Sunday, November 29, 2015

Was J S Mill correct in his observation that happiness cannot be obtained by seeking it?

John Stuart Mill is often quoted as an authority on the question of
whether happiness can be obtained by seeking it. In Autobiography he wrote:
“Those only are happy ... who have their minds fixed on some object other than their own happiness; on the happiness of others, on the improvement of mankind, even on some art or pursuit, followed not as a means, but as itself an ideal end. Aiming thus at something else, they find happiness by the way”.

How can that view be reconciled with Mill’s conviction “that happiness is the test of all rules of conduct, and the end of life”? That was no problem for J.S. Mill. In Utilitarianism he proposed:
“the happiness which forms the utilitarian standard of what is right in conduct, is not the agent's own happiness, but that of all concerned. As between his own happiness and that of others, utilitarianism requires him to be as strictly impartial as a disinterested and benevolent spectator”.
Mill enlisted the support of a widely-esteemed authority in support of that proposition:
“In the golden rule of Jesus of Nazareth, we read the complete spirit of the ethics of utility. To do as you would be done by, and to love your neighbour as yourself, constitute the ideal perfection of utilitarian morality”.
Mill might not have been a reliable exponent of the teachings of Jesus, but he was certainly an artful propagandist for utilitarianism.

Coming back to the original question, it seems important to be clear about the nature of the happiness that Mill claimed could not be obtained by seeking it. In his writings he seems to accept that some of the pleasures of life can be obtained by seeking them. As noted in 
my discussion of his views on pushpin and poetry (here and here) he regarded some pleasures as being higher than others.

Mill saw the development of “noble character” as intimately linked to the higher pleasures. At one point Mill seems to suggest that development of a noble character is an avenue to happiness. In Utilitarianism he wrote:
“... if it may be doubted whether a noble character is always the happier for its nobleness, there can be no doubt that it makes other people happier ...”.

Mill argued that some happiness could be obtained by cultivating tranquillity:
“the conscious ability to do without happiness gives the best prospect of realizing, such happiness as is attainable. For nothing except that consciousness can raise a person above the chances of life, by making him feel that, let fate and fortune do their worst, they have not power to subdue him: which, once felt, frees him from excess of anxiety concerning the evils of life, and enables him, like many a Stoic in the worst times of the Roman Empire, to cultivate in tranquility the sources of satisfaction accessible to him, without concerning himself about the uncertainty of their duration, any more than about their inevitable end”.

In saying that happiness cannot be obtained by seeking it, Mill possibly meant that tranquility of mind cannot be obtained by seeking pleasure. Mill’s personal experience is relevant here. He reports that he helped himself to regain some measure of happiness after suffering a nervous breakdown when he was a young man by reading the poetry of William Wordsworth. In Autobiography he wrote:
What made Wordsworth's poems a medicine for my state of mind, was that they expressed, not mere outward beauty, but states of feeling, and of thought coloured by feeling, under the excitement of beauty. They seemed to be the very culture of the feelings, which I was in quest of.

Wordsworth’s poem “Imitations of immortality from recollections of earlychildhood” might provide an example of what Mill was writing about.

What should be make of Mill’s suggestion that to be happy people need to fix their minds on some object other than their own happiness? In his autobiography Mill reports that he came to that view after his nervous breakdown. It has been suggested (for example by Kieran Setiya) that Mill displayed a lack of self-knowledge because he became unhappy even though he had already met his own condition of aiming not at his own happiness, but at the happiness of others.

However, my reading of Mill’s account suggests that he saw his problem as stemming from the moment when he asked himself whether he would be happy if all his objects in life were realized. Mill implies that his mistake was to question his own happiness:
“Ask yourself whether you are happy, and you cease to be so. The only chance is to treat, not happiness, but some end external to it, as the purpose of life. Let your self-consciousness, your scrutiny, your self-interrogation, exhaust themselves on that; and if otherwise fortunately circumstanced you will inhale happiness with the air you breathe, without dwelling on it or thinking about it, without either forestalling it in imagination, or putting it to flight by fatal questioning”.

Under what conditions would a person who was fully absorbed in a major social or political movement be likely to be made to feel depressed merely by asking himself if he would be happy if all the objectives of that movement were realized? It seems to me that one set of circumstances in which that outcome might make sense is if the person concerned had been indoctrinated into the movement from an early age and had not previously considered the extent to which “his” objects in life were consistent with his own personal values. Those conditions may have applied in the case for JS Mill, who was educated by his father to become a propagandist for utilitarianism.

That explanation fits with Mill’s account that the first "small ray of light broke in upon [his] gloom" when he "accidentally" read the passage from Marmontel's MĂ©moires that relates his father's death and the sudden inspiration by which he, then a mere boy, felt as a result of his increased responsibilities. It strikes me that Mill might at that moment have been inspired to see himself as an autonomous individual rather than a creation of his father (James Mill) and Jeremy Bentham (his godfather).  

So, after all that, was Mill correct in his observation that happiness cannot be obtained by seeking it? The answer depends on what we mean by happiness. The small amount of wisdom I have gained from my reading in this area suggests that it makes sense to pursue the things we (as autonomous individuals) value most highly in all domains of our lives. Whether or not that brings us great joy, it is likely to give us the satisfaction of knowing that our lives are meaningful.

Note: This is a revised version of an article posted on this blog in 2008. I have revised it because my views have changed.

Sunday, November 22, 2015

Why donate through Opportunity International Australia?

It must have been over 15 years ago when I first began making modest monthly donations to Opportunity International Australia. Opportunity is a microfinance organisation that provides small loans to help people in low-income countries break the poverty cycle by starting their own small businesses. It also offers its clients other financial services including savings accounts and insurance.

What attracted me to Opportunity the most was the potential for money donated to be recycled to help more people as loans are repaid. Over the years I have obtained satisfaction from the information that Opportunity has sent me about transformations that have occurred in the lives of individuals who were being helped. There have been many heart-warming stories about donations being used in ways that help poor people, mainly women, to build better lives for themselves and their families.

Nevertheless, the sceptical old economist in me has been muttering that he would like to see such stories backed by more empirical data showing how the economic and social prospects of Opportunity’s clients have improved as a result of the help that they have been given.

The enthusiasm of development economists for microfinance seems to have waxed and waned over the years, but recent research findings suggest that it can be an effective way to expand the opportunities available to people living in poverty who would otherwise be unable to obtain credit (or would have difficulty servicing loans at interest rates reflecting the high credit risks conventionally perceived to be involved). One particular study I have in mind, undertaken by Shahidur Khandker and Hussain Samad for the World Bank, uses over 20 years of panel data for Bangladesh. This study found that microcredit programmes resulted in increases in income, expenditure and net wealth, and increased participation in education. The results suggest that microcredit has been a particularly effective tool for reducing poverty among women.

In terms of global microfinance, the Opportunity International Network is a relatively small player, but a recent Social Performance Report indicates that it now has 3.6 million loan clients and its gross loan portfolio stands at $US 841.6 million. As indicated in the chart below, most of those loans have been made to India and other parts of Asia.

Those priorities seem appropriate from an Australian supporter’s perspective, but I would personally like to see Opportunity also establish a presence in Papua New Guinea.
Information in the Social Performance Report also indicates to me that Opportunity has been fairly effective in targeting assistance to those whose needs are greatest. A high proportion of new clients have been living in poverty, using $2.50 per day as the benchmark; new clients often have had no previous access to loans or savings facilities with a financial institution; and 94% of clients are women.

Information on the impact of loans and other assistance is currently patchy, but efforts are being made to develop appropriate indicators. The Social Performance Report provides evidence of a substantial reduction in the proportion of clients in poverty in the Philippines and of substantial job creation in clients’ businesses in African countries. One statistic which must imply impressive economic performance by clients is the repayment rate of loans – it is reported that 98% of Opportunity loans are repaid.

Rather than rounding off this post with a conclusion that any two-handed economist might be proud of, I want to do something I have never done before. I urge readers to spare $6 or more (hopefully much more) each month to make a regular donation to Opportunity. You might get a warm inner glow by giving money to other charities, but it would be hard to find anything more deeply satisfying than giving a hand-up to poverty-stricken people who seeking to build better futures for themselves and their families.

Sunday, November 15, 2015

Will the Swedes maintain their positive attitudes toward non-European immigration?

Attitudes toward non-European immigration are much more positive in Sweden than in other EU countries. This is illustrated in the following chart, based on a Eurobarometer survey.

EU countries in which the highest proportion of the population have positive feelings toward non-EU immigration

Note: SE = Sweden; DK = Denmark; FI = Finland. Norway is not a member of the EU.
Source: Eurobarometer 82; Survey Nov.2014; QA 11.2 (Abridged)

The high proportion of Swedes who have positive attitudes toward non-Western migration sits somewhat oddly with the difficulty that Sweden has had in integrating such migrants. That is apparent in Michael Booth’s book, The Almost Nearly Perfect People, which I began to discuss in my last post. Booth writes of “newly arrived immigrants being shunted off to places like RosengĂ„rd, where they are given just enough money to live on but often face insurmountable obstacles to progressing further in society”. He suggests that the Swedish welfare state creates “ghettos” for “clientification” of new arrivals. I guess clientification has come to describe the process by which people become dependent upon welfare because government welfare agencies pretend to run businesses in which welfare beneficiaries are viewed as clients.

Michael Booth notes that newly arrived migrants becoming dependent upon welfare is in sharp contrast to the situation in the US, for example, where immigrants generally have to work hard to survive. That comment presumably refers specifically to illegal Mexican immigration into the US. It brings to mind Milton Friedman’s comment to the effect that illegal Mexican migration is a good thing because illegal immigrants are not eligible for welfare benefits. Friedman also made the more general point that it is not possible for a welfare state to maintain open borders because that would disproportionately attract the kinds of migrants who are likely to become eligible for welfare benefits. (He was, of course, more favourably disposed to open borders than to welfare states.)

It is worth noting at this point that immigration programs are sometimes seen as making a net contribution to welfare systems. Immigrants to Australia have tended to be of working age and to have useful skills, so that, on average, their tax contributions have tended to exceed the welfare payments made to them. That probably reflects immigration policies designed to attract migrants with useful skills and would not apply under an open-borders policy with migrants immediately eligible for welfare benefits.

It would be difficult for anyone to argue that the ongoing positive attitudes of the Swedes toward non-European immigration stems from social cohesion that has been created by the welfare state. The Scandinavian countries with less positive attitudes to immigration also have large welfare states. Moreover, the weight of evidence seems to support the view that high levels of trust and social cohesion in the Scandinavian countries prepared the way for the welfare state, rather than vice versa. Michael Booth tends to support that position – he reports interesting interviews with protagonists on both sides of the debate.  The international evidence that I have presented in an earlier post supports the view that people in high trust societies tend to have greatest support for moving toward a more humane society, with more redistribution of income to reduce inequality. 

Michael Booth makes the point that many Danes take pride in the fact that they pay a lot of taxes. This is apparently a way for them to say how successful they are. Booth notes that the pride that Danes take in paying tax does not prevent them from evading tax by shopping enthusiastically on the black market. Evidence from a tax audit suggests that many Danes also engage in income tax evasion when they have an opportunity to do so.

It would be reasonable to expect that a high proportion of Danish taxpayers are proud of the support that they provide to other Danes who rely on welfare payments. High levels of inter-personal trust would be likely to make such sentiments more common in Denmark and other Scandinavian countries than in most other parts of the world.

However, different attitudes seem to apply in Denmark when tax revenue is used to pay welfare benefits to newly arrived migrants. In recent years Denmark has taken the path of applying a two-tier welfare system with different provisions for new arrivals. Denmark has also adopted a more restrictive approach to immigration.

This brings me to politics. The Danes, Norwegians, Finns and Swedes all have anti-immigration parties that poll a substantial proportion of the popular vote (over 20 percent for the Danish People’s Party). The Swedish Democrats have been less influential than the xenophobic parties in the other Scandinavian countries. They obtained a lower percentage of the vote (13 percent in the last election) but the main reason they have been less influential is because they have been shunned by the other parties in Sweden. My source for this information is an article by Alberto Nardelli and George Arnett on the rise of the anti-immigration parties in the Nordic States (published in The Guardian, 20 June 2015).

I hope the vast majority of Swedes will continue to set an example to the rest of the world by maintaining strongly positive attitudes toward non-European immigration. However, that looks to me to be a forlorn hope - unless they can find a sensible way to restrict welfare benefits to immigrants (perhaps accompanied by special policies to assist refugees to find jobs). In my view, other countries, including Australia, should also consider moving toward a two-tier welfare system. Immigration to countries with costly welfare systems has a lot in common with having new members join a club that exists to provide benefits collectively to its members. It is much easier for current members to remain positive about having new members join if they are required to make appropriate contributions before being eligible for the full benefits of membership.  

Sunday, November 8, 2015

Are the Scandinavian countries almost nearly perfect?

This question is prompted by Michael Booth’s book, The Almost Nearly Perfect People. The author is English; he is married to a Dane and lives in Denmark. The subtitle (of the version I read) suggests that the author has exposed “the truth about the Nordic miracle”. The book is indeed informative, but the author’s main aim seems to be to entertain readers with his observations on the different character traits of the people in the five Nordic countries – Sweden, Finland, Norway, Denmark and Iceland - and what they think of each other.

The book could be viewed as essential reading for people thinking of spending time in Scandinavian countries. Visitors might need to be warned, for example, that Swedes tend not to be as well-mannered as observers of the on-court behaviour of Swedish tennis players might expect. Booth describes their behaviour when boarding public transport as “breathtaking rudeness” (but he comes from a country in which people do tend to apologize excessively).

The book also has much to offer people, like myself, with an interest in explanations for the high average happiness levels of these countries (as recorded in numerous international surveys) and those attempting to understand why Scandinavian welfare states have not yet collapsed.

The book was recommended to me by Jim Belshaw, an old friend and fellow blogger, because of my interest in happiness research. Jim has recently visited Denmark and has written on his blog about hygge – which translates as cosiness and has some similarity to the Australian concept of mateship – as well as about ethnocentricity and migration.

Michael Booth is bemused that the Danes tend to be consistently close to the top the world happiness rankings: even by comparison with the British they seem to be “a frosty bunch”. He suggests that the Danes are among “the least demonstrably joyful people on earth, along with the Swedes, the Finns and the Norwegians”. The author suggests that many Danes are themselves similarly bemused: “they tend to approach the subject of their much-vaunted happiness like the victims of a practical joke waiting to discover who the perpetrator is”.

It is often difficult to know when Booth is being serious, but he offers several more or less plausible explanations for the apparent contentedness of the Danes. These include low expectations resulting from their turbulent history, and a facility for denial of the costs of being Danish - including the high taxes and the loss of freedom of expression and individualism associated with hygge and Jante Law (the social norms of a small town). Such speculation is fun, but it may not be necessary to an understanding of why the Danes tend to be relatively satisfied with their lives. The relatively high average happiness levels of the Danes and other Scandinavians can be largely explained (statistically at least) in terms of such variables as average income, social support (having someone to count on in times of trouble), healthy life expectancy, perceived freedom to make life choices, generosity and relative absence of corruption. There is a good discussion in World Happiness Report 2015 (pages 21-26).

There is another possible explanation for Scandinavian happiness that I was hoping Michael Booth might have had some fun with. Last year Eugenio Proto and Andrew Oswald published exploratory research findings suggesting that cross-country differences in happiness are associated with “genetic distance from Denmark”. Apparently, the closer a country is to the genetic makeup of Denmark, the happier are the people in that country, other things equal. The study seeks to control for a fairly wide range of other variables. One part of the study is based on information on the incidence of people with short alleles (those who draw the short straw in terms of the serotonin-transporter gene) who have a genetic predisposition to overreact to stressful events. I was hoping that Michael Booth might have speculated about whether there might be something in the cultural heritage of the Scandinavians that could explain their genetic makeup. Unfortunately, the research paper was probably not published before his book was finished. When Booth did comment he cast doubts on the validity of the research findings, citing “the Dane’s record high consumption of antidepressants, which would appear to contradict the report’s assertions regarding clinical depression”. Well, who knows? More research might be required.

The thought of Scandinavians as being “almost nearly perfect” raises the question of how well these countries rate in terms of the “good society” characteristics, which I have previously proposed on this blog (in my most popular post) and in Free to Flourish as criteria that nearly everyone would consider to be important. For convenience, relevant information is summarised in the table below. The table shows data for the top 20 countries, according to their average ranking on the three criteria: peacefulness, individual opportunity and economic security. The shading - from green, through yellow to red - denotes levels of performance on each criterion from relatively strong to less strong for these top performers. (The indexes combine 15 indicators, using methodology described in Free to Flourish.)

It is obvious from the table that the Scandinavian countries are relatively good societies - according to the criteria I espouse. They rank very highly in terms of peacefulness and economic security - although, apart from Norway, they do not rank so highly in terms of individual opportunity. Equal weighting of the criteria might not be appropriate. If I had to choose whether it would be better for my grandchildren to live in a country offering greater individual opportunity or greater economic security, I would choose individual opportunity. However, my personal priorities are probably not widely shared in the Nordic countries. I wonder to what extent those priorities are shared among the large numbers of people who have migrated to Sweden in recent years.

The more contentious issue is whether these societies will remain “good” in the future. Michael Booth provides some hints in his discussion of productivity in Denmark:
I have read numerous articles in Danish newspapers of which the gist has been ‘Well, things are going well for the other Scandinavian countries so they will probably go well for us too,’ in which no mention is ever made of Norway’s colossal oil wealth or Sweden’s manufacturing supremacy and major public sector reforms. Denmark’s economy is far, far weaker than its neighbours’, and the country is facing far more serious problems, but the Danes are oddly reluctant to address their private debt levels or their gigantic welfare state”.

So, what about Finland and Iceland? There is apparently more to the Finns than taciturnity, modesty, trustworthiness and binge drinking. As well as Santa and forestry, they have a substantial electronics industry (think Nokia). Research and development spending is relatively high as a percentage of GDP and relatively little of this is public money. The Finnish education system seems to be relatively good by OECD standards (average PISA scores are very high) for reasons which seem to be related to the high regard for teaching as a profession and the simplicity of the Finnish language. The future economic growth prospects of Finland have been rated highly by the World Economic Forum, among others.

Iceland’s economy was almost wiped out by the GFC, but it now seems to be recovering. That is an interesting story, but it doesn’t deserve space in this post because the population of Iceland is tiny (about 330,000). That is less than the population of Canberra (which is admittedly somewhat bloated).

Since I have mentioned population I should note in passing that world-wide interest in the Nordic countries seems to be disproportionate to the size of their populations. The total population of the Nordic countries is only about 25 million – not much larger than Australia's. Sweden is largest, with 9.6 million people; the populations of Denmark, Finland and Norway (5.6, 5.4 and 5.1 million respectively) are all smaller than that for Victoria (5.8 million).

Coming back now to the question of whether the Nordic countries will remain good societies, it looks as though Norway will continue to be helped along for a few more decades by the rents from oil resources, while the Swedes and Finns will probably get by without too much trouble on the rents from their past investment in intellectual capital. All the Nordic countries will be helped by their high levels of social capital (trust) which seems to make changes in policy direction relatively easy to achieve as they endeavour to make their welfare systems more affordable. At this point I should mention the impact of immigration.  (So, I have mentioned it.)

Before I end this long post I want to give you a better indication of the flavour of the book by referring to some of the author’s comments on what the people in the different Scandinavian countries think of each other. According to Michael Booth, their Danish neighbours regard the Swedes as stiff, humourless, rule-obsessed and dull, and the Finns see them as “slightly foppish”. These days the Norwegians have enough money to rise above ancient resentments – they pay Swedes to wait on their tables and peel their bananas (to make a sandwich spread). The Swedes, who are wealthier than their other neighbours, tend to remain aloof from regional resentments, but they are inclined to make sanctimonious comments about anti-immigrant policies adopted by the Danes.

The overall impression I am left with, however, is that the lingering resentments among the Nordic countries are fairly tame by comparison with those among the different national and regional groups in the British Isles.

Sunday, November 1, 2015

Do humans have an inbuilt potential for realistic optimism?

In order to think clearly about this question it is helpful to remember that the opposite of optimism is pessimism. Realism is not the opposite of optimism.
My understanding is that realists seek to base their estimates of the probability of future events on evidence of one kind or another. Optimists tend to over-estimate the probability of positive future events. Realistic optimists are aware of their optimistic tendencies when they make predictions and important decisions.

The idea that humans have an inbuilt tendency to be optimistic is supported by neurological research discussed by Tali Sharot, a neuroscientist, in her book The Optimism Bias. Brain imaging studies show that the brain structures that are engaged when people recollect the past are also called upon when they think about the future. The author’s research suggests that when people think about their futures there is normally also a tendency for activation of neural pathways associated with optimism (the rACC and the amygdala). Healthy people expect the future to be slightly better than it ends up, and thus tend to be less accurate when predicting future events than are people with mild depression. (The line of argument in the book is summarised in an extract published in The Guardian.)

Tali Sharot suggests that the optimism bias has evolved because it encourages people to try to transform their predictions into reality:
“The brain is organized in a way that enables optimistic beliefs to change the way we view and interact with the world around us, making optimism a self-fulfilling prophecy”.

Sharot recognizes that optimism can be a health and wealth hazard when it causes people to make risky choices. She suggests:
“if we are aware of the bias, we would should be able to remain optimistic – while at the same time being able to promote action that will guard us from the pitfalls of unrealistic optimism”.

One point that occurred to me while reading The Optimism Bias is that this bias may often compensate for other common biases such as risk aversion and loss aversion, which tend to pull in the opposite direction. (I doubt whether I am the first person to think of this. It occurred to me that the logical place to look for a discussion would be Daniel Kahneman’s Thinking, Fast and Slow, but I couldn’t find it even though his chapters discussing the optimism bias and loss aversion are in close proximity.) The research by Robb Rutledge, which I discussed in “What is the secret of happiness?” seems relevant. If we have chosen a particular strategy because of its potential to yield high average returns over the longer term, it is often better to stick with it even if outcomes are disappointing in the short term. Under those circumstances, realistic optimism would help us to reject the temptation to avoid further disappointment by lowering our expectations and adopting a low-risk/low-return strategy.

A point that should be emphasised is that optimistic expectations can only become self-fulfilling if they induce people to change their behaviour in ways that make them self-fulfilling. There is support for that view in recent research by Elizabeth Tenny, Jennifer Logg and Don Moore. This research suggests that the benefits of optimism lie mainly in encouraging people to increase their effort in order to improve performance.

Similar findings were obtained in research by Gigi Foster and Paul Frijters (abstract here) comparing the expectations of Australian students about the grades they were likely to achieve with the grades they actually achieved. Individuals with high self-esteem were found to over-predict their outcomes and to put in more effort than fellow-students with otherwise similar characteristics.

Humans do seem to have an inbuilt potential for realistic optimism that enables them to set goals that are not far beyond their reach and then inspires them to work hard to attain those goals. However, potential is like a glass half full. The processes that function autonomously within us do not necessarily ensure that we remain optimistic or that our optimism is tempered by realism. In order to attain and maintain realistic optimism we need to become sufficiently self-aware and equanimous to avoid the pitfalls of pessimism and unrealistic optimism.

I am having second thoughts about the extent to which an optimism bias should be considered normal. The short allele variant of the 5-HTTLPR, which is associated with stronger attentional bias toward negative stimuli, is apparently present in almost half of the population of countries for which data is available. Most of us view optimism as desirable, but many of us have to exert some effort in order to maintain an optimistic outlook.