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A very large literature has built up over the past
several decades in the area of so-called "happiness research." Such
research is based on several very dubious assumptions: namely, that
utility is cardinal and measurable after all; that interpersonal utility
comparisons can therefore be made; and that the great unicorn of economic
theory – the "social welfare function" – has finally
been spotted. Armed with these assertions, socialists around the world
believe they have finally discovered their holy grail. Now that governments
supposedly know with "scientific certainty" what constitutes
"happiness," there can be no argument (or so they think) against
virtually unlimited government intervention in the name of creating
happiness.
Affluence is actually a disease that generates
massive unhappiness, says the Australian author of a popular book in this
field, entitled Affluenza. The government of Brazil is in the process of enshrining this notion into its constitution, and similar movements exist
in Great Britain and other countries.
These assumptions rest on the proclamation that
public-opinion surveys are sufficient measures of cardinal utility. The economists
who make such assumptions studiously ignore all of the reasons why economists
have disavowed such practices – especially the notion of demonstrated
preference – for generations. As Murray Rothbard
explained in his essay, "Toward a Reconstruction of
Utility and Welfare Economics,"
The concept of demonstrated preference is simply
this: that actual choice reveals, or demonstrates, a man's preferences; that
is, that his preferences are deducible from what he has chosen in action.
Thus, if a man chooses to spend an hour at a concert rather than a movie, we
deduce that the former was preferred, or ranked higher on his value scale.
... This concept of preference, rooted in real choices, forms the keystone of
the logical structure of economic analysis, and particularly of utility and
welfare analysis.
Rothbard continued to explain the folly of relying on public
opinion surveys, as opposed to the actual demonstrated preferences of
economic decision makers:
One of the most absurd procedures based on a
constancy assumption [i.e., the false assumption that people never alter
their preferences] has been the attempt to arrive at a consumer's preference
scale not through observed real action, but through quizzing him by
questionnaires. In vacuo, a few consumers
are questioned at length on which abstract bundle of commodities they would
prefer to another abstract bundle, and so on. Not only does this suffer from
the constancy error, no assurance can be attached to the mere questioning of
people when they are not confronted with the choices in actual practice. Not
only will a person's valuation differ when talking about them from when he is
actually choosing, but there is also no guarantee that he is telling the
truth.
The one economist who is arguably the leader in the
field of "happiness research" (at least among economists) is Bruno
Frey of the University of Zurich. When I asked him at a conference in Prague
several years ago about the age-old criticisms of replacing actual
demonstrated preferences with questionnaires, his response was that his
"data" were no worse than GDP data. As bad and as unreliable as GDP
data are, "happiness research" questionnaire data are at least no
worse, he said.
But in fact, much of the happiness-research data are
much, much worse.
European socialists in fields outside of economics
have gone even further with their research of "happiness." A
bestseller in Europe is The Spirit Level: Why Equality is Better for
Everyone, by
Richard Wilkinson and Kate Pickett. The book is an excellent example of the
misuse and abuse of statistics by these two British epidemiologists. It is an
abuse of statistics because the entire book is a fishing expedition for
simple correlations between the degree of material "inequality" in
a country and myriad other variables. Wilkinson and Pickett don't even
attempt the use of multiple-regression analysis, as is typical in their own
field, in economics, and elsewhere. Consequently, they arrive at contrived
statistical conclusions that greater material equality in a country
supposedly leads to improvements in community life, mental health, drug use,
physical health, obesity rates, intelligence, teenage births, recycling,
violence, imprisonment, social mobility, dysfunctionality,
anxiety, and self esteem. (One critic of this research mocked its abuse of
statistical methods by presenting a scatter diagram that purportedly showed a
positive correlation between recycling and suicide, suggesting that the more
one recycles, the more likely that one will commit suicide!)
According to these scientific-sounding conclusions
(which have been lavishly praised by politicians, of course), the people of
the former Soviet Union must have been the happiest people on earth, since
the pursuit of equality was always the pronounced objective of socialism. As
F.A. Hayek wrote in the 1976 edition of The Road to Serfdom, socialism was originally defined as government
ownership of the means of production, and then changed to mean the redistribution
of income and wealth through the auspices of the welfare state and
progressive income taxation. In each case, "equality" was the
ultimate end; only the means changed over time.
Happiness researchers make no mention at all of the
long-recognized deleterious effects of welfare statism,
including destruction of the work ethic, family breakup, the growth of
dysfunctional citizens who are paid by the state to remove themselves from
the work force, etc.
Bruno Frey is no socialist, but the area of research
that he champions is being very enthusiastically embraced by
interventionists, socialists, and would-be central planners within the
economics profession. Frey himself explained this in his June 2002 survey
article in the Journal of Economic Literature entitled "What Can
Economists Learn from Happiness Research?" (with
Alois Stutzer). Among the
things economists can learn from this strange branch of psychology, Frey and Stutzer approvingly report, are the following:
- "Happiness functions have sometimes been
looked at as the best existing approximation to a social-welfare
function. It seems that, at long last, the so far empirically empty
social welfare maximization ... is given a new lease on life."
- Income has increased dramatically since World
War II, but "happiness" supposedly has not. The
counterintuitive implication is that work, investment, and
entrepreneurship – the ingredients of economic success – do
not produce happiness, but human beings nevertheless keep doing more and
more of it year in and year out.
- Interpersonal utility comparisons have also
been resurrected, supposedly proving that "social happiness"
can be created by the state's theft of one person's income and the
redistribution of it to another (while keeping a tidy sum for
"administrative expenses").
- "Wealthier people impose a negative
external effect on poorer people but not vice versa." The supposed
negative external effect is the envy of "poorer" people.
Welfare parasites are assumed to impose no negative effects by being
given the income of their hardworking, taxpaying hosts.
- "If unemployment rises by 5 percentage
points the inflation rate must decrease by 8.5 percentage points to keep
the population equally satisfied," write Frey and Stutzer. Thus, the rotted corpse of the Phillips curve – and of Keynesianism
– is given new life by happiness research.
- Welfare payments should be increased "to
compensate for a larger family," write Frey and Stutzer,
so as "to maintain the subjective well-being of the family."
Again, there is no mention of the harsh negative effects of welfare statism, or of the negative effects of massive tax
increases on economic growth rates. Affluence is a disease.
- "The fight for relative positions is
socially wasteful, and ... the high-income recipients, as winners of
these races, should be more heavily taxed," happiness research
informs us. Thus, Frey and Stutzer define hard
work, saving, production, and entrepreneurship as merely "the fight
for relative positions" in society, and a rather trivial
"race" rather than a job-creating engine of prosperity.
- Not surprisingly, Frey and Stutzer
point out that the socialist John Kenneth Galbraith is widely regarded
as the "father" of "happiness research" because of
his numerous anticapitalist, prosocialist books such as The Affluent Society.
- "Raising everybody's income does not
increase everybody's happiness," but improving one's income
"in comparison to others does." These, like other claims
mentioned here, come from the two British socialist epidemiologists
mentioned above.
If one were to go to a university library and survey
some of the top economics journals, it would be easy to find dozens of
articles that seem to employ a blur of mathematics in page after page,
followed by mind-numbing econometric pyrotechnics, to prove that water runs
down hill. For example, I can recall reviewing a book on innovation for the Southern
Economic Journal that required 66 equations to arrive at the conclusion
that businesses are likely to invest more money on innovations that promise a
higher rate of return on their investment. Much of happiness research that is
conducted by economists is exactly like this, very often stating conclusions
that are extraordinarily simplistic and downright comical. The following are
a few examples from the Frey/Stutzer article in the
Journal of Economic Literature. Every one of them could be
appropriately concluded with the expression, "Duh."
- "Persons with higher income have more
opportunities to achieve what they desire."
- "British lottery winners ... reported
higher mental wellbeing the following year."
- "There is more to subjective wellbeing
than just income level."
- "On average, persons living in rich
countries are happier than those living in poor countries."
- "Happiness of unemployed persons is much lower
than that of employed persons."
- "Experiencing unemployment makes people
very unhappy."
- "Freedom and happiness are positively
related."
- "Happy people smile more during social
interactions."
- "People receiving an inheritance reported
a higher mental wellbeing in the following year."
- "Persons with higher incomes ... can buy
more material goods and services" and can therefore "achieve
what they desire." This contradicts the other statements about how
increased income supposedly does not increase happiness.
One thing these mundane, pedestrian statements
demonstrate is that happiness research has indeed been a gold mine for
résumé-building academic economists whose econometric game
playing is no longer limited by the requirement of digging up actual economic
data. They can make up all of their own data by simply mailing (or emailing)
out questionnaires.
Bruno Frey himself has published dozens of articles
and several books of this sort, and may well win the Nobel Prize in Economics
for them. It would not be a shock if the Swedish socialists who decide on the
prize, funded by the Swedish central bank (not the estate of Alfred Nobel),
gave the award to Professor Frey some day. That would be an enormous boon to
all the socialists of the world, who have never let economic reality or
economic logic stand in their way. As explained in an excellent critique of
happiness research in the form of a book entitled The Spirit Level Delusion:
Fact-Checking the Left's New Theory of Everything, by Christopher Snowdon
(p. 147),
Apologists for Marxism have made myriad excuses for
their ideology's failure to provide the same standard of living and liberty
as was enjoyed in capitalist nations. Until recently, few have been so brazen
as to claim that lowering living standards and curtailing freedom were the
intended consequences, let alone that people would be happier with less of either.
In that sense, books like The Spirit Level represent a departure for
the left. Limiting choice, reducing wealth and lowering aspirations are now
openly advocated as desirable ends in themselves.
Thus, "happiness research" is really a
crusade to persuade the public that poverty and servitude to the state are
superior to prosperity and freedom. It is what 20th-century communists
referred to as "socialism with a smiling face" during the last days
of Soviet and European communism.
Thomas DiLorenzo
Article originally published on www.LewRockwell.com. By authorization
of the author
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