Wednesday, March 28, 2007

Happiness (and how to measure it)

This title is stolen from the 23/12/06 issue of The Economist. The subtitle reads: "Capitalism can make a society rich and keep it free. Don't ask it to make you happy as well". Are you angry yet? Does a new TV make you happy?

In the 1930s John Maynard Keynes predicted that Capitalism would create richer societies, in which people would work less and have more time to enjoy the pleasures that capitalism brings. From the heart of the Great Depression, this was a dream. Now, almost 70 years from 30% unemployment and falling prices, we enjoy 6% unemployment and low inflation. Incomes are higher, we all live longer. Computing power has fueled development. Everyone can buy a microwave at Wal-Mart for $29.99 and having a dishwasher too – unimaginable to my great grandfather working for a $1 a day in PEI in the 1930s. The problem is: warming up leftovers does not put a smile on my face. However, I think Keynes' conclusion was a reasonable one to make: when people can’t find jobs and are struggling feed their kids, economic growth will clearly make people better-off.

When you are not worrying about where you next meal is going to come from, or if you are going to loose your job tomorrow, you can focus on the future. In this light, we can see how spending money on the environment and our education systems is a luxury of the wealthy. And, by using our wealth to re-green the earth and provide the opportunity to get educated, we will also create a foundation for the future weather and leisure. We, as rich society, are now positioned to focus on the future and begin to enjoy the fruits of capitalism: leisure, health, and education. Will these things make us happy? Maybe they will not make us ‘happy’ but they do make us better-off.

In summary, Canadians are among the wealthiest in the world – generations of economic growth have provided us will millions of ways to spend money. However, asking economic growth to make us happy will only make us disappointed. Don’t get me wrong, without growing the economy unemployment would rise and hardship will ensue, but this is not the answer to everything.

Appendix: what else does Capitalism provide?
I was once told that the promise of Capitalism is that each generation will be better off than the previous one. People gave me examples like the infant mortality rate falling, a longer life span and a better quality of life. Improvements in these areas have occurred over the last 100 years (these are such commonly known facts I feel no pressure to cite references). A quick demographic analysis tells me that, on average, we are gaining about 2.5 years per decade in life span and Canada's infant mortality rate is now less than 8 per 1000. Both great accomplishments (interconnected of course).

7 comments:

Jenny said...

I think the most important question to ask re:capitalistm is - at who's cost are we getting more rich? Not only this but lets be honest "we" isn't all of canada or the west in general "we" is middle and upper class white people.

Jenny said...

and yes, I *can* spell - capitalism. :)

Canadian Economist said...

In case anyone else is interested in "the Wal-Mart discussion" between Jenny and the economist, here is the link that will give you the scoop . I will blog about this once I have seen the movie, but please share your views if you have seen it ...

Dave said...

I must say I agree with jenny - the the tenor of this reasoning immediately privileges the position of the white middle and upper classes but more importantly this seems to assume that there must be some model for happiness and how to achieve it reliably - yet as many would attest, the character of happiness in personal experience is extremely personal. Thus, the economist in this case can provide only models for those behaviours more likely to be performed by happy rather than unhappy people but I am not sure that this givenness itself points to a reason for being happy or unhappy. This must rely on the interrogation of particular happy people without regard for their particularity (a poll/survey); thus, we can see all sorts of things about happy and unhappy people, we might be able to determine what factors tend to increase happiness or unhappiness on the whole, but as to the content or positive experience of happiness, there can be measurement only of effects and not causes. Anyway, do put me right if I'm wrong on this one...

Canadian Economist said...

Caution: terms such as 'middle class' are rarely defined and is often used to assert a position that is not clearly defined.

When I speak about Canadians I refer to the average Canadian – or rather the median Canadian - therefore there are people on each extreme and inequality is not the topic here (neither are racial issues). On average, Canadians are on average very rich – even the poorest Canadians are wealthy in a world context. In this posting I refer to the development of the economy over the past 70 years – and over that time even the poorest Canadians today are much better off than they were and much wealthier than most of the world. In regards to a model of happiness – there are in fact many economists and others who have used survey data to measure happiness and to find out what makes people happy. (I have not gotten into this hear, but maybe in a later post.) A good reference is here: John Helliwell’s paper

Egg Protector said...

An excellent treatment of happiness and how to attain it can be found in 'The Happiness Hypothesis' by Jonathan Haidt. Haidt use the teachings of histories great minds as a base to understand happiness. He compares the ideas and selected 10 primary concepts which are examined through the lens of modern science.

Beyond what's necessary for survival wealth turns out to be a poor measure of happiness. Not surprising since wealth is an entirely external artificial construction and happiness is completely internal.

Any information on global wealth? What is the mean and the median of world wealth and standard of living now as compared to 100 years ago?

Neil

Lourana said...

Well written article.