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Subject
 

The Dismal Science 

People multiply,

food does not.  The good news is

 there are wars and plagues.

— David M. Bader[1] 

It was Thomas Carlyle that characterized economics as “a dismal science.”  Ever since that famous statement was made in 1849, economics has been busy proving Carlyle wrong. 

The latest manifestation of this quest is to direct economic inquiry towards the current fascination with happiness.  It’s not enough to address and resolve the three great policy challenges of economics: Inflation, unemployment, and growth.  People should be happy as well.  Indeed, economics has a long track record of being focused on happiness.  The early economists assumed that rational people would maximize satisfaction.  This might have worked out fine if people actually were rational, but as Kahneman and Tversky pointed out in their pioneering research[2], a number of assumptions that economists made about how people behave were simply wrong.  Economists were wrong on people making decisions only from their own selfish perspectives (people are affected by other people), by their change in wealth (even if it is only on paper), by the perceived urgency of an event, and by status. 

It may not be enough that you are doing well, if others are doing equally well (“Not only must I win; you must lose.”).  That makes the pursuit of happiness rather tricky, if it is at the expense of the happiness of others. 

This might be the reason why happiness rankings worldwide are poorly correlated with economic success.  The University of Michigan’s World Values Survey has collected data on the happiness of countries for over twenty years.  Here is the latest ranking[3], compared with 2006 data for per capita income (purchasing power parity, adjusted, in US dollars)[4]:

Happiness Ranking Country Per Capita Income   Happiness Ranking Country Per Capita Income
1 Puerto Rico $16,700   41 South Africa $12,200
2 Mexico $10,000   42 Croatia $12,400
3 Denmark $34,800   43 Greece $22,300
4 Columbia $7,900   44 Peru $6,000
5 Ireland $41,100   45 China $6,800
6 Iceland $25,700   46 Morocco $4,100
7 Northern Ireland $24,381   47 South Korea $22,600
8 Switzerland $32,200   48 Iran $8,400
9 Netherlands $30,300   49 Poland $13,100
10 Canada $33,900   50 Turkey $8,400
11 Austria $32,600   51 Bosnia $5,200
12 El Salvador $4,700   52 Uganda $1,800
13 Venezuela $6,400   53 Algeria $7,200
14 Luxembourg $65,900   54 Bangladesh $2,100
15 U.S. $41,600   55 Egypt $3,900
16 Australia $31,600   56 Krygystan $2,000
17 New Zealand $25,300   57 Hungary $16,300
18 Sweden $29,800   58 Slovakia $16,300
19 Nigeria $1,400   59 Jordan $4,700
20 Norway $42,800   60 Estonia $17,500
21 Belgium $31,100   61 Serbia $4,400
22 Finland $31,000   62 Tanzania $700
23 Singapore $28,600   63 Azerbaijan $5,400
24 West Germany $30,100   64 Montenegro $3,800
25 France $29,600   65 India $3,400
26 Argentina $13,700   66 Lithuania $14,100
27 Vietnam $2,800   67 Macedonia $7,800
28 Chile $11,900   68 Pakistan $2,400
29 Indonesia $3,600   69 Latvia $13,700
30 Phillipines $4,700   70 Albania $5,300
31 Taiwan $27,500   71 Bulgaria $9,600
32 Brazil $8,300   72 Belarus $7,100
33 Spain $25,600   73 Georgia $3,400
34 Israel $25,000   74 Romania $8,100
35 Italy $28,700   75 Moldova $1,900
36 Portugal $19,000   76 Russia $1,100
37 East Germany $30,100   77 Armenia $4,800
38 Slovenia $21,500   78 Ukraine $7,000
39 Japan $31,600   79 Zimbabwe $2,100
40 Czech Republic $20,000        

The first thing that is truly striking is that some countries receive far more happiness from every dollar of income than do other countries.  Using this measure, some of the most “happiness-productive” countries in the world are Columbia, Nigeria, Vietnam, Indonesia, and the Philippines.  Countries that receive much less happiness per dollar are Japan, Germany, France, Finland and Belgium. 

 

 

Otherwise, happiness seems to favor geography in some way: Latinos, Northern Europeans, Canadians and Americans, and Australians/New Zealanders, all seem to have a bit of a happiness advantage.  Countries belonging to the old Soviet Union seem to have a lot of catching up to do when it comes to happiness and income. 

It is puzzling that Mexico, the second happiest country in the world, keeps sending so many people north of the border, where they are unlikely, perhaps, to achieve the happiness they left behind.  Maybe that is why they return in such large numbers for visits, and to stay. 

Researchers have found that people tend to have a “set-point” of happiness that rarely deviates over time from its normal value.  That is probably why the things we acquire and accumulate lose their attraction after a while; we end up taking them for granted.  Holidays like Thanksgiving serve the purpose of reminding us how grateful we should be for our lives on the earth — and gratefulness is incompatible with being unhappy. 

Our own research has shown that satisfaction is felt more deeply if it meets a strongly felt need rather than a want.  Carl N. Platou just called to ask me a question about something we did together in 1976.  Carl, now 83 years of age, is one of the happiest people I’ve ever known.  He exemplifies the way satisfaction is tied to true human needs.  Here are the sources of satisfaction revealed by research conducted by our staff over a thirty-year period; we use them here to frame Carl’s satisfaction as an example: 

1.      Acceptance:  He is widely accepted by colleagues for his work in health care.

2.      Intimacy:  He knows his field intimately, and he has built a multi-hospital system of renown.

3.      Sensory Stimulation: You’ll find him on his boat; or walking the beach in Florida; or enjoying good music, good books and good food.

4.      Growth and Development: He attends conferences, he reads papers, and he discusses issues of the day.

5.      Achievement and Recognition: He is Knighted by the King of Norway, and has received a great number of the awards he could receive from his own profession.

6.      Outward Orientation and Caring: You’ll find him at a steel desk in the corridor of the University of Minnesota Medical School, right outside Dean Powell’s office, working the phones.  Earlier this month, he raised $5 million for the medical school. 

Research also shows that the only way to beat the human life span of 85 years is to be happy with one’s life and work, and have the means to live it in the way one wants. 

The trick, then, is not to get what you want, but to want what you get.  The dismal science may be useful to us after all: Satisfaction, or happiness, may not be solely about money or status.  Satisfaction is, after all, a feeling.  What were the moments of our lives when we felt the greatest amount of satisfaction?  Chances are, it was when we were conscious of, or engaged in, something that fell into the six categories listed above.   

Like now, when I’m finishing this little article.  Or if I learn that someone has actually read it . . .


[1] Bader, D.  Haiku U. Gotham Books. New York. 2005. Commenting on Thomas Malthus’ An Essay on the Principles of Population.

[2] Kahneman, D. and A. Tversky. Prospect Theory: An Analysis of Decision Under Risk. Econometrica. 47(2). 263-91.

[3] EUROPEAN AND WORLD VALUES SURVEYS FOUR-WAVE INTEGRATED DATA FILE, 1981-2004, v.20060423, 2006. The European Values Study Foundation and World Values Survey Association. Aggregate File Producers: ASEP/JDS, Madrid, Spain/Tilburg University, Tilburg, the Netherlands. Aggregate File Distributors: ASEP/JDS and ZA, Cologne, Germany. Online. Available: http://www.worldvaluessurvey.orgNote that survey does not include all nations of the world.

[4] The World Factbook. December 26, 2006. Online. Available: https://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html.

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