Happiness

Back in 1974 Richard Easterlin of the University of Pennsylvania published a study that seemed to show that economic growth didn't necessarily lead to more happiness; especially at higher levels of income. Now two economists, Betsey Stevenson and Justin Wolfers argue that money does tend to bring happiness, even at higher income levels. (See here for a New York Times summary of the issue.) There are all sorts of ideological positions taken about what has become known as 'happiness research'. It's something I think about when wondering what should be targeted under a Social Policy Bond regime. My inclination is to stick to objectively verifiable measures of wellbeing; but there are grey areas. It's hard to measure crime rates, for example, and much easier to measure fear of crime. Evidence suggests that in the UK in recent years, the two have actually diverged, with increasing fear of crime coinciding with falling crime rates. That's quite plausible, if people are afraid of exposing themselves to crime, say, by staying indoors after dark.

Under a Social Policy Bond regime I've always thought it would be best to concentrate on targeting for improvement the lower levels of education, health, housing etc, on the basis that (1) there is less ambiguity about such improvements leading to wellbeing; and (2) at the lower levels, more can be done with fewer resources. Also, at higher levels of income and wealth, people generally have more varied goals, and more time and information with which to make informed decisions about how to reach them.

I still hold to that view, and I'm not sure I find the Stevenson and Wolfers work convincing. Others also have their doubts.