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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.
Reprinted from Mises.org.
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