There’s an interesting, but rather strangely house-size obsessed article (the author has written a book on building your own house) on happiness in last week’s Washington Post to which Robin (and my Cato boss, David Boaz) alerted me. The author interviews economist Luis Rayo, who has written a
Saying "Cato boss" counts as an important disclosure of potential conflict-of-interest. It's not at all the same as taking a potshot.
The point about "consumption levels" is interesting, by which I assume you mean not just levels of consumption, but more importantly, WHAT people are spending their money on (bling, fine wine, porn, or plane tickets to Tibet). You say that "almost nothing" is known about this, but I would be interested if you happen to know of any relevant studies.
Why "Cato boss"? Why not just "boss"? Didn't Eliezer just post on how it's best to avoid mentioning contemporary politics?
Otherwise, great post.
One is that there are clearly degrees of reliability of these different comparisons. So, the most reliable are probably panel data sets, a specific set of people whose answers one can track over time. "Are you happier now than yesterday"? Next would be over time within a country. Least realiable are those made across countries. There are admittedly problems with the first of these, but they are nothing compared to the lists of problems with this last sort of comparison (mea culpa, I admit to having actually cited such studies in papers of mine, albeit always with appropriate caveats).
The other point is that one needs to keep in mind the difference between "happiness" and "satisfaction." I am not sure which was measured in this study of housing that WaPo pubbed, but there are some notable differences. Thus, economic status comes out as much more important in terms of reported "satisfaction" than in reported, moment-to-moment "happiness." From moment to moment, how "happy" you are has very little to do with your income or status, but how "satisfied" you claim to be with your life very much does so, with the old result being that this is very much a relative to other people outcome. A very old wisecrack applies here: the most satisfied man is he who makes more than his wife's sister's husband.
Matthew, I think it's becoming pretty clear that "happiness" as a concept can, or at least will at some point in the not too distant future be able to be measured in a pretty objective sense, through brain scans etc. The real question is whether what is being measured is something we really care about (as opposed to, say, the degree to which people are satisfied with their lives).
I guess if what you are interested in is opinion polls, then this kind of research is useful. I do not even believe in the concept that they are measuring ("happiness" as an entity that can be measured). I believe the research is "interesting" from a sociological perspective, but ultimately amounts to measuring the length of shadows at different times of day. . .
Matthew, actually, much of it depends only on the weaker assumption that it can be inter-temporally intra-subjectively measured. There are still some potential problems with that (on which John Quiggin has a post over at CT today), but I don't think they're always insurmountable.
All of this assumes that satisfaction and pleasure can be objectively measured -- an assumption I find exceedingly doubtful.
"Now, it seems to me pretty arbitrary to interpret the permanent negative effect of declining health satisfaction as disconfirming the adaptation-setpoint hypothesis but to interpret the permanent positive effect of increasing financial satisfaction in terms of some kind of complicated story about shifting conceptions of material needs. Both explanations should have the same form: Declining health makes us less happy, and we don't get used to it. Increasing wealth, and the increased leisure and consumption it enables, make us more happy, and we don't get used to it either."
I wonder whether you're conflating two senses of adaptation here. (It's possible those you're critiquing do to. I can't quite tell.) One says that life-satisfaction adapts to domain (health/finance) satisfactions; the other says that satisfaction in particuar domains adapts to objective circumstances in those domains. It's the second that's the standard interpretation. But whether health satisfaction and/or financial satisfaction has a constant effect on life satisfaction is only relevant to the first. (And in any event, I'd have expected Easterlin to hold those effects constant by construction to be able to estimate their contributions to overall life-satisfaction at all. I could be wrong about that though.)
The truth of your claim that we don't adapt to our financial circumstances is entirely contingent on whether the actual patterns of consumption and wealth amongst the elderly back you up. They may do, but at this stage it's just as much an arbitrary hypothesis as the alternative. (Of course, the same goes for claims about adaptation to health - they depend entirely on the pattern of "objective" inputs into health satisfaction. The contribution of health satisfaction to life-satisfaction is irrelevant.)
"But money affects happiness mostly through actual consumption."
I had assumed this too, but it seems to be disconfirmed by the life-satisfaction data I've worked on. In the stuff that I've looked at income and consumption had approximately equal effects, and wealth also seems to have a strongish effect independently of spending it. None of this is entirely surprising, except if you've been taught to think like an economist for too long.
Great piece! As you correctly point out, the quotes from the Washington Post on nonmaterial domains are vast simplifications of the issue. A truly excellent paper that deals with differing adaptation to different dimensions of life, by Shane Frederick and George Loewenstein, can be found in the volume "Well Being: The Foundations of Hedonic Psychology" compiled by Kahneman, Diener, and Schwarz.
A lovely example is noise. For several types of noise, the exact opposite to adaptation occurs: we can get sensitized over time (i.e., more irritated). Same applies to an annoying colleague!
One must also distinguish baseline happiness from day-to-day hedonic fluctuations. Exercise and good friends can, no doubt, help with our baseline level -- which is not to say that they will instantly buy everlasting bliss.
Since Will is reading a lot on happiness, I asked him if he knew of evidence to support Rayo's claim; "Does our happiness really not adjust to the number and quality of our friends, as it adjusts to income?" Rayo's claim reminded me of Robert Frank's claim that gains from a fancy BBQ are relative, while gains from medicine are not. Does anyone know of any empirical support for these oft-made claims?
very nice post.