensian note: “It is the worst of times,and the best of times.” We owe the “worst oftimes,” according to Myers, to “radical individ-ualism” and “libertarianism,” both civil andeconomic.2 Journalist Gregg Easterbrook putsit this way: “We live in a favored age and do notfeel favored.”3 His bestselling book, The ProgressParadox, set out to explain “why capitalism andliberal democracy, both of which justify them-selves on the grounds that they produce thegreatest happiness for the greatest number,leave so much dissatisfaction in their wake.”4

All of those works and many more tap intoa rapidly growing body of research on the cor-relates of human happiness. Starting roughlywith University of Southern California econo-mist Richard Easterlin’s watershed 1973 papershowing that average happiness levels report-ed by Americans had not risen for decadesdespite a doubling in average incomes, econo-mists, sociologists, and psychologists havebeen busy canvassing the world, handing out“life satisfaction” surveys and customized“experience sampling” Palm Pilots and thenrunning the data through computers withcutting-edge statistical software to tease outthe determinants of a satisfying life.5

How important is wealth to happiness?How important is marriage? Parenthood? Jobsatisfaction? Leisure time? Health? The rateof unemployment? The rate of economicgrowth? Democratic institutions? Social safe-ty nets? The happiness researchers even havetheir own journal, The Journal of HappinessStudies, where all of this, and more, is analyzedat length.

Layard is sufficiently confident in the qual-ity of happiness research to bless it as a “newscience.” It is claimed that we now know, atlong last, what really makes people happy.Geoffrey Miller, a psychologist at the Univers-ity of New Mexico, writes: “In the last ten years,psychology has finally started to deliver thegoods—hard facts about what causes humanhappiness.”6 Scholars like Layard have not hes-itated to base dramatic policy recommenda-tions on our alleged newfound facts. Layardargues, for example, that a government thatcares about the pursuit of happiness will levyhigher taxes on income, impose strict controlson advertising and marketing, mandate gener-ous periods of paid parental leave, and imple-ment “radical” mandatory public schoolcourses covering aspects of life generally left toparents aiming “to produce a happier genera-tion of adults than the current generation,”and much else besides.7

Layard’s belief that happiness research sup-ports the policies of more heavily regulatedmarkets and a more thoroughgoing egalitarianwelfare state is by no means unique. Indeed, itappears to have become a sort of conventionalwisdom among those who study happiness. Inan academic paper about the evolutionary psy-chology of happiness (and not about the politicsof happiness), psychiatrist Rudolph Nesse, ref-erencing the work of Layard and CornellUniversity economist Robert Frank, reports inpassing what he takes to be the establishedpolitical implications of happiness research:

On a social and political level, it isabundantly clear that certain policiescan increase average SWB [subjectivewell-being] in a society. More equitableincome distribution is highly correlatedwith the average level of well-being in asociety, and high taxes on high incomesand luxury goods would result in onlyinfinitesimal decrements in the posi-tional pleasures provided by luxurygoods. Most democratic societies seemunable, however, to enact laws based onthis knowledge to increase the well-being in their societies.8

2

Layard’s beliefthat happiness

research supportsthe policies of

more heavily regulated markets

and a more egalitarian

welfare state hasbecome a sort of

conventional wisdom among

those who studyhappiness.

Notre Dame University political scientistBenjamin Radcliff argues that market-orient-ed societies are by nature corrosive to happi-ness and that large welfare states are the rem-edy. Publishing in his field’s most prominentjournal, Radcliff claims that the accumulateddata suggest:

Life satisfaction should increase as wemove from less to more social democra-tic welfare states. More generally, lifesatisfaction should vary positively withthe dominance in government of politi-cal parties committed to the socialdemocratic program of limiting humandependence on the market.9

Elsewhere Radcliff argues that “the more wesupplement the cold efficiency of the free mar-ket system with interventions that reducepoverty, insecurity and inequality, the more weimprove the quality of life.”10 Like Layard,Nesse, and Radcliff, many others believe it hasbeen established that certain policies—policiesthat would make the United States more likeSweden or France—would enhance our happi-ness. “The utilitarian argument for the rich giv-ing more of their money to the poor is now sci-entifically irrefutable,” writes Geoffrey Miller,“but few journalists have recognized that revo-lutionary implication.”11 Swarthmore Collegepsychologist Barry Schwartz, writing in theNew Republic, says that thanks to happinessresearch “we now know there is some signifi-cant subset of people likely to be made betteroff through heavier taxation, and that thesepeople reside at the top end of the wealth dis-tribution.” Schwartz continues:

Given that a concern for people’s welfarehas traditionally been one of the chiefmoral objections to taxing wealth (atleast among those sympathetic to redis-tribution in principle), a policy of heaviertaxation for the very wealthy may be theonly moral course of action.12

An article on happiness research in the NewYork Times reports that George Loewenstein, a

leader in “behavioral economics” at CarnegieMellon University, “doesn’t see how anybodycould study happiness and not find himselfleaning left politically.”13

Perhaps the most compelling left-leaningarguments based on happiness research arethose, such as Robert Frank’s in his bookLuxury Fever, which de-emphasize the impor-tance of absolute material wealth to happinessand stress instead the importance of relativeposition in the distribution of income andsocial status. Whereas happiness research hasshown a flat trend in happiness over time, italso shows that at any time wealthier people aremore likely to say they are happy. However, sothe argument goes, if we all run harder to pullahead in the race for the benefits of higher rel-ative standing, those ahead will just run hard-er too. In the end, the frantic pace will have leftus all harried and exhausted, and average hap-piness will have remained unchanged.

“Every time [some people] raise their rela-tive income (which they like),” Layard writes,“they lower the relative income of other people(which those people dislike). This is an ‘exter-nal disbenefit’ imposed on others, a form ofphysical pollution.”14 Layard’s proposed solu-tion is a tax on “the polluting activity” or, aseconomists call it, the “negative externality.”The polluting activity here is nothing less thanyour and my working hard to make moremoney. But, if it is relative standing that mat-ters, the increase in total wealth will notincrease happiness on average. There willalways be a top half and bottom half. A taxthat reduces the monetary benefits of laborand so encourages everyone to ease up in uni-son will slow the pace of life and reduceincomes. This, the argument goes, will do noharm to happiness, but the time and energyfreed to pursue the pleasures of family, friends,and leisure will do a world of good.

If we must push ourselves ever hardermerely to keep up, then it is easy to suspectthat the output of increased economic pro-duction will not actually contribute to ourhappiness. We end up with nothing but super-fluous abundance, the side-effect of a maddash that does nothing but wear us down and

3

Like Layard,Nesse, andRadcliff, manybelieve that certain policies—policies thatwould make theUnited Statesmore like Swedenor France—wouldenhance our happiness.

hollow us out, even as it sedates us with thespurious satisfactions of unending novelty.

This is a powerful and compelling line ofreasoning, in the light of which it becomeseasy to understand why the importance ofeconomic growth has taken a beating by anumber of prominent happiness scholars. Inan article entitled “The Hippies Were Rightabout Happiness,” Warwick University eco-nomics professor Andrew Oswald writes:

Routinely derided, the ideas of thesedown-to-earth philosophers are beingconfirmed by new statistical work bypsychologists and economists. . . . Oncea country has filled its larders, there is nopoint in that nation becoming richer. . . .Economists’ faith in the value of growthis diminishing. That is a good thing andwill slowly make its way down into theminds of tomorrow’s politicians.15

The Declaration of Independence states that“all men are created equal,” vested with rights to“Life, Liberty, and the pursuit of Happiness.”The apparent consensus among happinessresearchers strongly suggests that America hasfailed to live up to its founding ideals.Happiness research may seem to pose a gravethreat to the legitimacy of the relatively libertar-ian American political-economic model.

The threat hits home with a vengeancewhen we recall that the Declaration was notjust a statement of national ideals but anincendiary argument aimed at the justifica-tion of rebellion—a radical case for overthrow-ing the government. According to the Dec-laration, “whenever any Form of Governmentbecomes destructive of these ends” (i.e., life,liberty, and the pursuit of happiness) “it is theRight of the People to alter or abolish it,” andreplace it with a government they feel sure will“effect their Safety and Happiness.” In otherwords, if a government actively interferes withits citizens’ pursuit of happiness, it has nolegitimate authority, and citizens are justifiedin scrapping it and starting over. A failinggrade on the “American test” of happiness is acall for massive reform, if not outright revolt.

The task of this paper is to examine thestate of happiness research and grade the per-formance of the United States on its owntest. Has the nation’s relatively dynamic,competitive, free-market system failed us inthe pursuit of happiness? Has “science”shown that the ideals of free markets andlimited government deserve retirement? If wewould in fact be happier as denizens of anegalitarian welfare state on the model ofEuropean social democracies, it may seemthat only the ignorant or spiteful would tryto stand in the way of happier lives and a bet-ter grade on the American test. So we have toask: Would we be right to scrap our currentsystem and start over?

The aim of this paper is to demonstrate thathappiness research poses no threat to U.S.ideals as they have been historically interpretedand are embodied (albeit imperfectly) in ourpresent socioeconomic system. Happinessresearch is seriously hampered by confusionand disagreement about the definition of itssubject as well as the limitations inherent incurrent measurement techniques. Happinessresearch in its present state cannot be relied onas an authoritative source for empirical infor-mation about happiness, which, in any case, isnot a simple empirical phenomenon but a cul-tural and historical moving target. Further-more, happiness is not the only element ofhuman well-being or of a valuable life. At thevery least, believing that it is has no standing asa scientific proposition, and there is no liberalmoral justification for holding up happiness asthe sole standard for evaluating policy in a con-tentiously pluralistic society. Yet the problemswith the political uses of happiness researchrun deeper than methodology. Even if we grantthat the findings of happiness research do shedsome light on the state of human well-being,few of the main alleged implications for publicpolicy actually follow from a fair reading of theevidence. In a nutshell: even if we put asidecharges of questionable science and bad moralphilosophy, the United States still comes off asa glowing success in terms of happiness. If anynation deserves an “A” on the “American test,”the United States does.

4

Even if we putaside charges of

questionable science and bad moral

philosophy, theUnited States still

comes off as aglowing success

in terms of happiness.

Though the putative implications of hap-piness research touch on almost all areas oflife and public policy, this paper focuses onthree major claims:

(1) The relatively greater dynamism of theU.S. market economy and the relative-ly smaller scope of the U.S. welfarestate are bad for happiness, and wewould be happier with European-stylesocial democracy.

(2) The importance of relative position tohappiness provides a justification forhigher taxes on income and/or con-sumption.

(3) Economic growth is unimportant tohappiness, and measures of social wel-fare such as GDP per capita (or growthin GDP per capita) should be replacedor at least augmented with measuresof happiness.

Before explaining why each of these claimsis false, I will discuss how happiness research iscurrently conducted, what it says, and why ittells us less than its defenders think.

The Limits of HappinessResearch

Happiness research is a label for a widerange of research programs that aim to uncov-er the correlates or causal determinants ofhappiness, life-satisfaction, or subjective well-being (commonly abbreviated as SWB). Forthe most part, happiness researchers—usuallyeconomists, psychologists, and sociologists—rely on data gathered from large surveys inwhich people report how they are feeling, aswell as how much money they make, howmany children they have, what kind of jobthey have, and so forth. Researchers thensearch for patterns in relationships betweenanswers about happiness and answers aboutmoney, children, work, and so forth, using awide variety of statistical techniques.

Surveys are fairly blunt instruments forprobing into people’s psyches. “Taken all

together, how happy would you say you are:very happy, quite happy, not very happy, or notat all happy?” is a typical question that appearson the widely used World Values Survey.16

Other surveys, such as those conducted by theNational Opinion Research Center, use slight-ly different wording and a three-point scale.There are also multi-item surveys, such as theone included in the Midlife DevelopmentInventory, that ask about the frequency of pos-itive and negative feelings17 and the popularmulti-item Satisfaction with Life Scale createdby University of Illinois psychologist EdDiener.18 Some surveys, such as the Eurobar-ometer survey, ask how “satisfied,” instead ofhow “happy,” the respondent is with his or herlife.

Though broad-brush surveys dominatethe field of happiness research at present,there are other, more fine-grained self-reporttechniques. The experience sampling method(ESM) was pioneered by psychologist MihalyCsikszentmihalyi, best known for his workon peak experience or “flow.”19 ESM equipsvolunteers with beepers or specially outfittedhandheld computers programmed to soundan alert at random intervals throughout theday, at which point the volunteer is supposedto makes note of what he is doing and howhe feels while doing it. Because ESM can bevery expensive for large samples, recent stud-ies have begun to use the Day ReconstructionMethod, created by economics Nobel Prize-winning psychologist Daniel Kahneman andothers, as a substitute.20 Volunteers in DRMstudies are asked to spend time at the end ofthe day recalling and recording their activi-ties during the day along with what they werefeeling while performing them.

Even more promising, the development ofmedical diagnostic technology such as brainimaging and the isolation of hormones inblood samples now allows us to measuredirectly the organic underpinnings of goodand bad feelings. There is a wide array of neu-rotransmitters and hormones, such asdopamine, serotonin, oxytocin, cortisol, pro-lactin, and many more that may contribute togood and bad feelings. There are a few studies

5

Surveys are fairly bluntinstruments forprobing into people’s psyches.

that attempt to directly measure the physicalbasis of well-being, but, so far, they are veryfew—in large part because they are very expen-sive. The recent work of University ofWisconsin psychologist Carol Ryff and herteam of investigators stands out as an exampleof happiness research that integrates brainimaging and biochemical evidence with surveyresearch.21 Though such research efforts aredifficult, time-consuming, and expensive, theypromise to advance our understanding ofhappiness considerably and deserve greaterattention and emulation.

Much of the happiness literature is occu-pied with examining the relative merits ofthree hypotheses (or combinations thereof)that seek to explain the so-called “EasterlinParadox”—the fact that average self-reportedhappiness has not risen with average income.The “adaptation-set point” hypothesis saysthat each of us has a settled disposition tofeel a certain way (our largely geneticallydetermined happiness “set point”) and thatwe quickly “adapt” or habituate” psychologi-cally to both pleasurable and painful events,reverting eventually to that usual set point.22

The “aspiration adjustment” hypothesis—Easterlin’s own favored explanation—makessense of the flat happiness trend by notingthat people tend to raise their aspirations assoon as they have met their old ones. If self-reported happiness is an individual’s assess-ment of their position relative to their aspira-tions, a penchant for constantly “shifting thegoal-posts” will ensure people rarely say theyare getting happier.23 Last, as we’ve alreadynoted, there is the “relative position” hypoth-esis, which claims that self-reported happi-ness is a function of our relative position in asocial hierarchy. Since that hierarchy is oftenidentified with income distribution, the rela-tive position hypothesis is taken by many toexplain why increases in average incomedon’t correlate strongly with increases inaverage happiness.24

Opposed to each of these theses is the“absolute effect” hypothesis, which states thatincreases in material well-being have real andlasting effects on happiness—effects that we

don’t simply get used to psychologically, thatdon’t diminish in light of shifting aspirations,and that aren’t sensitive to social comparison.The absolute effect hypothesis is not an expla-nation of the Easterlin Paradox, but rather adenial of it. In other words, it is the claim thathappiness has increased significantly withincome and wealth.

It is not my purpose here to sort out the rel-ative explanatory power of the “adaptation-setpoint” and “aspiration adjustment” hypothe-ses. This paper does argue, however, that thereis some absolute effect of wealth and incomenot subject to adaptation and aspiration shift-ing and that the importance of relative posi-tion is dramatically overblown. But if there arecontinuous real effects of increasing materialwell-being, then why are they so hard to see?

Problems with SurveysThe first question that occurs to most

people when encountering survey-based hap-piness research is whether everyone thinks of“happiness” in the same way and whether wejudge our own level of satisfaction accordingto the same standards. Doesn’t everyone havehis own notion of happiness? Isn’t this way ofmeasuring subjective well-being too . . . sub-jective? Happiness scholars generally point tothe same small set of studies that show somecorrelation with self-reported happiness andother things we might imagine to be objec-tive manifestations of happiness, such asincreased blood-flow in certain parts of thebrain, smiling a lot, or being rated as happyby one’s friends and family. However, thesechecks on the validity of happiness surveysare only as good as the thinking behindthem, and some of the thinking isn’t veryimpressive. For example, people in some cul-tures just seem to smile more than others,and there is evidence that “authentic” smilesfunction more as social cues than as rawphysical expressions of individual emotion,so it is hard to know how much confirmationof survey data is provided by noting that peo-ple who say they are happier smile more.25

Other happiness researchers dispute theimplied objection by invoking the law of

6

Doesn’t everyone have

his own notion of happiness?Isn’t this way of measuring

subjective well-being too . . .

subjective?

large numbers, which guarantees that ran-dom variations are washed out with an ade-quately large and representative sample.26

But a great deal of variation seems not tobe random at all. For example, it is not clearthat all cultures understand “happiness” thesame way Americans, or Westerners moregenerally, do. And, if it needs to be said, theproperties of being American or beingChinese, for example, are not randomly dis-tributed throughout the human population.Cultural characteristics can matter for theway people respond to surveys, even in theunlikely event that cultural differences breakalong political boundaries.

With a few notable exceptions, it has so farbeen rare to encounter any acknowledge-ment that survey measures track anythingbut a universal and ahistorical form of expe-rience or that different languages mightexpress these experiences differently.

Australian National University linguistAnna Wierzbicka—perhaps the world’s lead-ing authority on the ways different languagesexpress emotion—says, “The glibness withwhich linguistic differences are at timesdenied in the current literature on happinesscan be quite astonishing.”27 According toWierzbicka, “It is an illusion . . . to think thatthe English words happy and happiness haveexact semantic equivalents in Chinese or, forthat matter, in other European languages.”28

She does not argue that cross-cultural andlinguistic comparisons of self-reported sub-jective states are hopeless, but that cross-cul-tural and linguistic comparisons of self-reported happiness are. The English words“happy” and “happiness” do not have exactcounterparts in every language, and theyexpress sets of cultural expectations andideals about the experience and expression ofemotions that are not universal. “To be ableto interpret self-reports across cultures,” shewrites, “one needs a methodology for explor-ing cultural norms that may guide the inter-viewees in their responses.”29

Psychologists Ed Diener and ShigehiroOishi find that Confucian-influenced Asiannations report lower levels of average self-

reported happiness than would be expectedfrom their levels of wealth and the quality oftheir political institutions, whereas manyLatin American countries post what seem tobe inflated happiness scores, a difference theyadmit “could be influenced by response bias-es rather than actual experience. For example,the Japanese [who score unusually low onsurveys] might not want to stand out fromtheir group by saying they are very happy.”30

They note that psychological and cultural“norms for feeling emotions, and the desireto fulfill the high expectations of others, canalso have an effect” on happiness surveys.31

Of course, there is also cultural hetero-geneity within societies, with some societiesbeing more heterogeneous than others. Itwould seem to follow that nations like theUnited States, which absorb high numbers ofimmigrants from every part of the world, willyield samples that contain a large degree ofnonrandom cultural variation in the wayhappiness survey questions are interpretedand answered. It’s worth emphasizing againthat the political boundaries of modernstates may or may not fall along national,ethnic, or cultural lines.

Cultural heterogeneity aside, economistAndrew Clark and coauthors have found thatthere is, in any case, a good deal of patterneddiversity not only in the way people withinsocieties translate variables like income intohappiness, but in the way they express theirhappiness level in speech and on self-report-ed surveys.32

Suppose, for example, you and I bothmake $50,000 per year, and we both reportour happiness level as a 7 on a scale from 1 to10. However, the fact that we circled the samenumber on the survey guarantees neitherthat we are equally happy nor that incomeaffects our happiness equally. Suppose fur-ther that your level of satisfaction at $50,000a year is what mine would be at $70,000 (hold-ing other things equal). So I am, in fact, lesssatisfied than you are with the same incomeand life as a whole (since other things areequal). However, for some reason (culturaldifferences in the expression of feelings, dif-

7

The Englishwords “happy”and “happiness”do not have exactcounterparts inevery language,and they expresssets of culturalexpectations andideals that arenot universal.

ferences in goals or expectations, differentpersonality types, or whatever), our internalstandards for translating feelings into lan-guage differ, so we end up reporting the samelevel of happiness despite the fact we do notfeel the same.

Given the same input to experience (e.g., acertain income, a certain number of hoursspent watching television, etc.), people canfeel the same thing but talk about it different-ly. Harvard psychologist Dan Gilbert callsthis “language-squishing.” Or people can feeldifferently, but talk about it the same way.Gilbert call this “experience stretching.” “Thefundamental problem in the science of expe-rience,” Gilbert writes,

is that if either the language-squishingor the experience-stretching hypothe-sis is correct, then every one of us mayhave a different mapping of what wesay—and because subjective experi-ences can be shared only by saying, thetrue nature of those experiences can-not be perfectly measured.33

Gilbert attempts to solve the problem byappealing to the law of large numbers: “when[the number of individuals in the sample]becomes two hundred or two thousand, thedifferent calibrations of these individualsbegin to cancel one another out.”34 As we’venoted, the law of large numbers works whenit washes out random variations in propertiesthat are not systematically correlated withone another (i.e., that are “independent.”)However, if variation is nonrandom within agroup—if, say, tendencies of language-squish-ing and experience-stretching tend to associ-ate with other nonrandom properties—theoverall average may be largely useless, convey-ing inaccurate information about every sub-group. It may be that the average weight of agroup of Chihuahuas and mastiffs (we don’tknow how many of each) is 36 pounds, butit’s not very helpful to know this. This sort ofmixed sample is what Clark and coauthor’shave in mind when they note that “ourresults suggest that the blind aggregation of

diverse populations risks producing empiri-cal results that are false for everybody.”35

In their study, Clark and his team “showthat people are different,” and not randomlyso, as they tend to fall into different classes ofhappiness survey response in predictable pat-terns based on a number of personal anddemographic variables. Though they areunable to tease out which people fall intoeach class due to language-squishing and/orexperience stretching, they are able to“strongly reject the hypothesis that individu-als carry out these joint transformations[from income to experience and experienceto self-reported happiness] in the same way.”This leads them to conclude that “aggregat-ing data across diverse populations may be adangerous practice.” They write that “indi-viduals who seem to fall naturally into anumber of different classes differ in waysthat are far more complicated” than thosepicked up by studies that control for theeffect of simple individual differences onhappiness.36

In addition to systematic differencesbetween individuals, the way people reporttheir happiness is highly sensitive to context,threatening the reliability of surveys. In aseries of papers, philosopher Dan Haybronhas argued that life satisfaction judgmentsare highly labile and perspective dependent.Quite appropriately, people have differentstandards for assessing how well things aregoing, and they may employ different stan-dards in different sorts of circumstances. Theway we answer a question about how satis-fied we are with life as a whole will depend onthe standard that happens to be active at thetime. “We are all familiar,” Haybron writes,

with the tendency we have to waverbetween appraising our circumstancesby comparison with the less fortunate,with certain of our peers, or with themore fortunate. Compared to A thingsmight be going swimmingly, but com-pared to B—or one’s hopes, aspirations,expectations, past experience, etc.—one’ssituation might be dismal.37

8

The way peoplereport their

happiness is highly sensitive

to context, threatening the

reliability of surveys.

In an award-winning paper, psychologistMichael Hagerty demonstrates that partici-pants in self-reported happiness surveys donot all use the same internal standard forreporting their life satisfaction. Some reporthow well they are doing relative to their aspi-rations, or how they just happen to be feelingat the moment, but most report their life sat-isfaction with an eye to how well they aredoing relative to their perceived peer group.However, Hagerty shows that the standard ofjudgment people use when reporting theirlevel of happiness is contextual and malleable,and that we can easily switch our frame of ref-erence when primed to do so. When asked toreport how well they are doing relative to theirown and their parents’ past, self-reported happi-ness levels rose dramatically.38

Even more confounding, it is possible thatwe do not always have ready or reliable accessto the quality of our own subjective states.After summarizing the various forms of accessand reporting biases to which psychologicalresearch has shown we are subject, DanHaybron concludes: “We cannot assume thatpeople are reliable judges of their own affectivestates. In fact I suspect something stronger:that pervasive [affective ignorance] is not just apossibility, but the reality.”39 How is it possiblethey cannot always accurately judge our owninner lives? Psychological theorists Randy J.Larsen and Barbara L. Fredrickson argue:

If some emotional episodes are eitheroutside phenomenal awareness or notrepresented in working memory, par-ticipants will be unable to perceive orrecognize the feeling state accuratelyand, as a consequence, unable to pro-vide accurate self-reports.40

A major problem in this regard is thehuman capacity for habituation, mentionedearlier as one of the three explanations forthe Easterlin Paradox. If you’ve ever jumpedinto a swimming pool, cried out from theshock of the cold, and then, just a few min-utes later, found yourself splashing aroundhappily, no longer feeling cold at all, then

you’ve experienced habituation. If you buy anew high-definition television, you’ll get aninitial boost in pleasure as you marvel at theclarity of the picture, but after a while you’llsimply forget what it was like not to seeSimon, Randy, and Paula’s pores. As formerAmerican Psychological Association presi-dent Martin Seligman writes: “This process[of habituation] is an inviolable neurologicalfact of life. Neurons are wired to respond tonovel events, and not to fire if the events donot provide new information.”41 Althoughgreater income may purchase conveniences,fancy cars, and neat gadgets, you simply getused to them and eventually revert to yourex-ante happiness “set point.”

Hedonic or affective adaptation may benatural selection’s way of allocating scarceattention and motivation efficiently, reward-ing the organism for deploying its resourcesto new stimuli requiring immediate atten-tion.42 Furthermore, the dissipation of bothgood and bad feelings is likely to keep theorganism motivated. We’d starve if we neveragain became hungry after eating one greatmeal. And if the satisfaction of our lastachievement never faded, there might not bea next achievement. The upshot is that thereis no “happiness bank” in which to accumu-late and continually experience an evergreater sum of good feelings. It seems to be acondition of our biological emergence thathappiness is evanescent. Mark Twain nailedit when one of his characters says, “as soon asthe novelty is over and the force of the con-trast dulled, it ain’t happiness any longer,and you have to get something fresh.”43

The phenomenon of adaptation cannotonly help explain why average levels of self-reported happiness have tended not to rise,but it can also explain how the trend in self-reported happiness could remain flat even ifthe quality of experience was improving (ordeteriorating). Adaptation may affect atten-tion as well as feelings. Because the mindseeks novelty and quickly shunts off anti-quated stimuli into the background ofawareness, it is possible that we not only stopnoticing after a while how great our new

9

When asked toreport how wellthey are doing relative to theirown and their parents’ past, self-reported happiness levelsrose dramatically.

Audi looks, or how bad the paper mill smells,but also that we stop noticing the quality ofour own experiential states once they, too,have become old news. We stop paying atten-tion especially if a change in feeling persists.We might feel simply terrific and not notice,since we almost always feel terrific.

Besides the fact that most of us don’t payattention to how well we are doing comparedto how things were in the past, we aren’t usu-ally mindful of just how well scientific andeconomic progress has rooted out many smalland not-so-small aggravations and pains fromlife. Prior to the advent of modern sanitationand medicine, multitudes suffered from fre-quent low-grade bacterial infections and wan-dered around with toothaches and otherchronic maladies.44 It seems unlikely that peo-ple simply adapted to it and didn’t really feellousy after a while. It seems rather more likelythat they felt lousy all along, but adapted atten-tionally rather than experientially. They simplystopped paying that much attention to theconstant dull pain, irritation, and fatigue,because there was no new information in it. Soif you had asked how they were feeling, theymight have told you they felt fine, becausethey weren’t paying attention by “design.”

Similar points can be made regarding allthe comforts and conveniences made avail-able during the past half-century of flat self-reported happiness levels. It is conceivablethat none of this has actually made a positivedifference in the quality of people’s subjectiveexperience, but it seems more likely that wesimply don’t realize just how good we feel.This is one reason it is crucial for happinessresearch to focus more on the biochemicalcorrelates of good and bad feelings in orderto create a more trustworthy picture of howwell we actually feel.

The usefulness of more objective, organicmeasures is illustrated by a study reported byDan Haybron in his compelling, carefullyargued paper, “Do We Know How Happy WeAre?”:

[Subjects in a noisy office] showed ele-vated epinephrine levels, made half as

many ergonomic adjustments to theirworkstations, and were markedly lesspersistent in efforts to solve difficultpuzzles afterwards. Yet the researcherswere surprised to find no differences inreports of perceived stress—specifically,reports about the extent to which sub-jects felt “bothered, worried, relaxed,frustrated, unhappy, contented, [or]tense. . . . It seems likely that givenenough time, the experienced officeworkers . . . ceased to notice the unpleas-ant effects of the noise. Yet it also seemsplausible that the noise affected notonly subjects’ physiological responsesand behavior, but the hedonic quality oftheir experience as well: they experi-enced more stress, had a less pleasanttime of it, than they would have withoutthe noise.

If the contemporary developed world is like aless-noisy office, we may in fact feel betterwithout knowing enough to say so.45

For all the ink spilled over the EasterlinParadox, it is puzzling how seldom happinessresearchers point out that while the scales onhappiness surveys are bounded, there is noupper limit on the growth of income. Thisshould be an obvious source of possible dis-tortion in the happiness data. Suppose for amoment that happiness does rise continuouslywith income, and suppose further that peopledo not readjust their representations of thehappiness scale as they become wealthier. Inthat case, there will be a point at which theentire population has finally climbed into thetop happiness bracket. From that momentforward, average happiness must remain flat,simply as an artifact of the bounded scale, evenif people continue to become happier as theycontinue to become richer. However, in lightof the fact that people have quite limitedaccess to the facts about how happy they are, itseems almost certain that we have no idea howhappy it is possible to become—whether forhumans in general or as individuals. With noknowledge of the real, empirical upper boundon happiness, and, a fortiori, no knowledge of

10

We aren’t usuallymindful of just

how well scientificand economic

progress has rooted out many

small and not-so-small aggravations

and pains fromlife.

the relationship of one’s feelings to the objec-tive limit, it seems individuals have no alterna-tive but to construct an internal representationof the happiness scale on the basis of historicaland cultural convention (“Under what condi-tions do people around here generally say theyare happy?”) and on the basis of some kind ofself or social comparison (“Everybody saysBarb is really happy, and I guess I’m doing a lit-tle less well than Barb,” or “I feel a lot betterthan I did last year.”)

Even if happiness (as opposed to surveymeasures thereof) has no fixed upper limit,increasing individual levels of happiness maycome at an increasing individual cost. Such,at any rate, is the suggestion made by NobelPrize-winning economist Gary Becker andhis coauthor Luis Rayo in a paper modelingthe evolutionary logic of adaptation.46 Beckerand Rayo are thinking of “evolutionary cost,”in the context of inclusive biological fitness,in order to demonstrate the possibility thatnatural selection might lead to preferencesthat limit the pursuit of happiness past a cer-tain point. But it is possible to think of theincreasing marginal cost of happiness interms of personal cost if we accept that thereare values other than happiness, and there-fore, do not assume that happiness is theonly “benefit” that may be of value to indi-viduals. (Indeed, Becker and Rayo’s argumentsheds light on why evolution would lead usto value things that are in competition withhappiness.) In that case, there may be a limitto how much people they are willing to “pay”to become happier. If someone has reachedthe point at which a marginal “unit” of hap-piness costs too much in terms of other val-ues, then he will be optimally happy accordingto his individual preferences. If the cost ofhappiness, and willingness to pay for a mar-ginal unit, varies from person to person, orfrom society to society, an individual’s placerelative to his optimal upper limit may be dif-ferent than his place on some imaginedobjective scale. Therefore, one person may behappier than another relative to some objec-tive happiness scale, yet further away fromhis own optimal upper bound.

However, it is not even necessary to acceptthe existence of values other than happiness toreach this result, since happiness itself seemsto be multidimensional and plural in consti-tution, having complex biological underpin-nings. First, neuroscientific studies have estab-lished that good and bad feelings do not existon a single continuum—an increment of plea-sure does not cancel out an equal increment ofpain—and it is possible to feel happy and sadsimultaneously.47 Second, the fact that somany different hormones and neurotransmit-ters are causally implicated in different posi-tive and negative feelings creates the possibili-ty of what Dan Haybron calls an “affect-typebias.” “When judging how happy we are, forinstance, we may focus primarily on affectsthat fall along the joy-sadness dimensionrather than on those, say, along the anxious-calm dimension,” Haybron writes.48

When there are so many things going onat once biochemically and experientially, wecannot pay attention to it all, and we mayfind some types of good and bad feelingsmore immediately available to awareness, ormore relevant for judgments about happi-ness. Further, we may not know how muchweight to put on different dimensions of feel-ing for the purposes of generating a singlesummed judgment about our subjective well-being. Imagine, for example, a man concur-rently experiencing anxiety about missing anappointment, satisfaction from a deliciouslunch, excitement at having won the officefantasy football league, disappointment inhis daughter’s poor report card, and a shoot-ing pain in his trick knee. If he’s going tomanage to make a judgment at all about howwell he’s feeling, he is going to need onedimension of feeling to stand out especiallyin attention (i.e., he may need an affect-typebias), lest he get stuck in the quagmire ofdetermining just how much postprandialdelight weighs against paternal frustration.

If there is no single common currency ofaffective experience, and feeling better on oneaffective dimension sometimes come at theexpense of feeling better on another, then it isinevitable that people will have highly vari-

11

Happiness seems to be multidimensionaland plural in constitution, having complexbiological underpinnings.

able and individualized exchange ratesbetween dimensions of affect. Optimal hap-piness for one person, given her valuation ofdifferent dimensions of affect, is going tolook very different from optimal happinessfor another. Notice that this is the case evenif we accept the dubious claim that only hap-piness is of value.

At this point, the very idea of objectivehappiness scales seems to dissolve into amorass of confusion. Can there be a determi-nate way to locate the upper and lowerbounds of the happiness scale if, for example,happiness is multidimensional, and the posi-tions on the anxiety-calm dimension have noset value relative to positions on the sadness-joy dimension? Although we may be able use-fully to measure individual dimensions ofhappiness—whether it be calm, joy, sensualpleasure, self-esteem, a sense of self-efficacyand control, and so forth—we may not beable to measure happiness as such becauseMother Nature has nowhere posted a table ofexchange rates between the various kinds offeelings and mental states that are ingredi-ents in individual conceptions of happiness.Happiness—as a simple, universal, unitaryphenomenon—simply may not be out therein the world for the scientist to find.

What Are We Trying to Measure?Julia Annas, an eminent historian of

ancient philosophy and author of The Moralityof Happiness—a scholarly book exploringancient Greek conceptions of happiness—dis-covered one day that she had been added to abibliography of happiness researchers on theWorld Database of Happiness website.Browsing around the site, she was discour-aged to find nothing that resembled the con-ception of “happiness as achievement” shehad developed from decades of studyingPlato, Aristotle, and the Stoics. However dis-couraged, in the end Annas was not surprised“that if you rush to look for empirical mea-sures of an unanalyzed ‘subjective’ phenome-non, the result will be confusion and banality.After all,” she continues, “what is it that thesocial scientists on the World Database of

Happiness are actually measuring? Here is theheart of the problem. Is happiness reallysomething subjective? Is it simply a matter ofpleasure, a positive feeling? One can at leasthope it is not.”49

The panoply of measurement techniquesand the multiplicity of dimensions of goodand bad feeling force us to follow Annas andask pointedly what it is exactly that research-ers are attempting to measure. To say we aretrying to size up “happiness” is to say some-thing, but, unfortunately, not very much.Because, well, what is happiness?

While surveying the happiness literature, itis easy to get the impression that somebody—maybe even everybody—knows the answer. Butif questions have sizes, then this is somethinglike the Everest of questions. Its unavoidableshadow falls over the entire enterprise of hap-piness research, and accounts of successfulexpeditions give conflicting descriptions ofthe view from the summit. So far I have acqui-esced in the indiscriminate use of the term“happiness,” but the various measurementtechniques track different, if overlapping,phenomena. Furthermore, it is unclear thatany of these techniques measure whatever it isthat we are thinking about when we thinkabout how much we would like to be happy.

In technical language, the questionamounts to this: what is the dependent vari-able—the target of elucidation and explana-tion—in happiness research? Here are the mainpossibilities:

(1) Life satisfactionA cognitive judgment about overall lifequality relative to expectations. (2) Experiential or “hedonic” qualityThe quantity of pleasure net of pain in thestream of subjective experience.(3) Happiness Some state yet to be determined, but con-ceived as a something not exhausted bylife satisfaction or the quality of experien-tial states.(4) Well-being or welfareObjectively how well life is going for theperson living it.

12

The panoply ofmeasurement

techniques andthe multiplicity of

dimensions ofgood and bad

feeling force us toask what it is

exactly thatresearchers are

attempting tomeasure.

The relationship between these four con-ceptions in the happiness literature is exceed-ingly complex. And the views of prominenthappiness scholars fail spectacularly to con-verge on a single conception of happinessthat could be used as a standard for the eval-uation of institutions and public policy. Theextent of disagreement about the constitu-tion and measurement of happiness is bestgrasped by looking at the views of a fewprominent happiness scholars.

Let’s start with Richard Layard, who in hisbook Happiness blithely merges all fournotions into one (or jumps from one to anoth-er with abandon), assuming that well-being isno more or less than happiness, that happi-ness is no more or less than a flow of pleasantexperience, and that life satisfaction surveysreliably indicate the average hedonic quality ofthe stream of subjective states.50 Layardproudly declares himself an unreconstructeddisciple of British utilitarian philosopherJeremy Bentham, who held that happiness or“utility” is no more or less than pleasurableexperience, and that his Principle of GreatestHappiness—that the right action or rule isalways the one that will maximize happinessso construed—is the one and only evaluativestandard for both individual and politicaldecisionmaking. “I believe that Bentham’sidea was correct,” Layard confesses, “and thatwe should fearlessly adopt it and apply it toour lives.”51

Nobel Prize-winning Princeton psycholo-gist Daniel Kahneman—a good bet as themost influential living experimental cogni-tive psychologist—also takes a page fromBentham and conceives of happiness in linewith idea (2), the quality of experience on apleasure/pain or good/bad continuum.52

However, unlike Layard, Kahneman forceful-ly denies that idea (1), judgments of life satis-faction, reliably track the hedonic quality ofexperience over time.

In a famous 1996 study on the ability ofpatients to recall the painfulness of an unpleas-ant medical procedure (a colonoscopy), Kahne-man, together with medical researcher DonaldRedelmeier, demonstrated that patient self-

reports after the fact systematically fail to reflectthe actual average intensity of pain they hadreported on a pain scale every 60 seconds duringthe procedure.53 “The retrospective evaluationsof patients are suspect because they are liable tobiases of memory and to a process of evaluationthat sometimes violates elementary logicalrules,” Kahneman writes.54 He is thereforemotivated to distinguish between the “remem-bered utility,” the retrospective evaluation of anepisode, and the “total utility,” the aggregationof “moment utilities” over a period of time.According to Kahneman, “subjective happi-ness” is (unreliably) “remembered utility,” and“objective happiness” is the “total utility” overyour life so far. “The implication of this analy-sis,” Kahneman argues, “is that the goal of pol-icy should be to increase measures of objectivewell-being, not measures of satisfaction or sub-jective happiness.”55 Kahneman has thereforedeveloped the experience sampling and day-reconstruction self-report methods in order tominimize the distortions of broad-brush self-report measures like happiness surveys.

So Richard Layard and Daniel Kahneman,perhaps the two most eminent proponentsof a classically utilitarian, hedonistic concep-tion of happiness, disagree fundamentallyabout the measurement techniques that bestprovide information about happiness as theyunderstand it. According to Layard, “It is thelong-term average happiness of each individ-ual that this book is about, rather than thefluctuations from moment to moment,” yethis policy proposals lean heavily on preciselythe kind of life satisfaction survey data thatKahneman has proven to fail in extracting anaccurate average from the hedonic flow.56

Is the unadorned hedonistic notion ofhappiness and well-being advanced byLayard and Kahneman as the basis of a “sci-ence” of happiness and well-being actuallytrue? That’s not a scientific question. It’s aphilosophical question about the nature ofmoral value, and philosophical questionsabout moral value aren’t what economistsand psychologists are trained to answer.

Is happiness really nothing more than arelatively high average quantity of pleasure

13

The views ofprominent happiness scholars fail spectacularly toconverge on a single conceptionof happiness thatcould be used as astandard for theevaluation ofinstitutions andpublic policy.

over one’s lifetime? As philosopher RobertNozick noted, a miserable life with a momentof transcendent bliss at the very last momentmay have higher average hedonic utility thana normal life with normal satisfactions, butfew of us would choose the former.57

Similarly, a life that starts out at a peak ofimmense happiness but slowly erodes so thateach moment is slightly less pleasant thanthe last may contain a greater average ofhedonic utility than a normal life, but, again,only a masochist would want it. It is plausiblethat many or most of us value the distributionof pleasure over the course of life: we mayvalue a life that feels good generally and getsbetter over time more than, say, a hugelyvolatile life of towering peaks of pleasure anddeep pits of despair, even if the latter is morepleasurable on average. Which is just anotherway of saying we don’t necessarily valueepisodes with more total pleasure overepisodes with less.

We also have Nozick to thank for thefamous thought experiment of the “experi-ence machine,” a device in which we live outthe rest of our lives in something like a coma,but with the vivid experience of the mostpleasurable life we can possibly imagine.58

Nozick argues that the fact so many of uswould choose a less pleasurable life with realengagement, real accomplishment, and realfailure over an ideally blissful life of illusionplugged into the machine—even were we com-pletely confident that it would work exactly asadvertised—shows that pleasure cannot bethe only thing we value.

“Time and philosophical fashion have notbeen kind to hedonism,” notes University ofToronto philosopher Wayne Sumner, theauthor of an influential treatise on well-being. “Although hedonistic theories of vari-ous sorts flourished for three centuries or soin the congenial empiricist habitat, they haveall but disappeared from the scene. Do theynow merit even passing attention, for otherthan nostalgic reasons?”59 University ofAlabama economist and philosopher of sci-ence Erik Angner observes that the hedonis-tic conception of happiness and well-being is

“now considered so implausible that there isnot a single living philosopher (to the best ofmy knowledge) who is willing to defend it.”60

It’s not only moral philosophers who dis-agree with Layard and Kahneman (who dis-agree with each other about what wouldcount as evidence that someone is happy).Other happiness researchers disagree withthem, too, and with each other.

Julia Annas may be heartened to knowthat a number of happiness researchers dointegrate Aristotelian, or eudaimonistic,ideas of happiness as objective flourishinginto their studies. Martin Seligman, thedoyen of the “positive psychology” move-ment, argues that the “measurable compo-nents of what people mean by happiness”include pleasure, eudaimonia (which hecharacterizes as “engaged well-function”),and a sense of meaning in life.61 In Happiness:The Science Behind Your Smile, University ofNewcastle psychologist Daniel Nettle con-ceives of “happiness” as a multivalent termencompassing three distinct “levels.” ForNettle, “Level One” happiness consists of“momentary pleasures.” “Level Two” happi-ness consists of “judgments about feelings,”the same idea captured by “life satisfaction.”Level Three” happiness is taken to concern“quality of life,” which Nettle sees as eudai-monistic “flourishing” or “fulfilling one’spotential”—a more objective notion of well-being.62 Carol Ryff identifies two traditionsin well-being research, one focused on “hedo-nic well-being”—the SWB that dominateshappiness research—and one focused on“eudaimonic well-being,” which she charac-terizes as “perceived thriving vis-à-vis the exis-tential challenges of life” and labels “psycho-logical well-being” or PWB.63

Seligman, Nettle, and Ryff’s complex con-ceptions of happiness and well-being are sim-ilar, attempting to frame a notion of happi-ness richer than simple pleasure, but theyalso differ in important respects. In any case,it is apparent that most current techniquesfor measuring happiness—such as life satis-faction survey questions or experience sam-pling—capture only a small part (perhaps the

14

We don’t necessarily value

episodes withmore total

pleasure overepisodes with

less.

least profound part) of the larger idea of hap-piness or well-being each has in mind. Whilecomplex conceptions of well-being are morenuanced—and for that reason alone moreplausible as accounts of a good human life—than Layard or Kahneman’s hedonism, theircomplexity also creates daunting problemsof measurement. And even if any of them aremeasurable, their complexity threatens tomake them unfit as standards for the evalua-tion of public policy.

A study by Ryff and her coauthors com-paring measures of hedonic SWB with eudai-monic PWB helps illustrate why. Ryff and herteam found that although SWB and PWB aregenerally strongly correlated, they comeapart for some people due to factors of indi-vidual personality. “We found,” they wrote,“that those with high levels of psychologicalthriving (i.e., PWB) but low levels of happi-ness (i.e., SWB) were distinguished from theiropposite counterpart (high SWB/low PWB)by their levels of Openness to Experience.”64

The point here is that if there is more thanone dimension to happiness or well-being,then there may be trade-offs between them, atleast for some people. If life satisfaction andpositive affect aren’t all there is to happinessor well-being, then the attempt to maximizethem may come at the expense of somethingelse of value, such as a sense of challengedthriving. And in that case, even a benevolentdictator endowed with perfect knowledgewould be unable to maximize all dimensionsat once. The dictator would have to make avalue judgment about which dimension ofhappiness is most important. But even then:most important to whom?

As I suggested in the previous section, thecomplex biochemistry of good and bad feel-ings suggests that there are many more thantwo dimensions even to hedonic well-being,and so trade-offs among them are inevitable.The noise, bustle, and danger of a big city areno doubt a source of higher levels of cortisoland thus stress. Which is one important rea-son some people would rather live in the coun-try. But cities can also be a greater source ofstimulating novelty—more short bursts of

dopamine—which is one important reasonpeople choose to live in cities. So is it better, interms of good and bad feelings, to live in thecountry or the city? It depends on how muchyou value peace vs. stress, familiarity vs. novel-ty. If there is no external standard for deter-mining the value of different dimensions ofaffect, then there is no universally rightanswer. Better for whom?

Whether it is better, in terms of feelings, tolive in the city or the country may be no differ-ent than the question of whether it is better, interms of feelings, to live in Sweden or theUnited States. Some Americans may feel betterin Sweden, and, judging from Minnesota, manySwedes may feel right at home in America.

Philosopher Nicolas White argues thatpeople don’t want to be happy as much as toachieve their aims, whatever they may be. Theconcept of happiness surely involves somelevel of positive experience, but by and large itis a blank that we fill in by the achievement ofour plans, projects, and goals. As we changeour goals, balance conflicting desires, andamend and specify the details of our plans,our conceptions of happiness changes:

As we develop a picture of what life is tobe like, we don’t start from a “frame-work” concept of happiness (an idea ofwhat the picture on the puzzle is to be),to which we tailor our particular aimsso that they’ll fit into it. . . . For the mostpart, we build up a conception of whathappiness would be out of the aims thatwe have. But we never have or try for acompletely and consistently articulated con-cept of happiness, or even suppose thatthere must be such a thing. . . . If that’sright, then in an important sense thehistory of the concept of happiness hasbeen a search for something that’sunobtainable.65

And if that’s right, happiness is not mea-surable, since there is no one thing indepen-dent of individual aims “out there” to mea-sure. This is not to say that the various dimen-sions of good and bad feeling are not each

15

The complex biochemistry ofgood and badfeelings suggeststhat there aremany more thantwo dimensionseven to hedonicwell-being, and sotrade-offs amongthem areinevitable.

measurable. Nor is this to say that a sense ofchallenged thriving, a sense of meaning, or thesense that life is satisfying is beyond the reachof measurement and analysis. The point issimply that different people with differentaims may prioritize each of these things quitedifferently and yet be equally concerned withtheir “happiness.” There is no order of suchpriorities that represents happiness par excel-lence, and an evaluative standard biasedtoward any one of them isn’t a standard com-mitted to happiness per se.

Moreover, there are plausibly nonsubjectiveaspects of well-being, such as health, longevi-ty, real opportunity, the development of basichuman capacities, and the achievement ofvalues other than happiness. Not only dopeople give different weights to the variouselements of happiness and well-being, peopledon’t even agree about what they are. What’smore, many people don’t even agree thathappiness or well-being, however conceived, isthe greatest good. The fact of disagreementover the nature of happiness, or the nature ofthe good more generally, does not establishthat there is no right answer to these ques-tions. The presence of disagreement amongreasonable people is simply an empiricalfact—what philosopher John Rawls calls “thefact of pluralism”—that places a hard con-straint on both the practical success andmoral legitimacy of policies derived from anyevaluative standard.66

Polities can manage the fact of pluralism bylooking to general values common across oth-erwise conflicting worldviews. “People canagree, for example, on the importance of hav-ing opportunities for self-expression (the exactform of these opportunities being as yetunspecified) even though they disagree sharplyover the merits of particular speeches, plays,demonstrations, etc.,” notes Harvard politicalphilosopher T. M. Scanlon. “Similarly, peoplewho hold very different and conflicting beliefsmay still be able to agree that ‘being able to fol-low one’s religion’ is (for those who have one)an important part of life, and consequently apersonal value that must be given significantweight in moral argument.”67

Likewise, almost no one denies that hap-piness is important (not in Western societiesat least), even if some deny that it is mostimportant. And whatever different peoplethink about how happiness is constituted,most of us would like more pleasure, more“flow,” a greater sense of meaning, and agreater sense of self-efficacy in the face oflife’s challenges. If a psychologist ambles upto you with a clipboard, and asks how happyyou are with life as a whole, then, if you’re likeme, you would like to be able to sincerely say:“very happy.”

Despite the foregoing criticisms, happi-ness research as it stands is far from useless.We can make the best use of it if we don’tnaively assume that happiness is really the pri-mary subject of measurement and research,as if the elusive nature of happiness has beenpinned down at long last. Happiness researchdoes tell us something about how we feel,and it tells us a lot about the conditionsunder which different kinds of people areinclined to say that they are satisfied orunsatisfied with life. Good feelings areimportant, and so are culture-laden judg-ments that life is going well, even if happinessis more and less than that. It would be prettyincredible if the disposition to say that we arehappy on a survey didn’t correlate well withcertain good feelings and other good things.And the evidence is clear that it does.

I have done my best to expose the weak-nesses of the dominant survey methods inorder to provide a much-needed counter-weight to the often complacent confidence intheir reliability and lack of care in the inter-pretation of their results. When intellectualsand politicians use putatively scientific datafor political purposes, it is important to applycareful scrutiny to their methods and to theway their results are interpreted and used. If,however, we are very careful when comparinghappiness survey results across different cul-tures or across long periods of time; or whenlooking at studies that make no note of indi-vidual personality differences, that do not fol-low the same individuals over time, or thatsample an exceptionally diverse population, it

16

Many peopledon’t even agree

that happiness or well-being,

however conceived,is the greatest

good.

is possible to glean solid information aboutthings almost all of us care about that oughtto have real weight—if not all the weight—inour public deliberation about our politicaland economic institutions and policies. Inthat regard, it is heartening that recent studiesdeploy more sophisticated research designs,better econometric techniques, better theoret-ical constructs, larger data sets, and integra-tion with more objective and rigorous biologi-cal measurement techniques.

So let’s return to our main question: dothese studies show that the political and eco-nomic institutions of the United States are fail-ing its citizens in their pursuit of happiness?

Is There Something Wrongwith the United States?

Happiness research presently falls short asgood science and fails to get off the groundas an adequate ethical standard for evaluat-ing public policy. These conclusions admit-tedly follow from a fairly complex train ofreasoning starting from a number of con-testable assumptions that are impossible tovindicate fully in such a short space. Maybeyou’re not entirely convinced. That’s okay.

Even if you don’t buy the foregoing analy-sis of the complex methodological and philo-sophical problems that dog happinessresearch; even if you remain convinced thatrecent survey-based scholarship really doesgive us highly reliable and useful informationon the determinants of happiness and well-being; even if you think happiness so con-ceived really is the primary target at whichpolicymakers ought to aim, it remains possi-ble to accept survey-based happiness researchat face value and show that the U.S.-stylesocioeconomic model is not only a recipe forimmense riches, which no one disputes, but awinning recipe for happiness.

A casual glance at the comparative interna-tional happiness data is enough to make uswary of the claim that there is some specialproblem with the United States relative to othernations in terms of happiness. Consider, for

example, Figure 1, which presents psychologistAdrian White’s “Map of World Happiness”based on the World Database of Happinessinternational rankings.

The United States is evidently among theworld’s happiest nations, on par with Canada,Australia, New Zealand, Ireland, Norway,Sweden, Switzerland, and a few surprises, likeEl Salvador and Nigeria. Notably, the largestEuropean social democracies, Germany andFrance, fall one or two ranks below the UnitedStates.

In various rankings using different sur-veys, the United States consistently ranksfrom the mid-teens to the mid-twenties out ofmore than 200 countries—in or around the90th percentile—in terms of average self-reported happiness. A 2005 Harris poll usingthe Eurobarometer questions found theUnited States to be happier than everyEuropean country, other than Denmark. Orconsider Table 1, which lists the top 50 coun-tries in self-reported happiness according tothe World Values Survey. The United Statesranks higher than Sweden, Norway, Belgium,Finland, Germany, and France. So much forBenjamin Radcliff’s claim that “life satisfac-tion should increase as we move from less tomore social democratic welfare states.”68 If wetake the data at face value, the obvious con-clusion is that the United States is among thehappiest places in the world.

As noted in my introduction, psychologistGeoffrey Miller believes that “the utilitarianargument for the rich giving more of theirmoney to the poor is now scientificallyirrefutable.”69 Would Americans be happierwith a larger and more generous welfarestate? If the argument for downward redistri-bution is “irrefutable,” then the evidence forit ought to shine forth in the data. Accordingto Dutch sociologist Ruut Veenhoven, chiefof the World Database of Happiness andfounder and editor of the Journal of HappinessStudies, there is barely a flicker of a finding fora welfare-happiness connection:

Contrary to expectation there appearsto be no link between the size of the

17

If we take thedata at face value,the obvious conclusion is thatthe United Statesis among the happiest places inthe world.

welfare state and the level of wellbeingwithin it. In countries with generoussocial security schemes people are nothealthier or happier than in equallyaffluent countries where the state isless open-handed. Increases or reduc-tions in social security expenditure arenot related to a rise or fall in the level ofhealth and happiness either.70

Another Dutch happiness researcher, PietOuweneel of Erasmus University, Netherlands,conjectured that at least the unemployed wouldhave higher average well-being, according to anumber of indicators, in nations that spent alarger percentage of GDP on welfare. Butgreater welfare spending had no statistically sig-nificant effect—even on the happiness of the unem-ployed. While larger welfare states generally doachieve lower levels of income inequalitythrough redistribution. “This apparent income

redistribution does not have any significanteffect on the subjective well-being of the unem-ployed. The general picture is that they are nei-ther happier nor healthier in welfare states.”71

Ouweneel concludes that “in first worldnations there is no consistent pattern of socialsecurity levels having a positive effect on well-being indicators.”72

By contrast, Notre Dame political scientistBenjamin Radcliff does finds a small statisti-cally significant positive effect of generous wel-fare spending on average happiness, and Har-vard economist Rafael Di Tella finds a smallboost from generous unemployment benefits.Ouweneel, however, criticizes both studies forcomparing a very small set of countries.Further, he notes both were able to achieve sta-tistical significance only by treating successiveyears in these countries as independent datapoints—a methodological faux pas.73

The most conservative inference to draw

18

Greater welfarespending had

no statisticallysignificant

effect—even on thehappiness of the

unemployed.

Figure 1

A Global Projection of Subjective Well-Being

Source: Adrian G. White, “A Global Projection of Subjective Well-being: A Challenge to Positive Psychology?”

Department of Psychology, University of Leicester, http://www.le.ac.uk/pc/aw57/world/sample.html.

from the existing happiness literature is thatif the redistributive openhandedness of thestate has any effect on happiness at all, it is asurpassingly small one. When slightly differ-ent econometric techniques using slightlydifferent datasets generate weak correlationsin opposite directions, the correct lesson todraw is that the variable barely matters at all.If Americans are less happy on average thancitizens of some other nations—and we arehappier than all but a handful—the scopeand generosity of the welfare state has littleor nothing to do with it.

If relatively lavish welfare spending fails toincrease happiness, other forms of govern-ment spending might nevertheless succeed.One reason big government could have a pos-

itive effect on happiness, aside from progres-sive redistribution, is that a higher rate of gov-ernment spending as a percentage of GDPmight indicate better provision of the kinds ofpublic goods that unaided market institutionsare often thought to be incapable of provid-ing.74 But economists Christian Bjornskov,Axel Dreher, and Justina Fischer find that “lifesatisfaction decreases with higher governmentspending.”75 Intriguingly, they also find thatthe “negative impact of the government isstronger in countries with a leftwing medianvoter”—which is to say, in places where votersmost want big government.

Advocates of progressive taxation andincome redistribution through welfare trans-fer payments often attempt to justify those

19

EconomistsChristianBjornskov, AxelDreher, andJustina Fischerfind that “life satisfactiondecreases withhigher govern-ment spending.”

Table 1

Subjective Well-Being Rankings of 50 Countries

1. Puerto Rico 4.67 26. France 2.61

2. Mexico 4.32 27. Argentina 2.613. Denmark 4.24 28. Vietnam 2.59

4. Ireland 4.16 29. Chile 2.535. Iceland 4.15 30. Taiwan 2.25

6. Switzerland 4.00 31. Domin.Rep. 2.257. N. Ireland 3.97 32. Brazil 2.238. Netherlands 3.86 33. Spain 2.13

9. Canada 3.76 34. Israel 2.08

10. Austria 3.69 35. Italy 2.06

11. El Salvador 3.67 36. E. Germany 2.02

12. Venezuela 3.58 37. Slovenia 2.02

13. Luxembourg 3.52 38. Uruguay 2.0214. United States 3.47 39. Portugal 1.9915. Australia 3.46 40. Japan 1.96

16. New Zealand 3.39 41. Czech Rep 1.94

17. Sweden 3.36 42. South Africa 1.86

18. Nigeria 3.32 43. Croatia 1.55

19. Norway 3.25 44. Greece 1.45

20. Belgium 3.23 45. Peru 1.3221. Finland 3.23 46. China 1.20

22. Saudi Arabia 3.01 47. South Korea 1.12

23. Singapore 3.00 48. Iran 0.93

24. Britain 2.92 49. Poland 0.84

25. W. Germany 2.67 49. Turkey 0.84

Source: Based on Ronald Inglehart, “Subjective Well-Being Rankings of 82 Societies,” World Values Survey.

http://www.worldvaluessurvey.org/Upload/5_wellbeingrankings.doc Latin American countries, which score high-

er than predicted given the quality of their economic and political institutions, are in italics. The wealthy OECD

countries are in bold. Ex-communist countries are underlined. East and West Germany are scored separately to

reflect the effects of their different institutional histories.

policies not only in terms of the increasedwell-being of the least well-off, but in termsof the overall importance of reducing incomeinequality generally. In theory, high relativeincome and social status are important tohappiness, and we are therefore aggravatedby the conspicuous display of goods we can-not afford. If true, it would make sense for aleveling of incomes to have some positiveeffect on happiness. But, again, empirical evi-dence is hard to come by.

Alberto Alesina, Rafael Di Tella, and RobertMacCulloch have found that inequality in theUnited States has no effect on the self-reportedhappiness of the poor. “Probably the moststriking result of all is the complete lack of anyeffect of inequality on the happiness of theAmerican poor and the American left,” theyreport. There is a very small statistically signif-icantly negative effect in the United States, butit is driven almost entirely by the effect ofinequality on the rich. This is so striking in partbecause it is basically the reverse of the situa-tion in Europe, where there is a much largernegative effect of inequality, due mostly to thedislike of inequality by the poor and left-wingvoters.76

This contrast between Europe and theUnited States raises a crucial point about theinterpretation of the effect of macroeconomicvariables on happiness—namely, their effect isculturally and ideologically mediated. Theauthors argue that the different effects ofinequality in Europe and the United States aredue largely to different prevailing attitudesabout income mobility. Whether or not theirbeliefs are realistic, Americans—even the poorand the left-wingers—have a strong faith in thepossibility of upward mobility, at least com-pared to Europeans. Under those conditions,the fabulously rich demonstrate to otherAmericans just how astronomically high it ispossible to rise and stand out as figures ofadmiration and emulation. (This is perhapswhy rich-bashing populism is a perpetual elec-toral failure in U.S. politics.) The Americanrich also believe strongly in mobility, butwhere there are wide income disparities, theysee all too clearly how far they could fall. Of

course, it is possible to criticize Americans forhaving unrealistic beliefs about mobility, forthey are generally unrealistic, especially amongthe poor. But if inequality has no negativeeffect on happiness independent of attitudestoward mobility, it seems that a happiness-promoting policymaker would want toencourage, not discourage, the American con-viction in mobility.

By most measures, income inequality hasbeen rising in the United States. However,inequality in happiness has declined. Risingincome inequality, then, does not imply awidening gap in satisfaction with life. On thecontrary, Americans are becoming more equalin happiness even as the income gap widens.Sociologist Jan Ott finds that rising averagelevels of happiness go together with decreas-ing levels of happiness inequality because the“level and equality of happiness depend even-tually on the same institutional conditions.”And the institutions of wealth creation areamong the most important: “Wealth con-tributes to higher levels of happiness and cre-ates ample possibilities to reduce inequality inhappiness,” Ott writes.77

The creation of wealth depends on a com-plex system of underlying economic, legal, andcultural institutions. Other things equal,nations that ensure their citizens’ greater eco-nomic freedom are also wealthier. The UnitedStates is the most visible embodiment of theideals of economic freedom on the worldstage. However, emphasis on the importanceof distinctively economic freedom in the happi-ness literature is relatively new, which is per-haps one reason the ideals of relativelyunhampered markets and open exchange—ideals strongly associated with the UnitedStates on the world stage—have yet to get ade-quate emphasis in popular accounts of happi-ness research.

Ott finds that economic freedom as mea-sured by both the Heritage Foundation andthe Fraser Institute correlates strongly withhigh and highly equal levels of happiness—asstrongly as almost any variable.78 Veenhovenfinds that economic freedom correlates morestrongly with happy-life-years (HLY) than any

20

Alberto Alesina,Rafael Di Tella,

and RobertMacCulloch have

found thatinequality in the

United States hasno effect on the

self-reported happiness of the

poor.

variable other than wealth (as measured bypurchasing power per capita) and degree ofsocial tolerance (i.e., acceptance of plural-ism).79 And in the largest study on economicfreedom and happiness yet conducted, econo-mists Tomi Ovaska and Ryo Takashima findthat economic freedom is the variable mosthighly correlated with self-reported happiness(see Figure 2). According to Ovaska andTakashima:

Compared to the GDP per capita mea-sure, the index of economic freedom—personal choice, freedom to competeand the security of privately ownedproperty as its core components—turned out to be about four times asimportant, as measured by elasticities.This indicates that the newly foundinterest of economics and of policymak-ers in measures of institutional quality

is well placed. Based on the regressionresults, economic freedom holds somepromise in serving as one of the policytools that could be potentially used toincrease the SWB of a nation’s popula-tion.80

According to Ovaska and Takashima, “Theresults suggest that people unmistakablycare about the degree to which the societywhere they live provides them opportunitiesand the freedom to undertake new projects,and make choices based on one’s personalpreferences.”81

According to the Heritage Foundation’s2007 Index of Economic Freedom, the UnitedStates ranked fourth, behind Hong Kong,Singapore, and Australia. And according tothe Fraser Institute-Cato Institute 2006Economic Freedom of the World Report, theUnited States was in a three-way tie for third

21

Economic free-dom correlatesstrongly withhigh and highlyequal levels ofhappiness—asstrongly asalmost any variable.

Figure 2

Self-Reported Happiness and Economic Freedom

Source: Tomi Ovaska and Ryo Takashima, “Economic Policy and the Level of Self-Perceived Well-Being: An

International Comparison,” Journal of Socio-Economics 35 (2006): 314.

with Australia and Switzerland, behind HongKong and Singapore. The evidence is extreme-ly strong that the outstanding level of eco-nomic freedom in the United States has astrong effect on its high showing in the inter-national happiness comparisons. Any policypackage aiming to improve American happi-ness should have initiatives to improve eco-nomic freedom at the forefront.

A fair look at a number of the most recent,and most sophisticated, happiness studiessuggests that the United States, far from beinga problem country, exemplifies many of theinstitutional virtues that strongly predict highlevels of national self-reported happiness.Although the United States is routinely criti-cized by Europeans and its own political leftfor a stingy welfare state and high levels ofincome inequality, there is almost no evidence inthe happiness literature to support the ideathat Americans would be better off with eitherlower levels of income inequality or a policy ofmore generous welfare transfers. The high lev-els of economic growth and economic free-dom in the United States are effectivelyincreasing the average American level of hap-piness while decreasing inequality in life satis-faction between its citizens.

If we take the current international com-parisons at face value, one very clear pictureemerges: advanced, liberal-democratic marketeconomies are the happiest places on Earth.However, if we descend from such rarefiedheights of generality, the picture goes blurry.The data are too coarse to distinguish amongpackages of specific policies—to tell us, forexample, that we would be happier withmandatory paid maternity leave, or withgreater restrictions on the content of advertis-ing to children. As with inequality, we willoften find that the effect of policy on happi-ness is mediated by culturally specific beliefsand attitudes. So, beyond a general recom-mendation to increase economic freedom andeliminate policies that hinder economicgrowth (which I will discuss in detail below),there is almost no specific guidance here for apolicymaker. The picture that does emergefrom the data is most emphatically not a pic-

ture of American misery, nor does it even hintat a problem with America’s conduciveness tohappiness relative to the European socialdemocracies.

Taxing Ambition

As noted at the outset, some of the mostcompelling happiness-based arguments forincome redistribution are built on the allegedimportance of relative as opposed to absoluteincome and wealth. However, these argumentsare much more theory-driven than data-dri-ven, turning on a very particular hypothesisabout the role and importance of social statusin human life. We have already seen that theempirical happiness-based case for reducinginequality and increasing welfare spending isextraordinarily weak. It should not be surpris-ing, then, that a hypothesis about humannature that leads to poor predictions aboutinequality and redistribution should also beill-supported by the facts. However, becausethe relative position hypothesis is so com-pelling to some very fine minds, it is impor-tant to understand in detail why it fails andwhy the importance of relative position pro-vides no credible happiness-based case formore redistribution.82

The politics of relative position encouragesus to see life as a competitive climb up a ladderof status. If there can be only one person perrung on any dimension of status or rank, theneach step up the ladder for one person logical-ly requires a step down for another. You can’tmake space for an eleventh restaurant or uni-versity on a “Top Ten” list, just as two runnerscan’t both come in first. Competition forhigher position is a paradigmatic zero-sumgame—every move up is offset by a corre-sponding move down. So if inherently scarcepositional goods like ladder rank are highlyvalued, then whenever you get a raise, a pro-motion, or a swank new suit, you must createa shower of negative psychic consequencesthat rain on those occupying the rungs below.

According to Layard, Frank and others, wefiercely value inherently scarce positional

22

There is almost no evidence in the

happiness literature to

support the ideathat Americanswould be better

off with eitherlower levels of

income inequalityor a policy of

more generouswelfare transfers.

goods because we fiercely value status—theultimate positional good. This explains, theyposit, why average self-reported happiness hasnot gone up over time, though wealthier peo-ple at any time are more likely to be happier.Higher relative standing makes us happier, butthe middle of the income distribution is themiddle, no matter how big the number. Sothere is no avoiding the positional downside ofevery positional upside. But, they insist, we can-not simply shrug off the inevitable cruelty of aworld in which our interests are in irreconcil-able conflict. Policy must take human natureseriously and do what it can to help. We shouldtake the dismay and anxiety caused by zero-sum competition over positional goods just asseriously as sludge dumped in a stream, theroar of jets at a nearby airport, or other classicexamples of negative spillover effects (or “nega-tive externalities”) of economic activity.

In addition to the “harms” caused by anyupward positional move, Frank and Layardworry about the negative effects of positional“arms races.” If I try hard to move up thepositional ladder, the people just ahead willtry harder still to maintain their lead. In theend, we’re all likely to wind up about wherewe started in terms of relative position, butwe’ll all be exhausted by the race. As an illus-tration, Frank highlights the signaling func-tion of fashion:

If some job candidates begin wearingexpensive custom-tailored suits, a sideeffect of their action is that other candi-dates become less likely to make favor-able impressions on interviewers. Fromany individual job seeker’s point of view,the best response might be to match thehigher expenditures of others, lest herchances of landing the job fall. But thisoutcome may be inefficient, since whenall spend more, each candidate’s proba-bility of success remains unchanged. Allmay agree that some form of collectiverestraint on expenditure would be use-ful.83

Frank argues that it is often impractical or

impossible for individuals to negotiate atruce, so a trusted third party—the state—must step in and impose a price cap or a taxon fancy suits (or cars, houses, or whatever)in order to mitigate the “harm” caused byself-defeating attempts to get ahead.

The intractability of zero-sum positionalcompetition for Frank and Layard flows froma rather nasty conception of human nature,according to which we are dominated by a uni-versal, inflexible, deep-seated, status-seekinginstinct, together with a remarkably narrow,materialistic conception of how positionalcompetition is culturally mediated. Theirs is adistressingly agonistic vision of the humanpredicament in which life is irremediablybrutish and nasty, if not short. “The desire forstatus is utterly natural,” Layard writes. “But itcreates a massive problem if we want to makepeople happier, for the total amount of statusis fixed . . . If my score improves, someone else’sdeteriorates.”84

In our original evolutionary context, Frankargues, higher-rank individuals would havehad greater access to material resources andthe highest quality mates, increasing the pro-portion of their genes in future populations.Therefore, Frank concludes, “it would bestrange indeed if the relentless forces of natur-al selection had not honed a human brain thatstrongly motivated its bearer to seek highrank.”85 Mother Nature has doomed us, likeother primates, to act as status-seeking mis-siles.

Layard recognizes this line of thought maysound ugly to certain ears. Accordingly, heimagines a critical “libertarian” who objectsthat public policy based on our status-fixationaffirms and rewards an “ignoble sentiment[like envy] that ought to be disregarded.” Heresponds:

This is an extraordinarily weak argu-ment. Public policy has to deal withhuman nature as it is. The desire for sta-tus is after all ubiquitous, and we all rec-ognize it. Greed is also common, andlibertarians do not disallow it. Both sen-timents are features of human nature.

23

The intractabilityof zero-sum positional competition forFrank and Layardflows from arather nasty conception ofhuman nature.

We are not perfect, and public policyshould help us make the best of what weare.86

Layard is concerned to get us to take theinescapability of status-racing seriously, orelse his argument for taxes on positional“pollution” will fall apart. He’s right that wemust deliberate about policy “taking men asthey are and laws as they might be,” asRousseau put it.87 And we should not be sur-prised to find that our theory of humannature will largely determine which laws andinstitutions seem feasible and desirable.However, although Frank and Layard’s foraysinto speculative evolutionary psychologymay be better than “extraordinarily weak,”they don’t amount to a state-of-the art con-ception of human nature “as it is,” either.Taking people as they really are is the down-fall of the politics of relative position.

It is true that status is no ideologicalfancy; it has a real organic basis. Frank andLayard both refer to studies involving vervetmonkeys showing that serotonin and testos-terone concentrations correlate positivelywith position in the deference-dominancehierarchy.88 Similarly, in an article in the NewYorker on the importance of relative (asopposed to absolute) poverty, writer JohnCassidy notes that low-ranking baboons haveelevated levels of stress hormones, and thatlow-ranking rhesus monkeys face elevatedrisk of arteriosclerosis.89 There is some goodevidence of similar physical correlates of sta-tus in humans. “If monkeys enjoy status, sodo human beings,” Layard reasons.90 He thenrushes to explore the policy implications ofintractable status competition.

But the fact that we are not actually vervetmonkeys or baboons matters a great deal.Species differences matter a lot, even betweenmonkeys and chimps. Pioneering primatolo-gist and psychologist Abraham Maslow firstpointed out the vast difference in behaviorbetween often friendly and tolerant domi-nant chimpanzees and vigilantly despoticdominant rhesus monkeys.91 “Real and pro-found differences are glossed over by flat

statements that all primates know domi-nance-subordination relationships,” writesFrans de Waal, the world’s leading expert onprimate hierarchies.92

Real and profound differences are alsoglossed over by failing to acknowledge what ispeculiar to humans. For one thing, we areuniquely cultural creatures, and this funda-mentally transforms the zero-sum logic of theprimate dominance hierarchy. We havealready seen how the effects of macroeconom-ic phenomena like inequality are mediated byculture-bound belief systems. Even universalhuman psychological traits are highly mediat-ed by diverse human cultural formations. Likemonkeys and chimps, we all eat. But some eatwith fingers, some with forks, and some witha tuxedoed waiter and violins. There is nodenying that all humans signal status, but thedifferences between a silk necktie and a boundfoot are not morally trivial. A high-statusdrug-dealing gangster and a high-status barn-raising Amish family man may each be “alphamales” within their groups, but the social con-sequences of positional competition for vio-lent power and for upstanding modest pietyare hardly the same.

Indeed, a sensible measure of a culture’squality is the extent to which it can shapepotentially destructive natural propensities,such as self-interest, status seeking, tribal sol-idarity, and mate competition, into benign oreven beneficial cultural forms.93 Althoughour taste for status may be deep, the fact thatour cultural capacity mediates our instincts,causing the form and value of their expres-sion to vary wildly, prevents facile extrapola-tion from tendency to policy.

This turn toward culture is far from a soft-headed evasion of hard biological truths.Cultural flexibility is our biological nature.Recent work by Peter Richerson, Robert Boyd,Joseph Henrich (a zoologist and two anthro-pologists), and others point out the adaptiveadvantages of a labile cultural capacity thatallows human populations to adapt quickly tochanging environments and accumulate andtransmit useful knowledge, norms, and insti-tutions across generations.94 In a paper on the

24

A sensible measure of a

culture’s quality is the extent to

which it canshape potentially

destructive natural

propensities intobenign or even

beneficial culturalforms.

cultural evolution of cooperation, Boyd,Richerson, and Henrich point out that thecommon human cultural capacity explains thehuge variation in cooperative institutions andnorms between societies. Whether we happento be locked in zero-sum or positive-sumgames is more a matter of culturally transmit-ted institutions (norms of interaction andcoordination, explicit or tacit) than of brutefacts about our genetic constitution.95 Thequestion, then, isn’t whether we are statusseeking. The question is how our culture andinstitutions harness, suppress, or amplify ournatural tendencies.

Henrich, with anthropologist and psy-chologist Francisco Gil-White, has arguedthat the distinctive human cultural capacitycreates space for kinds of status based in thepositive-sum trade of specialized knowledgeand expertise for “prestige.” They argue thatfreely conferred prestige provides both anincentive to develop excellence in a valueddomain and a payment for the demonstra-tion and transmission of scarce knowledgeand skills that benefit members of the group:

In humans, in contrast [to other pri-mates], status and its perquisites oftencome from non-agonistic sources—inparticular, from excellence in valueddomains of activity, even without anycredible claim to superior force. Forexample, paraplegic physicist StephenHawking . . . certainly enjoys high statusthroughout the world. Those who, likeHawking, achieve status by excelling invalued domains are often said to have“prestige.”96

It cannot be denied that prestige based insuperior knowledge of theoretical physics islight-years from that enjoyed by a dominantvervet monkey tyrannizing its coweringunderlings. Henrich and Gil-White’s concep-tion of nonagonistic prestige based in valuedexcellence points to the exit from Layard andFrank’s grim, zero-sum world. To be sure, therunner-up in the race to cure a disease may beinfuriated by the prestige granted to his win-

ning nemesis, but this triviality will beswamped by the benefits that flow to peoplewho may not even know the innovator’s name.

The logic is basically David Hume’s in hisessay “The Rise and Progress of the Arts andSciences,” where he attributes the advance ofknowledge and beauty precisely to a combina-tion of “emulation,” the ambition to equal orsurpass others (positional competitiveness),and a taste for “praise and glory” (freely con-ferred prestige).97 Hume may well have hadhimself in mind when he observed, “A writer isanimated with new force, when he hears theapplauses of the world for his former produc-tions; and, being roused by such a motive, heoften reaches a pitch of perfection, which isequally surprising to himself and to his read-ers.”98 The world is better, not worse, forHume’s own avidly status-seeking “love of lit-erary fame,” his confessed “ruling passion.”99

We applaud for a reason: to stimulate the sup-ply of excellence by gratifying the demand forstatus.

Crucially, there is no limit to the possibleforms of excellence. So, although the numberof positions on any single dimension of sta-tus may be fixed, there is no reason whydimensions of status cannot be multipliedindefinitely. It does not in fact require a vio-lation of mathematical law to produce morehigh-status positions, for it is possible to pro-duce new status dimensions.

In his fascinating analysis of the economicsof fame, economist Tyler Cowen interpretspraise as the currency with which fans rewardand manipulate fame-seeking performers, andconcludes, in an argument addressed to Frank,that fame-seeking is a positive-sum, not a neg-ative-sum, game. “Given the benefits of tradingpraise for performance, markets continuallyfind new means of accommodating andattracting fame-seeking,” Cowen writes.100 Andmarkets continually find new means of accom-modating and attracting more garden-varietyforms of status-seeking as well.

New dimensions of excellence and statusoften open up as a result of technologicalinnovation. It was impossible to be a chart-topping pop star or a champion triathalete

25

There is no reason whydimensions ofstatus cannot bemultiplied indefinitely.

before there were radios and bikes. Liberalmarket societies not only create new technolo-gies, they create proliferating forms of associa-tion, affiliation, expression, and identity at asometimes alarming rate.101 Each musicalgenre, hobby, committee, church, club, ideolo-gy, and lifestyle provides a new dimension—anew frame of reference—for positional compe-tition. Environmental purists can competewith one another to conspicuously consumeeco-friendly products (or conspicuously refuseto consume much at all), while punk rockersduke it out on grounds of anti-establishmentauthenticity and economics professors knockthemselves silly trying to get articles into eso-teric journals no one else cares about.

The cultural fragmentation some criticslament is precisely what liberates us fromunavoidable zero-sum positional conflict.Surfer dudes don’t compete with Star Trekgeeks for status. Dynamic market liberal soci-eties create higher-order positive-sum games(for example, the “create a new status dimen-sion” game, or the “find the status dimensionon which you rank highest” game) that havelower-order zero-sum games as parts.

Once we recognize the anarchic multidi-mensionality of status, the frequent supposi-tion of Frank, Layard, Cassidy, and othersthat the distribution of income—whether withinthe office or within the nation—is the maindimension of positional competition beginsto look ridiculous. Struggling artists do notnecessarily doubt their superiority in the faceof successful accountants. And it should notneed pointing out that many of us simplydon’t know how much our friends make anddon’t much care.

Are the external effects of positional com-petition really like pollution, as Layard says?Or is positional competition more like thelight of the sun: it can burn you, but nothinggrows without it? Nobel Prize winner GaryBecker and his University of Chicago col-league, Clark Medal winner Kevin Murphy,have argued that without the motivatingprospect of increased status, there would be“underinvestment” in entrepreneurial activity:“Great scientists and outstanding entrepre-

neurs receive enormous prestige and statusprecisely in order to encourage scientific andstartup activities,” they write.102 The benefitsof such status seeking, they say, may morethan offset the negative effect of status “armsraces.” Even if the taste for relative position isunavoidable, Indiana University economistRichmond Harbaugh argues that fear offalling behind can induce high rates of sav-ings—a kind of stockpiling for future status-signaling consumption races—with positiveoverall effects on economic growth.103 So,there may well be negative external effects ofpositional competition, but when we add thepositive effects, the net externality may turnout to be positive. We can draw no soundimplication for policy by blinding ourselves toone column of the cost-benefit ledger.

If some positional competition creates neg-ative spillovers, the best policy solution is lessclear than Frank, Layard, and others imply. Inhis seminal 1960 article, “The Problem ofSocial Cost,” Ronald Coase destroyed theolder conception of externalities.104 Coasedrew attention to the fact that externalitiesexist only as an interaction of preferences. I maysmell of jasmine, to the delight of most whoenter my orbit. But if you are allergic, my fra-grance may be far from pleasant. A tax on jas-mine may benefit you, but at the cost of thosewho take pleasure in the scent. Coase instructsus to look for the “least-cost avoider.” If itcosts you least simply to stay out of waftingdistance, then that will be the most efficientcourse.

The cultural variability and open-ended-ness of status make it clear that we are nothelpless to avoid the harsh side-effects ofpositional competition. If it is within ourpower to opt out of any particular status raceand to compete for status on a differentdimension, those “harmed” may well be theleast-cost avoiders. Remember Frank’s exam-ple of competing job applicants in a race tobuy an ever-fancier suit? The fact is, you sim-ply don’t have to apply for that job. And evenif you really want to, you can always buy yoursuit on the cheap from Overstock.com, hopenobody notices, and use the $500 you saved

26

The cultural frag-mentation somecritics lament is

precisely what liberates us from

unavoidable zero-sum positional

conflict.

to buy studio time for your new indie-emo-folk band—that is, to compete on anotherdimension of status.

More importantly, as Michael Hagerty’sstudy discussed above makes clear, although aplurality of people taking a happiness surveydo determine their answer on the basis ofsome kind of concurrent social comparison,people are easily able to shift their frame of ref-erence and respond to the survey on the basisof intertemporal personal comparison, orintertemporal social comparison, in whichcase their self-reported life satisfaction increas-es. All it takes is for the experimenter to askthem to look at things a different way. If the“negative externality” vanishes simply becausepeople have shifted the perspective fromwhich they answer a happiness survey ques-tion, then the idea that there are real “harms”here, or that the state might have an interest inpreventing them, becomes hard to swallow.The “harm” appears to be a phantom of aneasily ameliorable bias toward concurrentsocial comparison in survey respondents. It’shard not to be amused by the “policy implica-tion” Hagerty draws from his study:

The intertemporal questions aboveshow . . . that people are quite willing tochange their standard of comparison(at least temporarily). National happi-ness may therefore be increased byencouraging people to compare them-selves with their own grandparents, whohad far worse health, education, socialmobility, and job benefits than today,and who hoped for better lives for theirchildren. The present study shows thatpeople currently compare themselvesfar less to their own past (as little as11%) than to current standards such associal comparisons or current aspira-tions. Therefore, encouraging people tocompare themselves with their own past(rather than with current others or cur-rent aspirations) would increase judg-ments of happiness.105

The policy implication is not so much that

we ought to stick it to the rich, but to get abetter grasp on how rich we all really are.Indeed, if we extrapolate from Hagerty, thehappiness-based policy implication of hisstudy is that we should once again revise theConsumer Price Index so that it stops under-estimating growth in real wages.106 We’d behappier if government statistics didn’t con-ceal how much better off we really are.

Work by psychologist Bram Buunk showsthat individuals can differ strongly in whathe calls “social comparison orientation” orSCO. It turns out that it is not good for youto be high in SCO:

Individuals high in social comparisonorientation are characterized by a senseof uncertainty about themselves as wellas by a strong concern with their ownmotives and feelings, as apparent fromsubstantial correlations of social com-parison orientation with neuroticism,and with public and private self-con-sciousness. Moreover, and particularlyrelevant here, individuals high in socialcomparison orientation are relativelylow in intellectual autonomy (one ofthe Big Five dimensions) and tend tohave a strong interest in how others aredoing in order to evaluate their owncharacteristics.107

It is well-known that neuroticism in par-ticular correlates negatively with self-report-ed happiness, while intellectual autonomy(also known as “openness to experience”) cor-relates positively with Ryff ’s “challengedthriving.”108 People high in SCO feel worsewhen others are doing better, while peoplelow in SCO simply don’t notice. It seemsunwise to create policy that would symboli-cally endorse and possibly reinforce whatappears to be a psychologically problematicorientation. And it seems deeply unfair toraise taxes on everyone simply on the basis ofthe fact that some people can’t help compar-ing themselves to others. Happily, Buunkand coauthors show that people high in SCOaren’t stuck feeling sour about others’ rela-

27

If the “negativeexternality” vanishes simplybecause peoplehave shifted theperspective from which theyanswer a happi-ness survey question, the ideathat there are real“harms” becomeshard to swallow.

tive success: they can be taught to pay moreattention to those doing worse, with divi-dends in self-reported happiness. Even thoseof us most inclined to compare ourselves toothers can reduce the “harms” of relativeposition simply by choosing to pay attentionto something else.

Frank, acknowledging the logic of Coase’sleast-cost avoider principle, argues that evenpeople who are uninterested in status may beharmed anyway by others’ positional competi-tion. For example, “positional externalities inthe housing market,” Frank argues, “alsoentail far more tangible costs, most notablythat failure to keep up with communityspending patterns means having to send one’schildren to schools of below average quality.The scope for accommodation to such costsseems far more limited” than in cases wherewe can simply choose not to let relative posi-tion bother us or volitionally to switch ourframe of social comparison.109 But this,Frank’s best example of a case where it is hardto opt out, is in fact a strikingly poor example.It turns entirely on the irrational bundling ofschools and neighborhoods in the Americanpublic school system, a problem that could beentirely alleviated with school choice policiesthat would allow families to send their kids tofancy schools outside their own modest neigh-borhood. This suggests that the most directpolicy implications of positional competitionmay not be higher taxes on work and con-sumption, but policies, like school choice, thatmake it easier to pick and choose among races.It should be possible to give your kids a leg upin the education race without living in anexpensive neighborhood. Frank identifies acost of the status quo system of educationfinancing, not a cost of positional competi-tion in general.

Getting Rich, Getting Happy

The relative position hypothesis also helpsdrive the animus toward economic growth. Ifwe’re grinding away to get ahead, and every-body gets richer, but money doesn’t make us

happier, and no one on average gets aheadanyhow, then what’s the point of everybodygetting richer? What’s the point of a high rateof GDP growth? We could grind away a lotless, be a bit less rich, but also a bit happier.We should relax more instead: build modelairplanes, spend time with the kids, adopt ahighway, or whatever—and policy shouldhelp make this easier. Money isn’t everything,and there’s something wrong with a govern-ment that doesn’t seem to understand that.

“GDP is a hopeless measure of welfare,”Layard concludes. “For since the [SecondWorld] War that measure has shot up byleaps and bounds, while the happiness of thepopulation has stagnated.”110 Elsewhere hewrites, “We desperately need to replace GDP,however adjusted, by more subtle measuresof national wellbeing.”111 This also is thekind of thinking that led Andrew Oswald towrite, “Economists’ faith in the value ofgrowth is diminishing. That is a good thingand will slowly make its way down into theminds of tomorrow’s politicians.”

It has, in fact, made its way to the minds oftoday’s politicians. As British prime ministerialhopeful David Cameron announced lastspring, “It’s time we admitted that there’smore to life than money, and it’s time wefocused not just on GDP, but on GWB—General Wellbeing.” In Cameron’s plea onecan hear echoes of Robert Kennedy’s famousattack on national income accounts as a mea-sure of human well-being. Stumping for pres-ident just months before his tragic murder,Kennedy lamented that a measure like GDP

does not allow for the health of ourchildren, the quality of their education,or the joy of their play. It does notinclude the beauty of our poetry or thestrength of our marriages; the intelli-gence of our public debate or theintegrity of our public officials. It mea-sures neither our wit nor our courage;neither our wisdom nor our learning;neither our compassion nor our devo-tion to our country; it measures every-thing, in short, except that which

28

Even those of usmost inclined

to compare ourselves to

others can reduce the “harms” of

relative positionsimply by

choosing to payattention to

something else.

makes life worthwhile. And it tells useverything about America except whywe are proud that we are Americans.112

Kennedy was right that national incomestatistics don’t tell us much about “our wit” or“the joy of our children’s play.” Nevertheless, ifwe’re looking for a single socioeconomic vari-able that tracks with most objective indicatorsof well-being, GDP per capita is hard to beat.Even if it does not measure everything thatmakes life worthwhile (because nothing does),it most definitely relates positively to mea-sures of a lot of good things, including happi-ness. But before looking at the effects ofmoney on happiness, I will examine howimportant high average individual wealth, asmeasured by GDP per capita, can be to non-subjective indicators of well-being.

A large recent study by OECD economistsRomina Boarini, Asa Johansson, and MarcoMira d’Ecole focused on the relationshipbetween GDP per capita and alternative mea-sures of well-being in the OECD nations. Theauthors found significant positive correla-tions of GDP per capita with self-sufficiency,average years of schooling, life expectancy atbirth, healthy life expectancy at birth, mortali-ty risks, and volunteering. Further, GDP percapita was significantly negatively correlatedwith income inequality, relative poverty, childpoverty, and child mortality.113 As economistsVito Tanzi and Hamid R. Davoodi show, GDPper capita is also significantly positively corre-lated with lower levels of corruption—so GDPmay have something to say about the “integri-ty of our public officials” after all.114

Given the serious charge that high-growthmarket societies erode “social capital” andfray the social fabric, it is important to notethat even if GDP per capita is not significant-ly positively associated with most indicatorsof social cohesion other than rates of volun-teerism and a decrease in crime, neither doesit appear to accompany symptoms of socialbreakdown. According the authors, “indica-tors of crime victimization, prisoners andsuicides—as well as of divorces, drug use androad accidents—are not significantly correlat-

ed with GDP per capita,” either positively ornegatively.115

In his recent book, The Moral Consequences ofEconomic Growth, Harvard economist BenjaminFriedman emphasizes that in addition to thelitany of its astonishing humanitarian benefits,economic growth is also a powerful force forthe encouragement of broadly liberal socialand political aims. “The value of a rising stan-dard of living lies not just in the concreteimprovements it brings to how individualslive,” Friedman writes, “but in how it shapesthe social, political, and ultimately moral char-acter of a people. Economic growth—meaninga rising standard of living for the clear majori-ty of citizens—more often than not fostersgreater opportunity, tolerance of diversity,social mobility, commitment to fairness, anddedication to democracy.”116

And as Tyler Cowen has detailed atlength, wealthier societies produce morepaintings, poems, films, songs, operas, andsculptures. They build more museums, sup-port more symphonies, and patronize moreartists than do less wealthy societies. Econ-omists can’t tell a skeptic about economicgrowth whether the poetry is beautiful, but atleast there is more of it, and most of us,economists or not, recognize that much of itis in fact beautiful.117

So economic growth makes us healthier,better educated, and more public spirited;fosters social toleration; increases the integri-ty of our public institutions; and produces asurfeit of art and culture. But does economicgrowth make us happier?

It is impossible to review the happiness lit-erature without constantly tripping over thefact that GDP per capita, or some other proxyfor average wealth, dominates almost all vari-ables in terms of the strength of correlationwith a society’s average happiness. As we havealready seen, at any time and place, individualswith higher relative income are more likely tosay they are “very happy.” But, as we are con-stantly reminded, the idea that average happi-ness has not increased with average income isa bedrock finding of happiness research. It isalso false.

29

Economic growth is a powerful forcefor the encour-agement ofbroadly liberalsocial and political aims.

On average, wealthier nations have happi-er people, as Figure 3 makes clear. Moreover,the most recent statistical work on the rela-tionship between wealth and happiness,using larger sets of data and more sophisti-cated techniques of analysis, show unequivo-cally that we are getting happier as we getricher.

In a recent debate with Richard Easterlinin the journal Social Indicators Research,Michael Hagerty and Ruut Veenhoven haveargued that increasing wealth is making ushappier. Much of the debate centers on smallesoteric points of statistical methodologyand how to rhetorically frame the conclu-sions. However, Veenhoven and Hagerty’smethods do appear to be a marked improve-ment over most past happiness studies, andtheir well-argued interpretation of their find-ings goes mostly unchallenged by Easterlin,which augurs ill for the anti-growth crowd.

They argue that the data are inconsistentwith the predictions of strong relative posi-tion theories and that although adaptationdoes reduce the rate of increase in happiness,it does not wash out all absolute gains inhappiness from increasing wealth.118 Thereare non-relative and non-evaporating gainsfrom wealth. They conclude:

Happiness is apparently not a zero-sumgame and can be raised by growth innational income. This has been a centralbut until recently untested belief ofeconomists and public policy analysts.Not too long ago unhappiness wasdeemed the normal human condition.Since expulsion from Paradise, humanscould only hope for happiness in theafter-life. Promises of greater happinessin earthly existence were dismissed asoverly simplified utopianism. The cur-

30

There are non-relative and non-

evaporating gainsfrom wealth.

Figure 3

Life Satisfaction and GDP per capita

Source: Tomi Ovaska and Ryo Takashima, “Economic Policy and the Level of Self-Perceived Well-Being: An

International Comparison,” Journal of Socio-Economics 35 (2006).

rent research on happiness allows empir-ical tests of this, and has shown thatentire nations can become happier witheconomic growth and its covariates.119

Happiness researchers have mostly told usabout average self-reported happiness at aparticular time and over time. But we havebeen told little about how long a representa-tive person in a society can expect to live atthe average level of happiness. For example,most cross-national comparative studiescan’t see the difference between two equallyhappy societies, one of which has an averagelifespan of 30 years and the other of whichhas an average of 80. But if we’re makingjudgments on the standard of happinessalone, a society in which you can expect anextra 50 years of happiness has got to be bet-ter. Veenhoven’s HLY measure takes longevi-ty into account. His method is to take anation’s life-expectancy at birth and multiplyit by average happiness converted to a scalefrom 0 to 1 (e.g., a 5 on a 10-point happinessscale becomes .5, etc.). When we switch to theHLY indicator for the United States, we seeHLY levels clearly rising during the last half

of the 20th century. If a longer happy life ishappier than a shorter happy life, then life isevidently getting happier with growth (seeFigure 4).

The exact effect of rising wealth on thetrend of rising HLY is difficult to tease out, asGDP per capita tends to correlate with somany other positive indicators. Veenhovenshows that the gains in HLY do diminishrapidly (but never to zero) above about$15,000 of average income (see Figure 5).However, the returns to HLY from economicand political freedom do not appear to bediminishing, and these are the variables thattend to predict growth.

As Veenhoven shows in Table 2, purchas-ing power per head is the strongest singledeterminant of HLY. The fact that correla-tions for all other indicators (with the excep-tion of “trust in compatriots”) weaken aftercontrolling for wealth suggests that wealthand growth explain, at least in part, the levelsof other positive social conditions, such asfreedom, tolerance, civil rights, lower levels ofcorruption, discrimination against women,and inequality in happiness—strongly sup-porting Benjamin Friedman’s argument for

31

If a longer happylife is happierthan a shorterhappy life, thenlife is evidentlygetting happierwith growth.

Figure 4

Happiness Adjusted Life-Years in the United States 1948–1998

Source: Ruut Veenhoven, “Apparent Quality-of-Life In Nations: How Long and Happy People Live,” SocialIndicators Research 71 (2005): 61–86.

the broadly liberalizing effects of economicgrowth.120

The best studies are those that track peo-ple over time and see what happens to theirhappiness as their circumstances change. Onesuch study used the reunification of East andWest Germany—and rapidly rising incomes inthe East—as a kind of natural experiment totest whether increasing incomes do make ushappier. In a paper titled “Money DoesMatter!” the authors write:

average life satisfaction in EastGermany increased by around 20%between 1991 and 2001, leading to aclear convergence with West Germany.Importantly, increased real householdincomes in East Germany accountedfor around 35–40% of this increase,which corresponds to the economists’view that money surely matters.121

On the flip-side, sudden reductions inincome correlate strongly with declining sub-jective well-being. Hagerty and Veenhovennote that “in Russia average happinessdecreased by two points following the Rubel

crisis in the mid 1990s, which severely disor-ganized the economy. As the Russian econo-my began to pick up, so happiness also beganto rise.”122

Despite the apparently overwhelming evi-dence that wealthy, high-growth societies arethe happiest places in the world, and only get-ting happier, there is no lack of hand-wringingabout the spiritual emptiness of “materialism”in liberal market societies, and some of thehand-wringing is motivated by putatively sci-entific findings. In his 2004 book The HighPrice of Materialism, Knox College psychologistTim Kasser presents his research with RichardRyan showing that “extrinsically motivated”people who care predominantly about materi-al acquisition are more likely to find them-selves unhappy and dissatisfied with life thanare “intrinsically motivated” people devoted topersonally meaningful work and relation-ships. Kasser’s research on the negative effectsof “materialistic” value orientation on happi-ness seems sound and conforms to commonsense.

However, Kasser barely takes a breathbefore taking an awesome leap in logic fromthe micro to the macro level of diagnosis.

32

Sudden reductions in

income correlatestrongly with

declining subjective

well-being.

Figure 5

Wealth and Happy Life-Years in 66 Countries in the 1990s

Source: Ruut Veenhoven, “Apparent Quality-of-Life In Nations: How Long and Happy People Live,” SocialIndicators Research 71 (2005): 61–86.

Because extrinsically motivated individualswith predominantly materialistic values aremore likely to be unhappy, market societies,which create unparalleled opportunities formaterial accumulation and consumption andwhich motivate the production of goods andservices others value extrinsically with profitsand paychecks, must be unhappy.123 But thisis a simple non sequitur. Kasser boldly equivo-cates on the meaning of the word “materialis-tic,” implying that consumer demand formaterial consumption requires a widespread“materialistic” attitude in his special theoreti-cal sense. However, capitalist consumer soci-eties—and markets in general—don’t requirematerialistic monomania in order to operate.They require only that people want things, forgood reasons or bad, and that they are willingto trade what they have produced to get them.

Showing that there is a problem with materi-alistic monomania says nothing about capital-ist societies, nor does it imply that denizens ofcapitalism are more likely to be materialisticthan others.

Recent studies by Stephanie M. Bryant,Dan Stone, and Benson Weir have developeda new theoretical construct called FinancialSelf-Efficacy, which they define as “the beliefthat one can competently manage one’sfinances.”124 The authors find that individu-als high in FSE are more likely to treat moneyas an instrument for the achievement of other,nonmaterialistic aims. People high in FSEtend to have higher levels of debt but moreintrinsic motivation for carrying it (e.g., a stu-dent loan, a family home, a trip to a foreigncountry, etc.), and they are more likely tohave high levels of life satisfaction. The

33

Showing thatthere is a problem withmaterialisticmonomania does not imply thatdenizens of capitalism aremore likely to bematerialistic thanothers.

Table 2

Social Conditions and Happy-Life-Years in 67 Countries in the 1990s

Correlation with HLY

Condition in Nation Zero-order Wealth Controlled N

WealthPurchasing power per head* +0.73 66

FreedomEconomic* +0.71 +0.38 64

Political* +0.53 +0.13 63

Personal –0.61 +0.31 45

EqualityDisparity in incomes* –0.10 +0.37 62

Discrimination of women –0.46 –0.12 51

Disparity in happiness –0.64 –0.37 54

BrotherhoodTolerance +0.72 +0.43 55

Trust in compatriots +0.20 +0.20 37

Voluntary work +0.40 +0.31 53

Social security +0.34 –0.27 34

JusticeRule of law* +0.65 +0.20 64

Respect of civil rights* +0.60 +0.20 60

Corruption –0.73 –0.32 40

Explained variance by variables

marked with* 66% 60

Source: Ruut Veenhoven, “Apparent Quality-of-Life In Nations: How Long and Happy People Live,” SocialIndicators Research 71 (2005): 61–86.

upshot is clear: the aspiration to make andspend money is neither good nor bad. Whatmatters is our attitude toward our financialgoals, and their content. If we want moneysimply for its own sake, to impress friends, orto buy gadgets as palliatives for boredom andennui—Kasser’s “materialism”—money won’tdo us good. But if we regard money as a meretool with which to achieve more meaningfulends, more money will help us do more ofwhat we find meaningful.

University of Michigan political scientistRonald Inglehart’s work shows that nationswith a rising level of per-capita GDP tend to shiftculturally from “materialist” values, “whichemphasize economic and physical security,” to“post-materialist” values, “which emphasize self-expression and quality of life.”125 According toInglehart, the cultural shift includes a signifi-cant time lag, because “to a large extent, one’sbasic values reflect the conditions that prevailedduring one’s pre-adult years.”126 Inglehart findsthat there has been a large shift from materialistto post-materialist values in wealthy Western lib-eral market democracies.

For example, in the earliest U.S. survey,materialists outnumbered postmateri-alists by 24 percentage points; in WestGermany, they outnumbered postma-terialists by 34 points. During the threedecades following 1970, a major shiftoccurred: by the 1999–2001 surveys,postmaterialists had become morenumerous than materialists in all ninecountries.127

This, of course does not mean thatyounger generations spend all their timeshopping for “fair trade” coffee and perform-ing sun salutations (though there is surelymore of that). But the shift away from eco-nomic scarcity increases the emphasis on self-definitional and self-expressive consumption.“The rise of postmaterialism does not meanthat materialistic issues vanish,” Inglehartand Christian Welzel write:

The publics in postindustrial societies

have developed more sophisticatedforms of consumerism, materialism,and hedonism. . . . New forms of con-sumption no longer function primari-ly to indicate people’s economic class.Increasingly, they are means of individ-ual self-expression.128

Inglehart is not using “materialist” in pre-cisely the same way as Kasser, but the roughidea—an emphasis on material acquisition asopposed to meaning—is the same. If youwant fewer materialists, the way to go is tomake more material readily available to peo-ple, at which point they’ll stop worryingabout it so much and start worrying insteadabout things like happiness and the meaningof life.

Many people seem to think that a govern-ment’s emphasis on measurements like GDPindicate a kind of collective affirmation ofmaterialist goals, encouraging a narrowlymaterialist attitude at war with more exaltedvalues. But this is simply a mistake. The veryfunction of money is to serve as a neutralmedium of exchange. It is a shape-shiftingembodiment of almost any value. The same$100 can be spent on a prostitute or donatedto an HIV/AIDS clinic. The relative valueneutrality of money is precisely why the mea-surement of per-capita wealth is well suitedto pluralistic liberal societies; it doesn’t begmany questions about competing concep-tions of the good life. Money can’t be con-verted into anything that someone mightvalue, but it is of the nature of money to beconvertible into a phenomenally broad rangeof values. Societies with high levels of averageincome and wealth are societies in which peo-ple have more resources at their disposal toachieve their aims, no matter what thoseaims might be, which is why it should be nosurprise that, other things equal, people withmore money are more satisfied. By measur-ing GDP, household wealth, and the like,government is not affirming one set of valuesover others. It is, in fact, embodying an idealof liberal neutrality by measuring somethingthat is valuable in varying degrees to all of us.

34

If you want fewermaterialists, make

more materialreadily available

to people, atwhich point

they’ll stop worry-ing about it so

much and startworrying insteadabout things like

happiness and themeaning of life.

Conclusion

The United States is not failing theFounders’ test. The happiness-based evidencepoints unambiguously to the conclusion thatthose of us lucky enough to live in the UnitedStates in 2007 are succeeding fairly well in thepursuit of happiness. Whether or not ourFounders would recognize—or even like—theircountry, Americans are indeed living up to thepromise of our founding.

So, we are left with a puzzle. If we’re sohappy, then why are we so ready to be per-suaded by claims that we are suffering from aworld-historical spiritual malaise, despite allthe evidence to the contrary?

In his bestselling 2004 book The Paradox ofChoice, Schwartz argues that capitalist con-sumer culture gets us down by offering toomany choices. It’s not just that the onslaughtof new brands of toothpaste, breakfast cereal,chocolate bars, and books about happinesstaxes our frail deliberative capacities, but whenour set of options explodes, each new choicerequires not choosing so many other things.129

The perceived cost of making any choice andsticking with it seems higher and higher themore alternatives there are to forgo. On thisscore, Schwartz points us to Robert Lane’sclaim in The Loss of Happiness in MarketDemocracies:

There are too many life choices . . .without concern for the resulting over-load; and the lack of constraint by cus-tom, [and] demands for self-actualiza-tion, that is, demands to discover orcreate rather than accept a given iden-tity . . . all adds to the stress.”130

To be sure, it is a hassle to have to discoveror create our identities instead of being“given” one—or having one forced upon us.But this is, in essence, what it means to bepostmaterialist in Inglehart’s sense. Instead ofslipping into pre-assigned, traditional socialroles, we are able to sit atop mountains ofwealth and survey the vast horizon of possibil-

ity, with a heretofore unthinkable indepen-dence from custom, wondering what kind ofperson we would like to be. And then webecome agoraphobic.

Our problem is that there are both toomany and too few choices. There are particu-lar goods that would specially benefit andsatisfy each of us, but which don’t exist. Yet itis hard to identify the specially fitting goodsthat already do exist in the panoply of choice.If we weren’t so diverse, we wouldn’t requireso much diversity. One kind of shoe, onekind of bread, one kind of antacid would beuniversally satisfactory. But we are diverse,and, for the first time in history, we are liber-ated from ancient demands of conformity,because, for the first time in history, we nowcome into the world at a sufficiently safe dis-tance from scarcity to permit us to expressand experiment with our singular natures. Infine post-materialist fashion, we demandthat our consumption express our self-con-ceptions-in-progress, and so we need diversity.But we also don’t know exactly who we wantto be before we get to the store. So we can eas-ily feel lost in the consumer cornucopia, asthough we are sorting through a landfill fora diamond etched with just our name.

As John Maynard Keynes wrote in his star-tlingly prescient essay “Economic Possibilitiesfor Our Grandchildren,” there may be a sensein which we have already solved (we lucky fewin the advanced liberal democracies, that is)the economic problem of scarcity. But thenwhat?

Thus for the first time since his creationman will be faced with his real, his per-manent problem, how to use his free-dom from pressing economic cares,how to occupy the leisure, which scienceand compound interest will have wonfor him, to live wisely and agreeably andwell.131

And this, our permanent problem, we have yetto solve, and it weighs on us. Our culture hasnot yet caught up to the new, happier world ofscience and compound interest, and we do not

35

In fine post-materialist fashion, wedemand that ourconsumptionexpress our self-conceptions-in-progress, andso we needdiversity.

yet see how our inherited visions of the goodlife fit into it. So it seems plausible to most ofus that something is wrong, even if so much isright. If happiness research is going to be goodfor anything, it is not going to be for guidingwell-meaning technocrats who seek to makeus happier by pulling this policy lever or push-ing that policy button. Rather it is going to begood for providing insight in how “to livewisely and agreeably and well.” This is insightwe all badly need, and it is not the govern-ment’s to give.

Notes1. Richard Layard, Happiness: Lessons from a NewScience (New York: Penguin, 2005), p. 3.

2. David G. Myers, The American Paradox: SpiritualHunger in an Age of Plenty (New Haven, CN: YaleUniversity Press, 2001), pp. 1, 7–8.

3. Gregg Easterbrook, The Progress Paradox: HowLife Gets Better While People Feel Worse (New York:Random House, 2003), p. xx.

4. Ibid., p. xvii. Easterbrook here is quoting AlanWolfe’s formulation of Robert Lane’s thesis inWolfe’s review essay “Undialectical Materialism,”The New Republic, October 23, 2000, pp. 28–43.

5. Richard A. Easterlin, “Does Economic GrowthImprove the Human Lot?” in Nations and House-holds in Economic Growth: Essays in Honor of MosesAbramovitz, ed. Paul A. David and Melvin W.Reder (New York: Academic Press, 1974).

6. Geoffrey Miller, “Social Policy Implications of theNew Happiness Research,” an answer to Edge.org’squestion “What Is Today’s Most Unreported Story,”www.edge.org/3rd_culture/story/86.html.

7. Layard, Happiness: Lessons, pp. 233–34, forLayard’s policy laundry list. On education, see also,pp. 200–201.

8. Randolph M. Nesse, “Natural Selection and theElusiveness of Happiness,” Philosophical Transactionsof the Royal Society of London B, (2004): 1335.

9. Benjamin Radcliff, “Politics, Markets, and LifeSatisfaction: The Political Economy of HumanHappiness,” American Political Science Review 95,no. 4 (December 2001): 941.

10. Quoted in Susan Guibert, “Liberal PoliciesEqual Happier Citizens, Says Political Scientist,”

Notre Dame ReSource, August 24, 2006, http://newsinfo.nd.edu/content.cfm?topicid=18802.

11. Miller.

12. Barry Schwartz, “Choice Cuts,” New RepublicOnline, August 5, 2004, http://www.tnr.com/docprint.mhtml?i=express&s=schwartz080504.

13. Jon Gertner, “The Futile Pursuit of Happiness,”New York Times Magazine, September 7, 2003, p. 44.

14. Layard, Happiness: Lessons, p. 152.

15. Andrew Oswald, “The Hippies Were Right AllAlong about Happiness,” Financial Times, January18, 2006.

16. The survey, results, and analysis of many dif-ferent studies can be found at http://worldvaluessurvey.org.

17. The text of the Midlife Development Inventorycan be found at http://www.midus.wisc.edu/midus1/mail_parts_1_2.pdf .

18. See Ed Diener et al., “The Satisfaction withLife Scale,” Journal of Personality Assessment 49, no.1(1985). The scale itself can be found at http://www.psych.uiuc.edu/~ediener/hottopic/hottopic.html.

19. See Mihaly Csikszentmihalyi and JeremyHunter, “Happiness in Everyday Life: The Uses ofExperience Sampling,” Journal of Happiness Studies4, no. 2: 185–99; and Mihaly Csikszentmihalyi,Flow: The Psychology of Optimal Experience (NewYork: Harper and Row, 1990).

20. Daniel Kahneman et al., “A Survey Method forCharacterizing Daily Life Experience: The DayReconstruction Method,” Science 3, no. 570(December 2004): 306.

21. See Carol D. Ryff et al., “Positive Health:Connecting Well-Being with Biology,” PhilosophicalTransactions of the Royal Society of London 359 (2004):1383–94; and Heather L. Urry et al., “Making a LifeWorth Living: Neural Correlates of Well-Being,”Psychological Science 15, no. 6 (2004).

22. For a recent overview, see Ed Diener, RichardE. Lucas, and Christie Napa Scollon, “Beyond theHedonic Treadmill: Revising the AdaptationTheory of Well-Being,” American Psychologist 61,no. 4 (May-June 2006): 205–314.

23. Easterlin defends his aspiration theory againstthe adaptation-set point theory in Richard A.Easterlin, “A Puzzle for Adaptive Theory,” Journalof Economic Behavior and Organization 56, no. 4(2004): 513–21.

36

24. Robert Frank, Luxury Fever (Princeton: PrincetonUniversity Press, 1999), is devoted to exploring theimplications of the relative position hypothesis.

25. On the cultural relativity of smiling, see AnnaWierzbicka, “‘Happiness’ in Cross-Linguistic andCross-Cultural Perspective,” Daedelus: Journal of theAmerican Academy of Arts and Sciences 133, no. 2(Spring 2006): 36. On the socially “strategic” useof “authentic” or “Duchenne” smiles, see PaulGriffiths and Andrea Scarantino, “Emotions inthe Wild: The Situated Perspective on Emotion,”in Cambridge Handbook Of Situated Cognition, ed.Philip Robbins and Murat Aydede (New York:Cambridge University Press, forthcoming).

26. For example, Daniel Gilbert, Stumbling onHappiness (New York: Knopf, 2006), pp. 67–70.

27. Wierzbicka, p. 36.

28. Ibid., p. 37.

29. Ibid., p. 43.

30. Ed Diener and Shigehiro Oishi, “Are Scandin-avians Happier than Asians? Issues in ComparingNations on Subjective Well-Being,” in Politics andEconomics of Asia, ed. F. Columbus (Hauppauge, NY:Nova Science, 2006).

31. Ibid.

32. Andrew Clark et al., “Heterogeneity in ReportedWell-Being: Evidence from Twelve EuropeanCountries,” The Economic Journal 115, no. 502 (2005).

33. Gilbert, p. 69.

34. Ibid, pp. 69–70.

35. Clark et al.

36. Ibid.

37. Dan Haybron, “Happiness and the Importanceof Life Satisfaction,” unpublished manuscript,2001, www.slu.edu/colleges/AS/philos/HappinessAndTheImp.pdf.

38. Michael R. Hagerty, “Was Life Better in the‘Good Old Days’? Intertemporal Judgments of LifeSatisfaction,” Journal of Happiness Studies 4, no. 2(June 2003).

39. Dan Haybron, “Do We Know How Happy WeAre? On Some Limits of Affective Introspectionand Recall,” Nous, forthcoming, http://pages.slu.edu/faculty/haybrond/DoWeKnowHowHappyWeAre%20v61single.pdf.

40. Randy J. Larsen and Barbara L. Frederickson,

“Measurement Issues in Emotion Research,” in Well-Being: The Foundations of Hedonic Psychology, ed.Kahneman, Diener, and Schwarz (New York: RussellSage Foundation, 1999), pp. 48–49. They continue,“[A] person might “have” an emotion in a nonverbalchannel (for example, autonomic activation oraction tendency) yet never label that experience andhence not perceive it as an emotion at all.”

41. Martin Seligman, Authentic Happiness: Using theNew Positive Psychology to Realize Your Potential forLasting Fulfillment (New York: Free Press, 2002), p.105.

42. Shaun Frederick and George Loewenstein,“Hedonic Adaptation,” in Kahneman, Diener, andSchwarz.

43. Mark Twain, “Captain Stormfield’s Visit toHeaven,” in Tales of Wonder, ed. David Ketterer(Lincoln, NE: University of Nebraska Press, 2003),p. 32.

44. For an amazing account of improvement in theobjective quality of human life in terms of disease,malnutrition, body size, and longevity, see NobelPrize–winning economist Robert William Fogel’sThe Escape from Hunger and Premature Death, 1700-2100: Europe, America, and the Third World (NewYork: Cambridge University Press, 2004.)

45. Haybron, “Do We Know How Happy We Are?”Haybron uses the example of the noisy office tosuggest that we are worse off than happiness sur-veys indicate; modern life is like working in anoisy office. No doubt stress levels have gone upfor people living in certain kinds of cities, or incertain kinds of jobs, but taking all the improve-ments in medicine, technology and comfort intoaccount, it is extremely implausible that we actu-ally do feel worse overall than in the past.

46. Gary Becker and Luis Rayo, “EvolutionaryEfficiency and Happiness,” unpublished manu-script, home.uchicago.edu/~gbecker/RayoBeckerLSE1.pdf

47. Jeff T. Larsen, A. Peter McGraw, and John T.Cacioppo, “Can People Feel Happy and Sad at theSame Time?” Journal of Personality and SocialPsychology 81, no. 4 (October 2001).

48. Haybron, “Do We Know How Happy We Are?”

49. Julia Annas, “Happiness as Achievement,”Daedalus 133 no. 2 (Spring 2004): p. 44.

50. Layard, Happiness: Lessons, pp. 111–47.

51. Layard, Happiness: Lessons, p. 112.

52. Daniel Kahneman, “Objective Happiness,” in

37

Kahneman, Diener, and Schwarz, pp. 4–5.

53. Donald Redelmeier and Daniel Kahneman,“Patients’ Memories of Painful Medical Treatments:Real-time and Retrospective Evaluations of TwoMinimally Invasive Procedures,” Pain 116, pp. 3–8.Redelmeier and Kahneman show that retrospectivejudgments tend to track the average of the level ofpain at its most intense and the level of pain at theend of the procedure. So a short procedure that endsabruptly after its worst moment is remembered asmore painful than a longer procedure with an equal-ly painful peak and a longer denouement to a lesspainful conclusion. The upshot is thus that anepisode with more aggregate pain “in” it may beremembered as less painful than an episode with“objectively” less pain “in” it, which means that we areoften unreliable narrators of our hedonic histories.

54. Kahneman, “Objective Happiness,” p. 4.

55. Ibid., p. 15.

56. Layard, Happiness: Lessons, p. 112.

57. Robert Nozick, The Examined Life: PhilosophicalMeditations (New York: Simon and Schuster,1989), pp. 100–102.

58. Robert Nozick, Anarchy, State and Utopia (NewYork: Basic Books, 1976), pp. 42–45.

59. L. W. Sumner, Welfare, Happiness, and Ethics(New York: Oxford University Press, 1996), p. 83

60. Erik Angner, “Is it Possible to Measure Happi-ness? The Measurement-Theoretic Argumentagainst Subjective Measures of Wellbeing,” unpub-lished manuscript, www.dpo.uab.edu/~angner/pdf/WelfareMeasurement.pdf.

61. Martin Seligman, interview with John Brock-man, “Eudaimonia, the Good Life: A Talk withMartin Seligman,” Edge: The Third Culture, http://www.edge.org/3rd_culture/seligman04/seligman_index.html.

62. Daniel Nettle, Happiness: The Science BehindYour Smile (New York: Oxford University Press,2005), p. 18.

63. Corey L. M. Keyes, Dov Shmotkin, and Carol D.Ryff, “Optimizing Well-Being: The EmpiricalEncounter of Two Traditions,” Journal of Personalityand Social Psychology 82, no. 6 (2002).

64. Ibid. Openness to experience is one of the “BigFive” personality traits—along with neuroticism,extraversion, conscientiousness, and agreeable-ness—studied by personality psychologists.

65. Nicholas White, A Brief History of Happiness

(Malden, MA: Blackwell, 2006), p. 173.

66. On the fact of pluralism, see John Rawls,Political Liberalism (New York: Columbia UniversityPress, 1993), p. 36.

67. T. M. Scanlon, The Difficulty of Tolerance: Essaysin Political Philosophy (Cambridge, MA: HarvardUniversity Press, 2003), p. 184.

68. Radcliff, p. 941.

69. Miller deploys an updated version of the classicargument for redistribution from the diminishingmarginal utility of income. Political philosopherand economist David Schmidtz notes that, evengranting utilitarian premises, diminishing margin-al utility need not have redistributive implicationsin a world where not all income is immediatelyconsumed, but in which some is invested in wealth-creating production—that is, in the actual world.David Schmidtz, Elements of Justice (New York:Cambridge University Press, 2006), pp. 144–46.

70. Ruut Veenhoven, “Wellbeing in the WelfareState,” Journal of Happiness Studies (2000).

71. Piet Ouweneel, “Social Security and Well-Being of the Unemployed in 42 Nations,” Journalof Happiness Research 3 (2002): 167–92, 2002.

72. Ibid.

73. Ibid. The number of nations in Radcliff is 11and in Di Tella is 12. Ouweneel’s study looks at42.

74. See, for example, Charles B. Blankart andChristian Kirchner, “The Deadlock of the EUBudget: An Economic Analysis of Ways In and WaysOut,” Center for Economic Studies and Ifo Institutefor Economic Research at the University of Munich,CESifo Working Paper No. 989, 2003; Robert A.Musgrave, “The Theory of Public Finance: a Study inPolitical Economy,” (New York: McGraw-Hill, 1959);Arthur C. Pigou, “The Economics of Welfare” (NewBrunswick, NJ: Transaction Publishers, 2002).

75. Christian Bjornskov, Axel Dreher, and JustinaFischer, “The Bigger the Better? Evidence of theEffect of Government Size on Life SatisfactionAround the World,” Working Paper 05/44, SwissFederal Institute of Technology, Zurich, October2005. Emphasis added.

76. Alberto Alesina, Rafael Di Tella, RobertMacCulloch, “Inequality and Happiness: Are Euro-peans and Americans Different?” Journal of PublicEconomics 88 (2004): pp. 2009–42.

77. Jan Ott, “Level and Inequality of Happiness inNations: Does Greater Happiness of a Greater

38

Number Imply Greater Inequality in Happiness,”Journal of Happiness Studies 6 (2005): 397–420.

78. Ibid.

79. Ruut Veenhoven, “Apparent Quality-of-Life InNations: How Long and Happy People Live, SocialIndicators Research 71 (2005): 61–86.

80. Tomi Ovaska and Ryo Takashima, “EconomicPolicy and the Level of Self-Perceived Well-Being:An International Comparison,” Journal of Socio-Economics 35 (2006): 308–25.

81. Ibid.

82. Much of this section borrows from WillWilkinson, “Out of Position: Against the Politicsof Relative Standing,” Policy (Spring 2006),http://www.cis.org.au/POLICY/spring_06/polspring06_wilkinson.htm.

83. Robert Frank, “Are Positional ExternalitiesDifferent from Other Externalities?” Paper present-ed at “Why Inequality Matters: Lessons for Policyfrom the Economics of Happiness,” BrookingsInstitution Conference, htp://www.brookings.edu/gs/events/externalities.pdf, p 1.

84. Layard, Happiness: Lessons, p 150. Emphasis added.

85. Frank, Luxury Fever, p. 133.

86. Layard, Happiness: Lessons, p. 153.

87. Jean-Jacques Rousseau, The Social Contract,Book 1, Paragraph 1.

88. Frank, Luxury Fever, pp. 140–2.

89. John Cassidy, “Relatively Deprived,” The NewYorker, April 4, 2006.

90. Layard, Happiness: Lessons, p. 150.

91. See Frans de Waal, Good Natured: The Origins ofRight and Wrong in Humans and Other Animals(Cambridge: Harvard University Press, 1996), p. 126.

92. Ibid., pp. 126–27.

93. Will Wilkinson, “Capitalism and HumanNature,” Cato Policy Report, January/February 2005,http://www.cato.org/research/articles/wilkinson-050201.html

94. See Robert Boyd and Peter J. Richerson, Not ByGenes Alone: How Culture Transformed HumanEvolution (Chicago: University of Chicago Press,2004) for an excellent overview of this work.

95. Peter J. Richerson, Robert Boyd, and Joseph

Henrich, “Cultural Evolution of Human Cooper-ation,” in The Genetic and Cultural Evolution ofCooperation, ed. Peter Hammerstein, pp. 357–88.

96. Joseph Henrich and Francisco Gil-White, “TheEvolution of Prestige: Freely Conferred Status as aMechanism for Enhancing the Benefits of CulturalTransmission,” Evolution and Human Behavior 22(2001):1–32.

97. David Hume, “The Rise and Progress of theArts and Sciences,” Essays, Moral, Political, andLiterary (Indianapolis: Liberty Fund, 1987).

98. See Ibid.

99. David Hume, “My Own Life,” in The History ofEngland from the Invasion of Julius Caesar to theRevolution in 1688, vol. 1 (Indianapolis: Liberty Fund,1993).

100. Tyler Cowen, What Price Fame? (Cambridge,MA: Harvard University Press, 2000), p. 102.

101. See Tyler Cowen, In Praise of CommercialCulture (Cambridge, MA: Harvard UniversityPress, 1997) for an account of the success of mar-ket societies in producing, assimilating, and syn-thesizing new forms of culture.

102. Gary S. Becker and Kevin M. Murphy, SocialEconomics: Market Behavior in a Social Environment(Cambridge: Harvard University Press, 2000), p. 124.

103. Richmond Harbaugh, “Falling Behind theJoneses: Relative Consumption and the Growth-Savings Paradox,” Economics Letters 53 (1996):297–304.

104. Ronald Coase, “The Problem of Social Cost,”Journal of Law and Economics 3 no. 1 (1960): 1–44.

105. Michael R. Hagerty, “Was Life Better in the‘Good Old Days’? Intertemporal Judgments ofLife Satisfaction,” Journal of Happiness Studies 4, no.2 (June 2003).

106. Robert J. Gordon, “The Boskin CommissionReport and Its Aftermath,” NBER Working Papers7759 (2000), http://www.nber.org/papers/w7759.pdf. The Consumer Price Index estimates the rate ofinflation by identifying a “basket” of consumergoods and then comparing changes in the prices ofthe items in the basket periodically over time. Inbrief, the argument of the Boskin commission anda majority of economists is that the CPI overesti-mates the rate of inflation, and thus underesti-mates growth in real wages, by failing to capturequality changes in goods, failing to track the move-ments of many consumers to lower-cost retailers(e.g., “big box” stores or discount internet sites), andespecially by failing to include the introduction and

39

rapid price declines of new technologies, some ofwhich are life-saving, and could not be purchased inearlier periods at any price.

107. Bram P. Buunk, Frans L. Oldersma, and CarstenK.W. de Breu, “Enhancing Satisfaction throughDownward Comparison: The Role of RelationalDiscontent and Individual Differences in SocialComparison Orientation,” Journal of ExperimentalSocial Psychology 37 (2001): 452–67.

108. Kristina M. DeNeve, “Happy as an ExtravertedClam? The Role of Personality for Subjective Well-Being,” Current Directions in Psychological Science 8, no.5:141–44; and Keyes, Shmotkin, and Ryff.

109. Robert Frank, “Are Positional ExternalitiesDifferent from Other Externalities?” p. 24.

110. Richard Layard, “Happiness: Has Social ScienceGot a Clue?” London School of Economics, LionelRobbins Memorial Lectures, 2002/2003, http://cep.lse.ac.uk/events/lectures/layard/RL030303.pdf.

111. Richard Layard, “Happiness is Back,” Prospect,March 2005.

112. Robert Kennedy, Address, University of Kansas,Lawrence, Kansas, March 18, 1968. Kennedyreferred specifically to GNP, which has been largelyreplaced by GDP for purposes of estimating the sizeof the economy and rate of economic growth. GNPapparently also tells the Bhutanese everything aboutBhutan except why they are proud to be Bhutanese,which is why King Druk Gyalpo Jigme SingyeWangchuck officially jettisoned GNP way back in1974 in favor of what he calls “Gross NationalHappiness.” See “Preface” in Gross National Happinessand Development (Thimpu: Centre for BhutanStudies, 2004), http://www.bhutanstudies.org.bt/publications/gnh-dvlpmnt/GNH-I-1.pdf.

113. Romina Boarini, Asa Johansson, and MarcoMira d’Ercole “Alternative Measures of Well-Being,”OECD Social, Employment and Migration Work-ing Papers, no. 33, February, 17, 2006, http://www.oecd.org/dataoecd/13/38/36165332.pdf

114. Vito Tanzi and Hamid R. Davoodi, “Corruption,Growth, and Public Finances,” IMF Working PaperWP/00/182, 2000.

115. Ibid.

116. Benjamin M. Friedman, The Moral Consequencesof Economic Growth (New York: Knopf, 2005), p. 4.

117. Tyler Cowen, In Praise of Commercial Culture.

118. “In summary both absolute and relative utili-ty effects are active as national happiness varieswith national income. Contrary to strong models

of relative utility, happiness is not a zero sum game.Instead, increasing the income of all does increasethe happiness of all, but adaptation reduces therate of increase to about half of its peak.” p. 21

119. Ruut Veenhoven and Michael Hagerty, “RisingHappiness in Nations 1946–2004: A Reply to Easter-lin,” Social Indicators Research (2006) 79, pp. 421–36.

120. And, again, to the horror of egalitarian redistrib-utionists, we find that higher levels of income inequal-ity correlate positively with happy-life-years, and high-er levels of welfare spending (“social security” onVeenhoven’s table) correlate negatively with happy-life-years when adjusted for wealth. The inequalityresult is partly due to the fact that Latin Americancountries tend to have high levels of income inequal-ity and also report unusually high levels of happiness.Another part of the explanation, though, lies in thefact that societies can induce growth in part by allow-ing entrepreneurs to keep much of the profits fromeconomic gambles, a tiny few of which pay off mas-sively, producing astronomical levels of income in thetop percentiles of the distribution.

121. Paul Frijters, John P. Haisken-DeNew andMichael A. Shields, “Money Does Matter! Evidencefrom Increasing Real Incomes and Life Satisfactionin East Germany Following Reunification,” Ameri-can Economic Review 94, no. 3 (June 2004).

122. Veenhoven and Hagerty, p. 433. See RuutVeenhoven, “Trend Average Happiness in Nations:1946–2004,” Trendreport 2005–1d, World Databaseof Happiness, 2005, www.worlddatabaseofhappiness.eur.nl/trendnat (+ year).

123. Tim Kasser, The High Price of Materialism(Cambridge, MA: MIT Press, 2002), p. 106.

124. Stephanie M. Bryant, Dan Stone, and BensonWier, “Articulating a Positive Relationship to Money,”presented at the Designing Information and Organi-zations with a Positive Lens Conference, November11–12, 2005, http://weatherhead.case.edu/design/PositionPapers/Dan%20Stone%20et %20al.doc.

125. Ronald Inglehart and Christian Welzel, Mod-ernization, Cultural Change, and Democracy: The HumanDevelopment Sequence (New York: Cambridge Uni-versity Press, 2005), p. 97.

126. Ibid., p. 98.

127. Ibid., p. 103.

128. Ibid., p. 104.

129. Barry Schwartz, The Paradox of Choice: WhyMore Is Less (New York: HarperCollins, 2004).

130. Robert E. Lane, The Loss of Happiness in Market

40

Democracies (New Haven: Yale University Press,2000), p. 165. Schwartz quotes a smaller bit ofthis passage in The Paradox of Choice, p. 109.

131. J. M. Keynes, “Economic Possibilities for ourGrandchildren,” in Essays in Persuasion (New York:Norton, 1991), p. 367.

41

OTHER STUDIES IN THE POLICY ANALYSIS SERIES

589. Energy Alarmism: The Myths That Make Americans Worry about Oil by Eugene Gholz and Daryl G. Press (April 5, 2007)

588. Escaping the Trap: Why the United States Must Leave Iraq by Ted Galen Carpenter (February 14, 2007)

587. Why We Fight: How Public Schools Cause Social Conflict by Neal McCluskey (January 23, 2007)

586. Has U.S. Income Inequality Really Increased? by Alan Reynolds (January 8, 2007)

585. The Cato Education Market Index by Andrew J. Coulson with advisers James Gwartney, Neal McCluskey, John Merrifield, David Salisbury, and Richard Vedder (December 14, 2006)

584. Effective Counterterrorism and the Limited Role of Predictive Data Mining by Jeff Jonas and Jim Harper (December 11, 2006)

583. The Bottom Line on Iran: The Costs and Benefits of Preventive War versus Deterrence by Justin Logan (December 4, 2006)

582. Suicide Terrorism and Democracy: What We’ve Learned Since 9/11 by Robert A. Pape (November 1, 2006)

581. Fiscal Policy Report Card on America’s Governors: 2006 by Stephen Slivinski (October 24, 2006)

580. The Libertarian Vote by David Boaz and David Kirby (October 18, 2006)

579. Giving Kids the Chaff: How to Find and Keep the Teachers We Needby Marie Gryphon (September 25, 2006)

578. Iran’s Nuclear Program: America’s Policy Options by Ted Galen Carpenter(September 20, 2006)

577. The American Way of War: Cultural Barriers to Successful Counterinsurgency by Jeffrey Record (September 1, 2006)

576. Is the Sky Really Falling? A Review of Recent Global Warming Scare Stories by Patrick J. Michaels (August 23, 2006)

575. Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead by Dale Hatfield and Phil Weiser (August 17, 2006)

574. Budgeting in Neverland: Irrational Policymaking in the U.S. Congress and What Can Be Done about It by James L. Payne (July 26, 2006)

573. Flirting with Disaster: The Inherent Problems with FEMA by Russell S. Sobel and Peter T. Leeson (July 19, 2006)

572. Vertical Integration and the Restructuring of the U.S. Electricity Industryby Robert J. Michaels (July 13, 2006)

571. Reappraising Nuclear Security Strategy by Rensselaer Lee (June 14, 2006)

570. The Federal Marriage Amendment: Unnecessary, Anti-Federalist, and Anti-Democratic by Dale Carpenter (June 1, 2006)

569. Health Savings Accounts: Do the Critics Have a Point? by Michael F. Cannon (May 30, 2006)

568. A Seismic Shift: How Canada’s Supreme Court Sparked a Patients’ Rights Revolution by Jacques Chaoulli (May 8, 2006)

567. Amateur-to-Amateur: The Rise of a New Creative Culture by F. Gregory Lastowka and Dan Hunter (April 26, 2006)

566. Two Normal Countries: Rethinking the U.S.-Japan Strategic Relationship by Christopher Preble (April 18, 2006)

565. Individual Mandates for Health Insurance: Slippery Slope to National Health Care by Michael Tanner (April 5, 2006)

564. Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act by Timothy B. Lee (March 21, 2006)

563. Against the New Paternalism: Internalities and the Economics of Self-Control by Glen Whitman (February 22, 2006)

562. KidSave: Real Problem, Wrong Solution by Jagadeesh Gokhale and Michael Tanner (January 24, 2006)

561. Economic Amnesia: The Case against Oil Price Controls and Windfall Profit Taxes by Jerry Taylor and Peter Van Doren (January 12, 2006)

560. Failed States and Flawed Logic: The Case against a Standing Nation-Building Office by Justin Logan and Christopher Preble (January 11, 2006)

559. A Desire Named Streetcar: How Federal Subsidies Encourage Wasteful Local Transit Systems by Randal O’Toole (January 5, 2006)

558. The Birth of the Property Rights Movement by Steven J. Eagle (December 15, 2005)

557. Trade Liberalization and Poverty Reduction in Sub-Saharan Africa by Marian L. Tupy (December 6, 2005)

556. Avoiding Medicare’s Pharmaceutical Trap by Doug Bandow (November 30,2005)

555. The Case against the Strategic Petroleum Reserve by Jerry Taylor and Peter Van Doren (November 21, 2005)

554. The Triumph of India’s Market Reforms: The Record of the 1980s and 1990s by Arvind Panagariya (November 7, 2005)

553. U.S.-China Relations in the Wake of CNOOC by James A. Dorn (November 2, 2005)

552. Don’t Resurrect the Law of the Sea Treaty by Doug Bandow (October 13, 2005)

551. Saving Money and Improving Education: How School Choice Can Help States Reduce Education Costs by David Salisbury (October 4, 2005)

550. The Personal Lockbox: A First Step on the Road to Social Security Reform by Michael Tanner (September 13, 2005)

549. Aging America’s Achilles’ Heel: Medicaid Long-Term Care by Stephen A. Moses (September 1, 2005)

548. Medicaid’s Unseen Costs by Michael F. Cannon (August 18, 2005)

547. Uncompetitive Elections and the American Political System by Patrick Basham and Dennis Polhill (June 30, 2005)

546. Controlling Unconstitutional Class Actions: A Blueprint for Future Lawsuit Reform by Mark Moller (June 30, 2005)

545. Treating Doctors as Drug Dealers: The DEA’s War on Prescription Painkillers by Ronald T. Libby (June 6, 2005)

544. No Child Left Behind: The Dangers of Centralized Education Policy by Lawrence A. Uzzell (May 31, 2005)

543. The Grand Old Spending Party: How Republicans Became Big Spendersby Stephen Slivinski (May 3, 2005)

542. Corruption in the Public Schools: The Market Is the Answer by Neal McCluskey (April 14, 2005)

541. Flying the Unfriendly Skies: Defending against the Threat of Shoulder-Fired Missiles by Chalres V. Peña (April 19, 2005)

540. The Affirmative Action Myth by Marie Gryphon (April 6, 2005)

539. $400 Billion Defense Budget Unnecessary to Fight War on Terrorism by Charles V. Peña (March 28, 2005)

PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2PA Masthead.indd 2 2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM2/9/06 2:08:35 PM