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Happiness is a relative thing
Posted by: McQ on Tuesday, February 20, 2007

Interesting article in Scientific American about happiness.

It seems that happiness is a relative thing. And, according to Michael Shermer, it is also a genetic thing.
Consider a paradox outlined by London School of Economics economist Richard Lay­ard in Happiness (Penguin, 2005), in which he shows that we are no happier even though average incomes have more than doubled since 1950 and "we have more food, more clothes, more cars, bigger houses, more central heating, more foreign holidays, a shorter working week, nicer work and, above all, better health." Once average annual income is above $20,000 a head, higher pay brings no greater happiness. Why? One, our genes account for roughly half of our predisposition to be happy or unhappy, and two, our wants are relative to what other people have, not to some absolute measure.
Huh. My happiness is determined first by my genetic disposition toward, I would assume, optimism (which is more likely to find me "happy") or pessimism (which would be more likely to find me "not happy"). But then regardless of what my genetic predisposition might be, the other component of happiness is how well I'm doing compared to others?

Interesting. To make the point, Shermer cites a study which supports the point:
Imagine you have a choice between earning $50,000 a year while other people make $25,000 or earning $100,000 a year while other people get $250,000. Prices of goods and services are the same. Which would you prefer? Surprisingly, studies show that the majority of people select the first option.
Now maybe my genetic predisposition is a bit screwed up but, given the price of things being the same, I'd be taking that $100K all day long regardless of what others had. That means more stuff for me than I can get with $50K. Seems a no brainer, yet, as Shermer points out the majority of people opted for less money if the money they had was more than others had.

It may make sense to some, but for me, it just doesn't compute. Frankly I've never cared what others made or really what they had other that to say at times, "I want one of those!"

I'm not suggesting that makes me some superior being (or inferior for that matter), I'm simply saying I have trouble with the idea that I'd take less to ensure others didn't have as much as me.

Anyway, moving on, another interesting point about "happiness":
Harvard psychologist Daniel Gilbert goes deeper into our psyches in Stumbling on Happiness (Knopf, 2006), in which he claims, "The human being is the only animal that thinks about the future." Much of our happiness depends on projecting what will make us happy (instead of what actually does), and Gilbert shows that we are not very good at this forethought. Most of us imagine that variety is the spice of life, for example. But in an experiment in which subjects anticipated that they would prefer an assortment of snacks, when it actually came to eating the snacks week after week, subjects in the no-variety group said that they were more satisfied than the subjects in the variety group. "Wonderful things are especially wonderful the first time they happen," Gilbert explains, "but their wonderfulness wanes with repetition."
I can readily buy into this point. How many of you have anticipated something, dreamed about it, thought about it, and built your expectations to a very high level only to be disappointed by the actual event itself? In fact, if you really thought about it, you were probably "happier" during the building anticipation than you were actually doing or participating in the event. How many times have you felt "that was a disappointment" best described something you've done versus "wow, that was better than I anticipated?"

A few for me, that's for sure. Wisdom gathered from experience now has me severely tempering my expectations concerning anything new. That way, I guess, I'm "happier" than I would be if I built up my expectations to a level which would be difficult to fulfill.

However, as a life lesson, probably the most important thing I've learned most likely impacts my inability to understand why people may peg their "happiness" on what they have relative to what others have. That life lesson?

Never let anyone else define "success" or "happiness" for you (such as pegging your happiness on what others have). You'll never achieve their definition (and if you do the goal posts will move) and if you did, it most likely wouldn't be very satisfying.

Perhaps learning that years ago is why, for the most part, I'm a pretty happy guy.
 
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I would take the $50000 over the $100000 for a different reason. If I had $25000 more disposable income than everyone else I could invest. With $150000 less income than everyone else probably not and I would be constantly falling behind economically. Think of the people in the world now in that situation and ask if you want to be in that group. And of course there’s prices that change.

 
Written By: Rick
URL: http://
Rick your argument fails...you’d have money to invest...or not...you can invest 5% of your income NO MATTER WHAT THE INCOME YOU HAVE. What you’re saying is at the $500,000 scenario you’d have a long-term competitive advantage. You could have the house, the car and a LARGER 401K than your neighbors, making the yearly differential GROW thru time on the basis of compound interest.

So what you want is the Toyota today, like everyone else, the Lexus tomorrow and the Mercedes 500SL in a few years, whilst everyone else still has the Toyota.

Bottom-line: you get to Lord it over the Jones in the $50,000 scenario whereas they might Lord it over you in the $100,000 scenario, though you’d have a Lexus, they’d have Mercedes. Which seems to prove the point about the relative component of happiness and suggests Rick might be a snob.
 
Written By: Joe
URL: http://
I’m happy for you McQ.

If you were an economist however you would be unhappy. You would be unhappy because you would have devoted your life to a discipline that, to be relevant and mathematically sound requires three assumptions.

1) People have rational preferences among outcomes that can be identified and associated with a value. They can ordinalize these preferences. If they prefer A to B and B to C they must prefer A to C.

2) Individuals maximize utility and firms maximize profits. More is better.

3) People act independently on the basis of full and relevant information.

The research you quote dashes all three assumptions. If A is better than B only if the Jones’s have B but not when they have C it doesn’t work. If more only better if it is more than the Jones’s have the mathematical models upon which capitalism is based have no logical basis.

When people realized that the socialist model of "from each according to their abilities, to each according to their needs" was a failed model, communism fell. If people stop believing that they will be happier with more, western, neoliberal capitalism is doomed as well.

This is dangerous stuff.

 
Written By: cindyb
URL: http://
Consider a paradox outlined by London School of Economics economist Richard Lay­ard in Happiness (Penguin, 2005), in which he shows that we are no happier even though average incomes have more than doubled since 1950 and "we have more food, more clothes, more cars, bigger houses, more central heating, more foreign holidays, a shorter working week, nicer work and, above all, better health." Once average annual income is above $20,000 a head, higher pay brings no greater happiness. Why? One, our genes account for roughly half of our predisposition to be happy or unhappy, and two, our wants are relative to what other people have, not to some absolute measure.
This analysis needs a bit of help from Wil Wilkinson:
The fact that happiness surveys lay a 1 to 4 or 1 to 10 scale on top of an in-principle unbounded income distribution, or in-priniciple unbounded growth in income over time, seems to me as a reason not to make a huge deal out of the fact that the average score on a bounded scale doesn’t necessarily rise with an essentially open-ended thing like economic growth. If growth is ongoing, and self-reported happiness rises with growth — even excruciatingly slowly — then it is just a logical necessity that there is some time in the future when everybody hits the ceiling of the scale. Even if income and happiness continues to grow, the scale will HAVE to report a flat average, and will HAVE to stop being fully informative. Now, if — as seems to be the case — people have a kind of aversion to putting themselves at or near the top of the scale (if I don’t know how happy I can get, I may not want to say that I’m already there, or even almost there), then you’ve got a case for totally banal scale re-norming that will also produce a flat trend over time, below the top of the scale — again, even if the effect of growth on happiness is ongoing. Perhaps someone can explain to me why this is not considered a huge problem.
And this is one of those things that gets cited for all the wrong reasons:
Imagine you have a choice between earning $50,000 a year while other people make $25,000 or earning $100,000 a year while other people get $250,000. Prices of goods and services are the same. Which would you prefer? Surprisingly, studies show that the majority of people select the first option.
First, how much of a majority? Are we talking 90% of people or 52% of people? Second, even if something is a genetic predisposition, that doesn’t mean we should encourage it. Lots of people have genetic predispositions to heart atacks, and we encourage them to eat healthier and exercise. Sometimes your predispostion is wrong and should be challenged or changed. This type of information is often used to ’prove’ that the government ought to redistribute income more. That doesn’t follow. Third, what kind of magnitude difference in happiness are we talking about? Fourth, the relativity of the measure of happiness may extend across time (this is where the bounded vs. unbounded problem comes in). Very few people today would be ’happy’ to be plopped into society 200 years ago at the same social class they currently inhabit. This suggests that happiness is up in some absolute way not captured by the current measuring tools.
 
Written By: Sebastian Holsclaw
URL: http://
When people realized that the socialist model of "from each according to their abilities, to each according to their needs" was a failed model, communism fell. If people stop believing that they will be happier with more, western, neoliberal capitalism is doomed as well.
Socialism failed because it can’t work, not because people lost faith in it. Furthermore, it was a failure of central planning, not a failure of "from each according to their abilities, to each according to their needs", which never really was put in place to begin with (and it would never work, either, since it violates the laws of economics).

Cindyb certainly displays a quaint ignorance of economics typical on the left.
If I had $25000 more disposable income than everyone else I could invest.
I assume you missed this:

"Prices of goods and services are the same."
First, how much of a majority? Are we talking 90% of people or 52% of people?


52% is scary enough, and suggest why socialism continues to hold sway (even if it isn’t called socialism). If people are more concearned about others earning more than them than with their absolute wealth, it suggests they have other stupid ideas as well, like supporting minimum wage laws, price controls, etc.
 
Written By: Don
URL: http://
"52% is scary enough, and suggest why socialism continues to hold sway (even if it isn’t called socialism). If people are more concearned about others earning more than them than with their absolute wealth, it suggests they have other stupid ideas as well, like supporting minimum wage laws, price controls, etc."

Sure. A large percentage of people seem to want more government services and lower taxes too. And that is precisely why you can’t use surveys like this to make government policy.
 
Written By: Sebastian Holsclaw
URL: http://
Always keep your expectations low. That way they’ll likely be met or even exceeded!

Heh.
 
Written By: Mikey NTH
URL: http://
Don,

Your condescension is a function of your illiteracy. I’m sure you think you had a point. In small words, mine was this ... if people are not rational economic agents then classical economic theory fails. I’ve made no inference to, nor believe in, a triumph of socialism. I just believe that contemporary economics is approximately at the same developmental point that medicine was 200 years ago. Unlike you, contemporary economic theory has much room for growth. 200 years from now, economists will look back at us as well intended butchers.

By the way, this is all old news. Daniel Kahneman won a Nobel prize in 2002 for some very similar work
 
Written By: cindyb
URL: http://
CindyB you make a mistake, it is not a requirement that ALL actors be rational or well-informed, only that some of them be. The some of them that ARE both rational (technical term) and well-informed become market leaders, causing less well-informed, but also rational actors to emulate them...markets do not require uniformly rational actors. There is and has been a recognition of this in Neo-Classical/Liberal Economics for some time. You tilt at a windmill with your objection.
 
Written By: Joe
URL: http://
I think I know the reason people choose the first option. The question doesn’t specify a timespan, so it’s reasonable for some to assume a lifetime. Although the thrill of a higher real revenue wears off eventually, being born into the upper class is a happiness that lasts a lifetime. :)
 
Written By: SJC
URL: http://
Joe you lose an argument by calling names. And of course I would take an advantage over a disadvantage but you would have no idea how I would use it.
 
Written By: Rick
URL: http://
being born into the upper class is a happiness that lasts a lifetime. :)

Huuu’uuuum SJC is that autobiographical are you a member of the Leisure Class, the Coupon-clippers stealing the surplus value of womyn, the Poor and People of Colour, a part the mechano-rationalist system of Finance Capital that Rapes Mother Gaia and spreads poverty and dependence throu out the Periphery? A slug a parasite, a leach on the hide of the world-wide lumpen proletariat?
 
Written By: Joe
URL: http://
Joe you lose an argument by calling names. And of course I would take an advantage over a disadvantage but you would have no idea how I would use it.

you FOOL, I win by calling names, you know NOTHING of the Internet disputation!! Surrender now or I may be forced to break out Nazi, Fascist, Racist, Bigot, Homophobe, Elitist, and a whole lot MORE nasty names.....

Well you’re point was that in the $50,000 you couldn’t invest. And that’s patently untrue. You can invest at almost ANY level of income, above barest subsistence. The only difference(s) between the two scenarios is that in one you have MORE money to invest AND you have more cash flow...the natural result is that for equal amounts invested you’d have more...in fact in the $50,000 scenario you can live like anyone else on the $25,000 and invest the excess $25,000 making you MUCH wealthier int he future than your neighbors. In fact at the $50,000 scenario you live better than everyone else, save those NOT investing, because you ae investing $25,000 whilst they are investing AND living off $25,000, meaning you get the full use of the $25,000 AND still have a much larger investment pool.

Choosing to be richer than everyone else, though not necessarily richer than YOURSERLF in the $100,000 scenario...so it would be a safe assumption that the difference between the two sets of circumstances is that in one your are the King of the One-Eyed people, and in the second your a member of the Hoi-Poloi, though twice as rich as when you’re King....Snob might be too harsh a word, but I’m sure we could think of one that describes the situation well.
 
Written By: Joe
URL: http://
Your condescension is a function of your illiteracy. I’m sure you think you had a point. In small words, mine was this ... if people are not rational economic agents then classical economic theory fails. I’ve made no inference to, nor believe in, a triumph of socialism.
You should be careful swinging around accusations of "illiteracy" there, cindyb, especially when you proceed to completely miss Don’s point: socialism didn’t fail because people "realized" anything; it failed because it’s unworkable.
I just believe that contemporary economics is approximately at the same developmental point that medicine was 200 years ago. Unlike you, contemporary economic theory has much room for growth. 200 years from now, economists will look back at us as well intended butchers.
Maybe so, but you don’t seem to understand where economic theory is right now, so it’s a more than a bit condescending to claim knowledge of where it’s going in the future. Your original post cited some common assumptions used in generating economic models (wrongly in at least one case) as the core of "western, neoliberal capitalism" which, because such assumptions were "dashed" (also incorrect), would now crumble and fall. None of that makes any sense, and belies even the foggiest notions as to what "capitalism" is, much less how economic theory analyzes it.

Back OT, the premise of the question asked seems a bit off to me as well. Whether prices or goods and services are the same in each case is irrelevant at the outset, but that will quickly change depending on which world you choose. If I have $100K, and everyone else has $250K, the prices will rise rather rapidly for all those goods and services that we are competing for. Whereas, if I have $50K and everyone else is stuck at $25K, the prices will change very little. IOW, the reason to choose $50K may be based on relative incomes, but not necessarily based on some competitive "I need more than the other guy" motives.
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
Your condescension is a function of your illiteracy. I’m sure you think you had a point. In small words, mine was this ... if people are not rational economic agents then classical economic theory fails. I’ve made no inference to, nor believe in, a triumph of socialism.


Cindyb, your line: "When people realized that the socialist model . . . was a failed model, communism fell" deserves derision. It ignores history and economic reality.

I didn’t say you believed in a triumph of socialism, nor did I say anything about whatever point you think you were making. You need to improve your reading comprehension.

 
Written By: Don
URL: http://
Cindyb, the results of this study are in no way inconsistent with economic theory. As you correctly pointed out, "individuals maximize utility." You are incorrect, however, when you say that economics requires that "people have rational preferences."

In fact, people may have any preferences they wish. An agent may prefer to be poor, or may be altruistic, or may want to have as much money—-and hence ability to purchase goods and services—-as possible. (Many economists assume the case of wanting to have as much as possible, in absolute terms, because, regardless of how people respond in surveys, that tends to be how people actually behave.) Any of these preferences may be represented mathematically. What economic theory does require is that people act rationally, which in an economic context means that people take the action or actions that lead to highest utility.

Therefore, if someone’s utility is maximized when his or her income is higher in relative, not absolute, terms—-i.e. this person is driven by envy—-then it would be perfectly rational for this person to choose the $50,000. Indeed, in this scenario, that is the only rational response. And this can all be modeled mathematically within the theoretical confines of modern economics.

Just correcting a common misconception vis-a-vis economic theory.
 
Written By: Nathan
URL: http://nathansaper.com/blog/
Never let anyone else define "success" or "happiness" for you (such as pegging your happiness on what others have). You’ll never achieve their definition (and if you do the goal posts will move) and if you did, it most likely wouldn’t be very satisfying.
When you make a very good and important point, you do it well. And frankly, understanding this is far more important overall to any individual’s life than what they think about a given political issue, even something like the war in Iraq.

I also think adaptability and perspective are important to happiness. People who can adapt when circumstances change suddenly — loss of a job, loved one, or even just being unable to achieve something they had their heart set on — tend to be immune to deep lows. As for perspective, as the article points out, we are living high on the hog in the industrialized West, even those who are poor by our relative standards. If one has that sense of perspective, and ability to realize just how good we have it by any historical and 99% of global comparisons, one would be able to appreciate what one has rather than think about what the ads in the magazines say one should want to have.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
Socialism failed because it can’t work, not because people lost faith in it. Furthermore, it was a failure of central planning, not a failure of "from each according to their abilities, to each according to their needs", which never really was put in place to begin with (and it would never work, either, since it violates the laws of economics.
Also socialism was an attempt to see humans as completely economistic — it sold itself as an objectivist materialist analysis of historical laws. As such it didn’t even address the fundamentals of what gives human life meaning, and therefore made assumptions about human nature (that it reflected the economic mode of production in any given system) that were based not on science, reality, or psychology, but rather assumed because it fit the needs of the theory.

Moreover, I reject socialism less because of how it might or might not work in practice (social democrats do a better job than communists), but because it posits materialism as the driving force of human society and meaning. However, it does seem that in our society a lot of people do believe that relative difference matters — how many people measure themselves up against others and then get upset when they aren’t as good, don’t work in as good a job, or have as prestigious position in society? This need to somehow ’measure up’ against others is a major hindrance to happiness, seems pervasive, and seems to be something we should grow out of as we reach adulthood (I expect it from my three year old, but...)
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
cindyb:
communism fell
Don:
Socialism failed
MichaelW:
socialism...it failed
Scott Erb:
socialism was
Ya’ll need to go tell all the communists, socialists, Democrats and compassionate conservatives about how the whole take from the productive and give to the state thing, in both the lite and full-bore versions, is over and done with. All kinds of Venezuelan, Cuban, Chinese, Eurobotic, North Korean, American and Earth people would really appreciate their accepting defeat and laying off.
 
Written By: Linda Morgan
URL: http://
Joe, nothing in economics is static. You leave out the value of money.
 
Written By: Rick
URL: http://
I would guess that in the real world, these hypotheticals don’t exist, and thus don’t reflect reality...I also thinks its hard to imagine a world where all of a sudden people make 250k on average, and you now only make 100k and prices didn’t go up. Yes, yes, they can explain the fine print all day, but my brain is gonna say...I bet they get the good stuff and I have to buy Goodwill.
 
Written By: Harun
URL: http://
Ya’ll need to go tell all the communists, socialists, Democrats and compassionate conservatives about how the whole take from the productive and give to the state thing, in both the lite and full-bore versions, is over and done with. All kinds of Venezuelan, Cuban, Chinese, Eurobotic, North Korean, American and Earth people would really appreciate their accepting defeat and laying off.
You must have a pretty wide open inclusive definition of socialism. If you define it as any governmental redistribution, then everyone is socialist. But that definition becomes essentially meaningless.

China is embracing capitalism and markets, with a state capitalism reminiscient of Tawian, Singapore and South Korea after WWII. Cuba and North Korea still cling to bureaucratic socialism or communism, but clearly it’s failing there. Europe is definitely not socialist; they are prosperous and free. No, I think you are a little confused.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
All quotes Erb’s:
If you define it as any governmental redistribution, then everyone is socialist.
Not true.
state capitalism
Which is to say, not capitalism.
clearly it’s failing
Is failing and has failed are two different things. And persisting is not failing, any more than spreading is failing, even though societies are wantonly eviscerated.
Europe is definitely not socialist
Not true.
I think you are a little confused.
I think you exemplify willful ignorance.
 
Written By: Linda Morgan
URL: http://
Linda: Is failing and has failed are two different things.
It has failed. Marx et al certainly never envisioned the resulting reality of the USSR, PRC, Cuba, NK, etc. The communists I have argued with are right when they point out that the USSR wasn’t really communist.
What they are unable or unwilling to grasp is that it could never really be communist.

Lenin made a real attempt to move towards communism back in the early ’20s, and when that failed pulled back. Stalin moved the USSR more towards a fascist reality during the "Great Patriotic War".

The reality of communism is that there has never been a functioning communist state.
Scott: Moreover, I reject socialism less because of how it might or might not work in practice (social democrats do a better job than communists), but because it posits materialism as the driving force of human society and meaning.
I reject it ’cause it is evil. It can’t work, and devolves into vile tranny.

However, you are wrong to view socialism as inherently materialist. Not all socialists were Marxists.
 
Written By: Don
URL: http://
Don:
It has failed. Marx et al certainly never envisioned the resulting reality of the USSR, PRC, Cuba, NK, etc.
Would that the stunning failures - most still in progress - dissuaged contemporary knaves and fools from propping it back up and/or debutting it all over again. My point is that socialism and communism are far from being sealed in the waste receptacle of history.
 
Written By: Linda Morgan
URL: http://
Linda, you need to figure out what you mean by "socialist." You also seem not to understand Europe very well if you want to label it socialist. Scandinavian states can be labeled social democracies, but even there socialist notions have weakened considerably. To say ’state capitalism’ is not capitalism is odd; it is a form of capitalism, at least according to modern studies of political economy. You seem to be working with your own idiosyncratic definitions and ideas. To converse about them, you need to be precise about how you’re using your terms — your use is non-standard.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm

However, you are wrong to view socialism as inherently materialist. Not all socialists were Marxists.
Fair point. I frankly reject all ideologies as being inherently dangerous. Those which posit a utopia or "just society," whether materialist or not, run the risk of creating adherents who are so committed to the "ism" that they believe anything goes to support it.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
All right, I’ll say it.

Happiness is a warm gun.

One would think that with all the boomer gun nuts here someone would have beaten me to it.
 
Written By: timactual
URL: http://
Scott Erb:
be precise about how you’re using your terms — your use is non-standard
Well, “dissuaged” and “debutted” were certainly non-standard, I’ll grant you that. But for “socialist,” with respect to economy, I’m thinking that centrally-planned, governmentally coerced and controlled with decreased and demeaned private ownership and decision-making is probably not all that far from standard. Or European. And if not, so what. Non-standard is better than uncomprehending, which is how one comes to regard “state capitalism” as a comprehensible or workable form of capitalism.

timactual:
Happiness is a warm gun.
But only if it’s warmer than your neighbor’s.
 
Written By: Linda Morgan
URL: http://
I’m thinking that centrally-planned, governmentally coerced and controlled with decreased and demeaned private ownership and decision-making is probably not all that far from standard. Or European. And if not, so what. Non-standard is better than uncomprehending, which is how one comes to regard “state capitalism” as a comprehensible or workable form of capitalism.
The problem is labeling a hybrid as "socialist." In Sweden there are far more liberal (as in free market capitalist, not the American politics usage of the word) attributes than socialist. Yet they have many goverment programs and a corporatist decision making structure. True socialists call Sweden "welfare capitalism," and deride it’s "socialist" attributes as just putting lipstick on a capitalist pig. And hard core free marketers call Sweden socialist, and somehow ignore the fact Sweden relies on markets for its economic well being (and has high private property ownership rates — the highest in Europe).

Virtually every state is some kind of hybrid. Why choose one label over another? That seems to create more confusion and is perhaps more politically provacative, but does it really explain reality?
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm

 
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