The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [20]
This seems a much more credible result than the original Easterlin Paradox. But the temptation to read too much into this should be resisted. This is partly for reasons of sensible caution about the statistics. All of this work looks at statistical correlations and not at causation. Happier people might be more productive, leading to higher growth and incomes, rather than the causality running the other way. Alternatively, other factors that do cause happiness might be linked in turn to growth—such as better health or greater access to education—making the observed correlation between happiness and growth an indirect one.
Moreover, there is other evidence on the relationship between economic and social measures and happiness that gives useful insights when it comes to policy. Some of this evidence comes from similar statistical studies to those described above, but using other economic and social measures as the potential explanations for happiness levels. Some of these are linked to GDP but may do a more direct job in explaining happiness. This work shows that among the other economic indicators apart from income, having a job is the most important; unemployment makes people very unhappy, although inflation also contributes to dissatisfaction. Other important personal and social indicators are: being married, being in good health, having strong religious or moral values, living in a strong community, and having political freedom.36 These results place particular emphasis on political institutions and the importance of freedom.
More than a debate among economists is at stake here, because the two different approaches lead to contrasting policy conclusions. Those researchers like Richard Layard and Robert Frank who believe the link between growth and happiness tails off to nothing above a certain income level argue for taxes to make people stop working so hard or spend less on various consumer goods. The government must prod us into being happy because we’re simply adapting to each new level of income. The rat race means that like caged guinea pigs scrabbling around their wheel, we keep running to earn and spend more without making any progress in terms of happiness.
However, this kind of policy conclusion has been strongly challenged by other researchers. In his book The Idea of Justice Amartya Sen agrees that people’s happiness depends on their expectations, which are shaped by their own social situation.37 But he turns the argument about adaptation and the hedonic treadmill back on the happiness crowd: if we just aim for people to be happy with their lot, where is the social discontent that will create the momentum for a better life? Would women have ever gained the vote if many had not been unhappy? Would there have been a civil rights movement without discontent? Is poverty acceptable because poor people say they are pretty content? Obviously not; most people would agree the world with the discontent and change was better than the contented and static one.38 Other researchers, looking at the wider array of explanations as to what makes us happy, argue that strong growth is desirable because it keeps employment high, and this is important for happiness. Other things that empirically contribute to measured happiness are traditional social values and political freedoms. It will be obvious that these findings would be more acceptable to people with libertarian rather than interventionist political views.39
It also makes sense to look at indicators of unhappiness. Many of the researchers who built on the original Easterlin Paradox have pointed to other measures that suggest that richer societies are not automatically happier. For example, mental illnesses such as clinical depression, illegal drug use, alcohol abuse, and suicide have increased over time in some rich countries.40 These indicators tie in with the argument that countries