What caused the narcissism epidemic?

It seems obvious that there is a narcissism epidemic in many countries: people taking selfies everywhere we look; adolescents saying that their goal in life is to become famous; celebrities behaving like gods; people exploding in rage in response to imagined affronts; charlatans, shysters and jerks everywhere betraying trust. Psychologists have been written books about it: “The Narcissism Epidemic”, by Jean Twenge and Keith Campbell, tracked scores of U.S. college students on the Narcissistic Personality Inventory (NPI) across generations and found that there had been an increase in narcissism.

Claims based on the NPI have been disputed by Kari Trzensniewski, who conducted research using a slightly different data set and found no increase in NPI scores. In the face of ambiguous evidence, I wonder whether it might be narcissistic of me to continue to accept that there is a narcissism epidemic. Nevertheless, I will persist. A national survey conducted in the U.S. suggests that about 10 percent of people in their 20’s have experienced symptoms of Narcissistic Personality Disorder (NPD) at some time during their lives. So, even if narcissism hasn’t been increasing it might still be reasonable to view it as an epidemic.

NPD is a long-term pattern of abnormal behavior characterized by exaggerated feelings of self-importance, exaggeration of achievements and talents, an excessive need for admiration, and a lack of understanding of others' feelings. The Mayo Clinic has published a longer list of symptoms that are referred to in the DSMv. Narcissism exists on a spectrum, ranging from exhibiting a few traits to the full-blown personality disorder.

Anne Manne, an Australian journalist has provided an interesting discussion of the nature and causes of narcissism in her book, The Life of I, The new culture of narcissism, updated edition published 2015.

She notes that Twenge and Campbell have taken aim at myths regarding the relationship between narcissism and self-esteem. They point out that narcissism is not just high self-esteem, in the sense of a quiet and sturdy confidence in oneself. Narcissists feel superior; they are arrogant and unwilling to accept criticism.

Twenge and Campbell also suggest that it is a myth that narcissism is a mask for low self-esteem. They are opposed to the psychodynamic view that narcissists are flawed people who are ‘hurt deep down inside’. According to their view a narcissist is ‘just a jerk’.

However, Manne notes that Erin Myer and Virgil Zeigler Hill found that narcissistic people revealed lower self-esteem than non-narcissistic people when a bogus lie detector test was used in assessing self-esteem and narcissism. Narcissists don’t like to admit weakness or vulnerability.

Manne points to a corresponding division of views on the causes of narcissism. Twenge and Campbell argue that what makes a child into a narcissist is spoiling, indulgence, an absence of moral discipline in building character, and a culture of excessive praise, of telling children they are special. However, findings of research by Lorna Otway and Vivian Vignoles, using recollections of young adults to test a range of views of the role of parenting in development of narcissism, support a Freudian view. Apparently future narcissists receive constant praise from their caregivers that is accompanied by implicit messages of coldness and rejection rather than warmth and acceptance. This helps explain the combination of grandiosity and fragility exhibited by many narcissists.

Manne also discusses evidence that infants whose dependency needs are rebuffed by parents tend to become aggressive adults. Studies by Alan Sroufe suggest that preschoolers forced to self-reliance too early tended to bully others and engage in repeated acts of cruelty. Their early experiences at home made such behaviour seem natural.

The author also draws attention to research suggesting that affluent families are not immune to problems arising from parents being emotionally distant from their children. While insisting on high levels of achievement, such parents are often indulgent towards bad behaviour.

Manne sees the problems of parenting as linked to limited government support for parental leave. After a brief discussion of this topic she concludes:

“This brave new world is a whole lot larger than its symptoms – the self-esteem movement or the college kids with unrealistic ambitions or the helicopter parents rushing in to rescue a child whose grades are poor. Another way of looking at narcissism is that it is a quality required for survival in the hyper-competitive paradise of the new capitalism”.

That is indeed another way to look at the issue. Manne attempts to support that view in the second part of her book, holding Ayn Rand responsible for the “new capitalism”. She refers to Rand as “a monstrously narcissistic character” and suggests that “she practiced what she preached” in her philosophy of selfishness.

The main problem I have with that claim is that some of Rand’s behaviour seems to me to have been more selfish – showing less regard for other people - than that of the heroes of her novels. The behaviour of the heroes of her novels was presumably intended to illustrate the selfishness that she saw as a virtue, but I have difficulty, as previously noted, in recognising these fictitious characters as being particularly selfish

At one point Manne states that Rand’s “heroes are all young, male, wealthy … “. That left me wondering whether Manne had ever taken the trouble to read Atlas Shrugged. If she had done so, or even if she had looked up the list of characters on the internet, she would have been aware that Dagny Taggart was female.

Manne’s claim that Rand promoted “an ideology of narcissism” can be much better answered by an Objectivist, than by a reader of Rand’s novels like myself.  John Galt said:

“Happiness is not to be achieved at the command of emotional whims. Happiness is not the satisfaction of whatever irrational wishes you might blindly attempt to indulge. Happiness is a state of non-contradictory joy – a joy without penalty or guilt, a joy that does not clash with any of your values and does not work for your own destruction, not the joy of escaping from your mind, but of using your mind’s fullest power, not the joy of faking reality, but of achieving values that are real, not the joy of a drunkard, but of a producer”. (Atlas Shrugged, p 1022)

Manne raves on about what she refers to as “the neoliberal revolution” as creating an ideological framework for narcissism to flourish at an individual level. Yet she doesn’t specify the nature of the incentives that could have caused that to occur. If “neoliberalism” means free markets, how do free markets provide an incentive for appointment of narcissistic business leaders? Under normal circumstances the last thing individual investors want is to have their wealth depend on the actions of a narcissistic chief executive.

Some investors might think it makes sense to take a punt on a narcissistic entrepreneur in highly regulated industries where there may be something to be gained by hoodwinking politicians and voters. Otherwise, why take the risk that the narcissist might run off with your money or spend it to enhance his own image?

It is disappointing that Manne has not considered whether narcissism might be a problem in occupations other than business. Markets expose private sector narcissists to financial disciplines for failure to deliver on their promises unless they can use their skills to persuade governments to bail them out. Casual observation suggests that some other occupations - such as politics and some parts of the media - provide a breeding ground for narcissism and a sanctuary for narcissists.

Anne Manne has not, in my view, made a persuasive case that Ayn Rand’s philosophy played a large role in the partial return to classical liberalism in the U.S., the U.K, and a few other countries including New Zealand and Australia, during the 1980s and 90s. And she certainly hasn’t made a persuasive case that free markets promote narcissism.

Nevertheless, I enjoyed reading The Life of I. I particularly enjoyed reading her explanation of the behaviour of Anders Breivik and Lance Armstrong. The book seems to provide a good introduction to psychological research on the nature of narcissism and parenting styles that lead to narcissism.

How do we know what we value?

“Although feelings are the one output of the adaptive unconscious that is likely to reach consciousness, sometimes even feelings are unconscious. And other contents of the adaptive unconscious, such as personality traits and goals, are likely to remain beneath the surface, unavailable to conscious scrutiny (the beam of the flashlight).”

The quoted passage is from Timothy Wilson’s book, Strangers to Ourselves: Discovering the adaptive unconscious. The author views the adaptive unconscious as a “necessary and extensive part of a highly efficient mind”. Its functions include “warning people of danger, setting goals, and initiating action in a sophisticated and efficient manner”.

The context of the quote is a discussion of introspection as a means by which people can “try to decipher their feelings, motives, traits, or values, not to mention what they want for dinner”. The “beam of the flashlight” refers to a metaphor in which the mind is thought of as a cave, with consciousness constituting those objects that are not currently in the beam of the flashlight. The quote seems to imply that our values and preferences are not necessarily easily accessible by just focussing our awareness inwards.

Tim Wilson argues that because people “cannot directly observe their nonconscious dispositions, they must try to infer them indirectly, by, for example, being good observers of their own behaviour”. He suggests that when we discover important truths about ourselves through introspection we do so by constructing stories about our lives, much as a biographer would. Trying to access unconscious goals and motives results in “a constructive process whereby the conscious self infers the nature of these states”.

I felt somewhat bemused when reading that - presumably because of my training as an economist. The idea of being able to discern our values and preferences from our behaviour seems to have more in common with the neoclassical economists’ notion of ‘revealed preference’ than with the view of many psychologists (and behavioural economists) that people are prone to make irrational choices because of cognitive biases that reflect non-conscious influences.

Of course, Tim Wilson does not suggest that the adaptive unconscious always makes the right choices for us. He notes that it is important to distinguish between “informed and uniformed gut feelings” by gathering as much information as possible to allow your “adaptive unconscious to make a stable, informed evaluation rather than an ill-informed one”.  His main point seems to be that in order to make good decisions, e.g. in choosing a spouse or buying a home, you need to avoid over-analysis by the conscious mind.

Does it make sense to try to try to infer your values from your past behaviour? If the aim of the exercise is self-improvement that approach might appear to be futile. If you see need for improvement in your behaviour, it isn’t immediately obvious how the values that can be inferred from your past behaviour could provide helpful guidance.

So, how can people bring their values to awareness in order to engage in self-improvement exercises? Tim Wilson has some suggestions, but before considering them it might be useful to consider approaches adopted by some psychologists engaged in therapy and personal training.

Acceptance and Commitment Therapy (ACT) places a heavy emphasis on living according to values, so the approach adopted by ACT therapists might be of particular interest. One approach used in ACT is the life compass, which ask people questions to elicit values in various domains of their lives – relationships, health, work, leisure etc. People are asked what is important or meaningful to them, what sorts of strengths or qualities they want to develop and what they want to stand for. That approach obviously works if you can find what you value by just shining the flashlight into your cave. But to do that you must have a fair amount of self-knowledge already, and you would probably have constructed a story about where your values have come from.

ACT offers a range of techniques to elicit values if they don’t readily come to consciousness. One technique noted by Russ Harris in ACT Made Simple is to imagine what you would love to hear people say about you, and what you stand for, in short speeches at your 80^th birthday party. (Dr Harris presumably doesn’t have many readers who are over 80.) In The Reality Slap, he suggests that it is also possible to elicit values by remembering a “sweet spot”, a memory that encapsulates some of life’s sweetness for you. After appreciating that memory, he asks people to notice the personal qualities they were exhibiting and what this reveals about the personal qualities they would like to embody.

The Authentic Happiness web site (stemming from Martin Seligman’s book of that name) has, among other things, an extensive questionnaire that enables people to discover their ‘signature strengths’. People taking the questionnaire are asked to what extent 240 statements describe themselves. The statements seem to be largely about dispositions rather than past behaviours, so seem to assume prior knowledge of dispositions.

The Enneagram Institute offers people an opportunity to discover more about their personality type through a questionnaire (the RHETI) which asks participants to choose between 144 paired statements relating to their past behaviour. One of the potential benefits of this approach is that it seems to offer a way for people to identify values that can guide them toward attainment of higher levels of personal development, without having to attempt to make fundamental personality changes.  For example, a person who has a persistent desire for self-control could see himself, or herself, as having many of the characteristics of a Reformer, and thereby see potential for growth by becoming more reasonable, and progressively acquiring greater wisdom. Some more examples might help to make the point: a person who seeks to avoid conflict through accommodation might have many characteristics of the Peacemaker, and see potential for growth by acknowledging her or his peacefulness and seeking to become indomitable; a person who is highly defensive much of the time might have many characteristics of a Loyalist, and see potential for growth by becoming more trusting, cooperative, reliable and courageous; and a person who is restless and constantly seeking stimulation might have many of the characteristics of an Enthusiast, and see potential for growth by becoming more productive and more grateful. Similar personal growth paths exist for the five other personality types.

A couple of the approaches described above bring values into conscious awareness through an explicit consideration of past behaviour. The sweet spot approach builds on selection of a particular memory, whereas the RHETI may help people to identify their potential by providing them with a systematic way to understand their past behaviour and personality. Unfortunately, although the RHETI is being widely used in personal training exercises, its predictions do not yet appear to have been subjected to a great deal of rigorous scientific testing.

One approach that Tim Wilson advocates is Pennebaker’s exercise which involves writing about the deepest thoughts and feelings associated with an important emotional issue. Although writing about emotional experiences is distressing in the short run, it apparently has positive long-run effects. The exercise seems to help people make sense of a negative event by constructing a meaningful narrative that explains it. A possible downside of this approach is that some people may dwell on negative life experiences by constantly revising their narratives. I expect that some people might also have a tendency to fuse with stories that make their lives miserable.

Tim Wilson acknowledges that some narratives are better than others. He writes:

"As with any biography, there are multiple ways of telling the story. A good biography, though, has to account for the facts of the person’s life and capture his or her inner goals and traits. The better a story does at accounting for the “data” of the person’s adaptive unconscious, the better off the person is. By recognizing their nonconscious goals, people are in a better position to act in ways to fulfill them, or to try to change them."

How can we change our non-conscious states in order to match our more positive self-stories? Tim Wilson suggests we follow Aristotle’s advice to acquire virtues by first putting them into action. We can change our feelings and traits by changing our behaviour. In order to “change some aspect of our adaptive unconscious, a good place to start is deliberately to begin acting like the person we want to be”.

Is economics becoming a branch of psychology?

I began pondering this question while reading Misbehaving, Richard Thaler’s entertaining and somewhat triumphalist account of his career in helping to establish behavioral economics. The fact that Thaler was made president of the American Economic Association in 2015 might signal growing acceptance within the profession that economics should be built on the insights that psychology provides about human motivation and behaviour, rather than on conventional neoclassical assumptions about individual rationality. For those who accept Lionel Robbins famous definition of economics as “a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” and consider the rise of behavioral economics in that context, it would not involve a huge leap to suggest that all economics is behavioral economics, and therefore a branch of psychology.

It is acknowledged that behavioral economists seem to behave in many respects more like economists than psychologists, but that could, perhaps, be interpreted as a clever use of psychology. In the absence of behavioural economics, it would have been easy for economists to continue to ignore psychologists who suggest that the it is not realistic to assume that individuals maximize utility. It has been much more difficult for economists to ignore one of their number who makes the same point, while suggesting that the assumption that humans behave like mythical Econs should be retained as a benchmark against which actual human behaviour should be assessed. Early in the book Thaler writes:

“Theories based on the assumption that everyone is an Econ should not be discarded. They remain useful as starting points for more realistic models” (p7).

When it suits his purpose I think Thaler also uses the conventional utility maximizing assumption as a normative benchmark (just as many economists have wrongly used the concept of perfect competition as a normative benchmark). Although he claims that it “has never been my point to say that there is something wrong with people”, a lot of his efforts have been directed toward suggesting that humans make systematic cognitive errors that can be ameliorated by the “nudges” provided by wise government agencies. I have previously argued (here and here) that while the libertarian paternalism Thaler advocates is preferable to coercive paternalism, people need to be vigilant to ensure that they not being nudged toward choices that are contrary to their interests. We need apps to advise us whether or not to accept the default options offered to us by “choice architects”.

I cannot resist feeling bemused that during the period while psychology was gradually being welcomed into economics, like a Trojan horse, neoclassical economists were widely held to be behaving like imperialists, invading the subject matter of other social sciences, following the leadership of Gary Becker. Paradoxically, using the neoclassical assumption of individual welfare maximization, economists have been able to provide some useful insights to the study crime, the family, education and many other topics. Even when disciplinary overreach was fairly obvious, as in the theory of rational drug addiction, it has been plausibly argued that people like Becker challenged researchers to develop alternative theories and to confront those theories with data. The challenge of economists’ imperialism lives on in popular discourse, such as Freakonomics, as well as universities.

Perhaps the Trojan horse of behavioural economics will thrive within the broad domain of economic imperialism. We might see a convergence of psychology and economics in the study of a wide range of issues.

However, as I see it, the fundamentals of economics will continue to remain largely unaffected by both behavioural economics and the conventional neoclassical assumptions about individual welfare maximization. The theory of choice is worthy of study, but it is not as central to economics as it has commonly been claimed to be. Lionel Robbins definition of economics as being about solving allocative problems has tended to distract from the more important role of economists in studying “the propensity in human nature” to “truck, barter, and exchange one thing for another” and how this promotes “general opulence” or human flourishing.  The quoted words were, of course, used by Adam Smith in The Wealth of Nations.

In his article “What should economists do?”, published in 1964, James Buchanan argued that the theory of choice should be removed from “its position of eminence in the economist’s thought processes”. He suggested that economists should concentrate their attention on human behaviour in market relationships and other voluntaristic exchange processes, and upon the various institutional arrangements that can arise as a result of this form of activity.

Since Vernon Smith has studied how such institutions can emerge in experimental settings, it is fitting that he should be given the last word here:

“Individual choice … is not where the action is in understanding economic performance and human achievement. … The main work of socioeconomic systems is in specialization and the exchange systems that make possible the wealth they create, not the minutiae of choice and preference representation. The functioning of these systems is far beyond the field of vision of the individual, but it should not be beyond the vision of economic science” (Rationality in Economics, p 156). 

Postscript:

By coincidence, not long after I had finished writing this post I was enjoying my daily quota of Bourgeois Equality by Deirdre McCloskey, when came across this:

“Nowadays the behavioral economics of, say, Dan Ariely does a job of demolishing claims of individual rationality in moderns. Yet it too commits the Weberian mistake of focusing on individual psychology instead of group sociology and market economics. The experimental economics of Vernon Smith, Bart Wilson, Erik Kimbrough, and others, by contrast, works always with groups, showing that a wisdom of crowds often prevails over psychological shortsightedness and calculative confusion. And by the way, it makes a good case that property arises without the help of the state or the nudging of the clerisy” (p 282).

What does economics tell us about making New Year's resolutions?

Opportunity cost was the first thing that came to mind the other day after the thought occurred that I should perhaps consider making a New Year’s resolution. That was probably because I just happened to be paying attention on the day the concept of opportunity cost was explained when I was at university many years ago. 

Opportunity cost is just a label. If you haven’t had the benefit of studying economics you might still be aware that the time and effort you spend making resolutions and trying to keep them could possibly be spent doing something more enjoyable. You may also be aware that there are emotional costs associated with making resolutions and then failing to keep them.

On the other hand, by now some of you will be thinking that opportunity costs are just excuses for inaction. You might want to urge me to consider the potential satisfaction of making resolutions that might enable me to become a healthier or better person.

That is why my mind now turns to the law of diminishing marginal utility. That law says, more or less, that as you obtain more of any good, the additional happiness you obtain from each additional unit tends to diminish. Every wine drinker should know that a larger increment of happiness is likely to be obtained from the first glass of wine than from the second, and a larger increment of happiness from the second than from the third, and so on. If the truth of that observation is not obvious to you on New Year’s eve, it might well become very obvious on New Year’s day.

It seems to me that the law of diminishing marginal utility applies to New Year’s resolutions in much the same way as to other goods. For example, a person who swears a great deal might gain some satisfaction if she can refrain from using foul language in the presence of children. The further increment she obtains from refraining from swearing in front of people whom she knows to be disgusted by the behaviour, might be somewhat smaller. The increments in satisfaction could be expected to become progressively smaller as she adds further classes of people or situations.

All this brings to mind the image of a scissors diagram, regarded as a thing of great beauty by many economists of my vintage. The downward sloping line in the diagram below represents the declining marginal utility of resolutions and the upward sloping lines represent the rising marginal cost of resolutions (expressed in utility terms). If you are having difficulty viewing the quantity of resolutions as a homogenous good, think of the horizontal axis as measuring the extent to which you might consider reducing your use of a particular swear word over the next year. 

I have drawn two cost curves in the diagram to illustrate how the optimal investment in resolutions would change if it became less costly to make and keep resolutions. The initial optimum is at point A, where our subject makes a relatively small investment in New Year’s resolutions. If it became less costly to make resolutions, the optimum would move to point B. At that point she would make more resolutions - and her total utility would be higher.

So, what does economics have to tell us about how to reduce the costs associated with New Year’s resolutions? An obvious place to look is behavioral economics. It is not difficult to find articles on the internet suggesting how we can use behavioral economics to help us to stick to our resolutions. Much of the underlying research is more in the field of psychology than economics, such as the work of Roy Baumeister on willpower (which I discussed here).

In my view the area of economics that has most potential to help us to understand and reduce the costs associated with making and keeping resolutions is ‘identity economics’. The key idea of identity economics – as explained in a book of that name by George Akerlof and Rachel Kranton - is that individuals gain satisfaction when their actions conform to the norms and ideals of their identity. In the way Kranton and Akerlof develop the concept, identity is determined to a large extent by the groups to which individuals belong. 

However, when you think about your own identity, as an autonomous individual, you are free to think of it as being defined by the qualities you value most highly - or identify with. (There is some relevant discussion in a recent post in which I reviewed Russ Harris’s book, The Happiness Trap.) Recent research by Anthony Burrow and Nathan Spreng, which suggests that having a purpose in life tends to impede impulsivity, points to the potential benefits of keeping in mind the qualities we value most highly.

This brings to mind the potential to draw a possibilities diagram showing trade-offs between some of the things I value. On one axis is excellence and on the other axis is tranquility. I will leave it to your imagination.

Postscript

On reflection, it doesn’t seem to make much sense to think in terms of trade-offs between excellence and tranquility. It might make more sense to think in terms of a trade-off between satisfaction with professional achievement and satisfaction with relationships, as shown below. An investment in emotional health might expand the possibilities available.

How can we avoid the happiness trap?

The idea that pursuit of happiness can be futile has been around for thousands of years. In my last post, I discussed J S Mill’s contribution in the 19^th Century. In this post I will discuss the contribution made by Russ Harris in The Happiness Trap: Stop struggling, start living, which was first published in 2007. This book is based on Acceptance and Commitment Therapy (ACT) developed by Steven Hayes.

Russ Harris suggests that many people are caught in a happiness trap, which is based on four myths:

1. Happiness is the natural state for all human beings;
2. If you’re not happy, you’re defective;
3. To create a better life, we must get rid of negative feelings; and
4. You should be able to control what you think and feel.

It would be easy for me to become side-tracked into a discussion of how prevalent the happiness trap might be. The survey evidence suggests to me that in high income countries most people are actually fairly happy, but the picture that emerges does differ depending on the way happiness is measured. For example, at a national level high levels of positive emotion are not always accompanied by low levels of negative emotion. It is also possible for a substantial proportion of the population to experience chronic anxiety and depression at some time during their lives, despite the sustained existence of relatively high average happiness levels.

The important points are that too many people are falling into the trap of struggling to get rid of negative feelings and of attempting to control what they think and feel. I don’t think it is a myth that happiness is the natural state for most humans to be in: a majority of humans seem to have an inbuilt optimism bias. Nevertheless, there are times when it is natural, healthy and appropriate for humans to have negative thoughts and feelings. We cannot avoid having negative thoughts and feelings, but we can exercise a great deal of control over our responses to thoughts and feelings.

Harris argues that happiness has two very different meanings. The first refers to a feeling: a sense of pleasure, gladness or gratification. The second refers to a rich, full and meaningful life. The happiness trap is associated with craving the first form of happiness. If we seek to live a full and meaningful life at various times we can expect to experience the full range of human emotions, including sadness, fear and anger.

The author writes:

“The reality is, life involves pain. There is no getting away from it. As human beings we are all faced with the fact that sooner or later we will grow infirm, get sick and die. …”

But he provides grounds for hope:

“The good news is that, although we can’t avoid such pain, we can learn to handle it much better – to make room for it, rise above it and create a life worth living”.

So, how does the book suggest we go about creating lives that are worth living?  As I read it, the book does this by suggesting ways in which we can exercise and develop our personal powers (or capabilities) in relation to thoughts, sensations, values and goals. The underlying idea seems to be that if we manage to cope with unhelpful thoughts and unpleasant feelings, identify and endorse the values we want to guide us, set sensible goals for ourselves, act purposefully and engage fully in what we are doing, we will end up with lives that are worth living. That makes a lot of sense to me.

The approach suggested for coping with unhelpful thoughts or stories is to defuse them. The simplest technique suggested is to give yourself some distance from the thought by observing, “I am having the thought that …”. Many other techniques of defusion are suggested. One I particularly like is to thank my mind for the unhelpful advice it is giving me, and then ignore it.

The approach suggested for coping with unpleasant feelings and sensations is expansion -  that means making room for them rather than struggling with them. The three basic steps of expansion are: to observe the feelings and sensations in your body; breath into them; and let them come and go, or just stay there. If that sounds like Vipassana meditation, there are probably good reasons for that.

On the basis of my personal experience (as a consumer of self-help advice rather than a professional) I have doubts about the author’s recommendation to focus on the most uncomfortable sensation first. Acceptance of unpleasant sensations seems easier in the context of scanning my whole body, noticing and accepting all the sensations. Nevertheless, I particularly liked this comment:

“As you practice this technique one of two things will happen: either your feelings will change or they won’t. It doesn’t matter either way, because this technique is not about changing your feelings – it is about accepting them”. 

Russ Harris is of course not the first person to argue that we need to be guided by our values – our deepest desires relating to how we want to be and what we stand for – in order to have a rich full and meaningful life. For example, Aristotle emphasized the importance of values to individual flourishing, and Ayn Rand had John Galt develop a cogent argument leading to a definition of happiness as “that state of consciousness which proceeds from the achievement of one’s values” (Atlas Shrugged, p 1014). Harris underlines the importance of values by referring to Viktor Frankl’s observation that the prisoners who survived in Auschwitz were often not the physically fittest, but those who were most connected with something they valued such as a loving relationship with their children.

Harris suggests that people identify their values in all domains of their lives: family, marriage, friendships, employment, personal development, recreation and leisure, spirituality, community, environment, health etc. Many of the questions involve asking what sort of person we want to be and what qualities we want to bring to our experiences.

The next step is to set goals and action plans relating to our values for each domain of our lives. When reading about it, the process seemed as though it might be just as boring as corporate planning, but that need not be so. Findings of recent neural research (by Christopher Cascio and colleagues at the University of Pennsylvania) indicate that a focus on things we value in life -  referred to as self-affirmation – is associated with greater activation in parts of the brain that are known to be involved in expecting and receiving reward (the ventral striatum and the ventral medial prefrontal cortex).  A focus on what is most valued in a future context also involves more neural activity in areas associated with thinking about the self (the medial prefrontal cortex and posterior cingulate cortex).

It is worth remembering that the point of acting in accordance with our values is about the quality of our journeys through life rather than about reaching ultimate destinations.  As Russ Harris puts it:

“When we move in a valued direction, every moment of our journey becomes meaningful”.

I have written enough to provide a few hints about the contents of the book. My one criticism of the book (as a consumer of self-help products) is its failure to recognize that some cognitive approaches, e.g. Neuro-Semantics, can help people to adopt the frames of mind that they value, without having to engage in a struggle against negative thinking. Leaving that aside, in my view, this book has great value in helping readers to work out what they have to accept in life, what they can hope to change, and what commitments they have to make to make their lives more meaningful.

Why should we expect a close association between autonomy, realism and happiness in a worthwhile life?

Winton's amateurish artwork

Neera Badhwar writes:

“The main argument of my book can be stated in the following five propositions:

(i)    Well-being as the HPG (highest prudential good) consists of happiness in an objectively worthwhile life;

(ii)   Someone who leads such a life must be characteristically autonomous and reality-orientated, that is, disposed to think for herself and seek truth or understanding about important aspects of her own life and human life in general, and disposed to act on her understanding when circumstances permit;

(iii)   To the extent that someone with these traits succeeds in achieving understanding and acting on it when circumstances permit, she is realistic.

(iv)   To the extent that she is realistic, she is virtuous.

(v)     Hence, well-being as the HPG requires virtue”. 

"Wellbeing:Happiness in a Worthwhile Life", 2014.

I don’t have many problems with the first three propositions. Those propositions have been briefly discussed in my last two posts: “Is human well-being subjective or objective?” and “Is there a close relationship between autonomy and realism?” It is important to be clear that a realistic orientation is consistent with optimistic (hopeful) appraisals of future opportunities. Indeed, healthy human functioning seems to be characterized by realistic optimism. I will write something about that in my next post.

Coming back to the line of argument in Neera Badhwar's book, it was not immediately obvious to me why a person who is autonomous and realistic should be expected to be virtuous (point iv). Examples readily come to mind of situations where ‘being realistic’ appears to involve compromises in which virtue is sacrificed for pragmatic reasons. I will try to explain, briefly, how the author reaches the conclusion that virtue is positively related to realism.

The author accepts Aristotle’s view of virtue as an integrated intellectual-emotional disposition to think, feel, and act “at the right times, about the right things, towards the right people, for the right end, and in the right way”, and to take pleasure in so doing. Her focus is on the cardinal virtues of justice, honesty, courage, integrity, kindness, and the virtues that are partly constitutive of these virtues: practical wisdom, and regard for self and others.

In Chapter 4 she suggests:

“To the extent that an autonomous/ reality-oriented person achieves understanding of the true and the good, and acquires the disposition to deliberate, feel, and act accordingly, he is realistic and morally virtuous” (p. 108).

After reading that chapter I was left feeling sceptical about the line of argument developed. That surprised me because I have previously responded positively to other attempts to link well-being with virtues. (For example, see my previous comments on the views of Martin Seligman about cultivation of signature virtues.) As I see it the problem is that it is necessary to have or acquire a disposition to cultivate the virtues - as well as a somewhat optimistic disposition - before it is possible for the chemistry of autonomy and reality-orientation to produce happiness in a worthwhile life.

The problem is resolved in a later chapter. In Chapter 6 Neera Badhwar observes that nature has endowed humans with positive self- and other-regarding natural virtues and that in their early moral development people tend to acquire emotional dispositions to tell the truth, risk danger, help and empathize. She notes that the idea that well-tempered emotions are necessary for characteristically making the right choices is now widely recognized in philosophical literature and supported by psychological and neurological research.

The author argues that virtue and well-being both involve emotional, deliberative and evaluative dispositions. She notes that the cultivations of those dispositions is “to a significant extent up to us”. She adds:

“Furthermore, the integration of emotional dispositions with intellectual (especially deliberative) dispositions that is required by virtue, makes virtue highly conducive to happiness, since a common source of unhappiness is conflict between our emotions and evaluations. Indeed, since the virtuous agent necessarily takes pleasure or joy in acting virtuously, virtuous activity is inherently productive of some happiness. It also promotes happiness insofar as the achievement of worthwhile goals is a source of happiness, and virtuous activity enables the virtuous agent to achieve them” (p 152-3).

The way the author summarised her argument at the beginning of the book seems to me to have been unnecessarily provocative. After reading the book as a whole, however, I doubt whether many people would have fundamental objections to the idea that an objectively worthwhile life requires virtue and that cultivation of virtue requires autonomy and reality orientation. Indeed, if we accept that widespread regard for the traditional virtues must have evolved because practice of those moral intuitions served the individual and collective interests of humans, it would be strange if individuals who endorse and cultivate those virtues in their own lives did not obtain happiness from seeking to make their lives worthwhile.

In my view Neera Badhwar has presented strong reasons in support of the view that the chances for an individual to achieve happiness in an objectively worthwhile life depend heavily on the extent to which her/his life is characterized by autonomy and reality-orientation. 

Is there a close relationship between autonomy and realism?

Is this an empirical question or a conceptual question?

If it is viewed as an empirical question the obvious way to answer it would be to define autonomy, define realism and then test for an empirical relationship. I have made a quick attempt to do that in the chart below, using the excellent data analysis facility of the World Values Survey. The autonomy index used is the sub-index constructed by Christian Welzel for his emancipative values index.  Welzel’s approach is based on survey respondents’ views of desirable child qualities: an emphasis on independence and imagination is considered to be positive in terms of the value placed on autonomy whereas an emphasis on obedience is considered to be negative. The realism indicator I used is based on responses to the statement: “We depend too much on science and not enough on faith”. The data shown are from an Australian survey conducted in 2012.

The chart seems to show that people who place high value on autonomy tend to be more realistic. However, this is a fairly frivolous piece of research. Questions can be raised about the relevance of an Australian survey to people in other countries, the small size of the sample etc. More importantly, for present purposes, the plausibility of the depicted relationship depends on the validity of the indicators of autonomy and realism used in the chart.

The empirical approach to answering the question cannot avoid conceptual issues relating to selection of appropriate indicators. Perhaps the question should be viewed as entirely conceptual.

In Well-being: Happiness in a worthwhile life, Neera Badhwar presents a philosophical argument that autonomy and reality-orientation are two facets of the same character trait. (In my last post I discussed another issue arising from this book, the question of whether human well-being should be viewed as objective or subjective.)

In brief, the argument is as follows. An autonomous person is self-governing. When we live autonomously, we “play an active role in shaping our individual selves, instead of slavishly following others, or surrendering direction of our lives to our fantasies, illusions, momentary urges or inertia”. Autonomous individuals have minds of their own – they rely on their own epistemic powers to form judgements about important issues, including the issue of how far they can rely on their own judgement. They are goal-directed and have a reliable self in charge - they not so self-confident as to be self-deluded. In order to have a reliable self in charge a person has to be reality-oriented. Autonomous individuals also accept responsibility for their actions, and in order to do that they must be reality oriented.

The difference between autonomy and reality-orientation lies only in their focus:

“The focus of reality-orientation is gaining the truth about, or understanding of, important things and responding accordingly, while that of autonomy is living by one’s own judgements and decisions”.

Much of Neera Badhwar’s discussion of the relationship between autonomy and realism is taken up with defence of her view against various possible criticisms. I found her discussion of claims that realism is bad for people to be particularly interesting. (The relevant chapter is based on a previously published article.)

The author concedes that when facts are devastating we might be better off remaining ignorant of them – some happiness based on ignorance is better than total misery based on knowledge. However, she is critical of empirical research which purports to show that holding positive illusions about oneself tends to promote happiness. She points to many problems with the research leading to these claims. She also implies that it is not possible to draw useful conclusions from the research findings, even if they are accepted at face value.  People who have positive illusions about their abilities could also be expected to have positive illusions about their happiness:

“the emotions and evaluations that express or constitute their illusions about their abilities, achievements, and future prospects … together entail a sense of meaning and enjoyment of life. … It follows then that insofar as happiness consists of these unwarranted evaluations and emotions, the connection between happiness and illusions is a conceptual, and not a causal, one”.

I have to think more about what means in relation to neural research findings which suggest that it is normal for humans to have an inbuilt optimistic bias. When I look around me most of the people I see seem to have both a realistic orientation and tendency to look on the bright side of life. 

The author makes clear that she is not opposed to optimism. She recognizes that self-fulfilling attitudes, whether positive or negative, are a pervasive aspect of human psychology. The point she is making is that realistic optimism about oneself and one’s future beats unrealistic optimism – and thus recognizes that it is possible to have a realistic basis for optimism (as I have previously argued on this blog).

Neera Badhwar notes that Abraham Maslow and Carl Rogers, leaders of the human potential movement, viewed realism as central to mental health and well-being. She notes that in Rogers' view the fully functioning individual is open to experience, distorting neither his perceptions of the world to fit his conception of himself, nor his conception of himself to fit his perceptions of the world. I find this particularly interesting in the light of Rogers’ use of Alfred Korzybski’s notion that “the map is not the territory”. Carl Rogers recognized that our maps do not serve us well if they are not realistic.

Is work-life balance a big problem in Australia?

There was a time, not long ago, that I avoided using the term “work-life balance” on the grounds that work is a normal part of life. Writing about work-life balance makes about as much sense as writing about sleep-life balance. But here I am now, writing about work-life balance! Never mind, everyone knows that what I am actually writing about is the balance between work and other aspects of life, including leisure, spending time with family members, and sleeping.

According to the OECD’s Better Life index, work-life balance in Australia is among the worst in the OECD. Australia’s ranking on this criterion is even below that of the United States. The indicators used by the OECD to assess work-life balance are the percentage of employees working very long hours, and time devoted to leisure and personal care. Australia’s ranking is 30/36 on both those indicators.

Do those indicators accurately reflect the impact of hours of work on the well-being of individuals? In order to answer that question it makes sense to look at the way hours of work impact on life satisfaction and other measures of emotional health. The fact that people are working long hours does not necessarily mean that they are irrational, or even that they are choosing to sacrifice some life satisfaction in order to achieve other objectives that are more important to them. They might just like working.

A few years ago, in an update of one of my more popular posts - entitled “How much does over-work affect happiness?” -  I ended up suggesting (not surprisingly) that life satisfaction data might help to answer that question. Since then I have wondered from time to time why I had not seen any studies using Australian survey data to shed light on the issue. I obviously hadn’t looked!

An article by Mark Wooden, Diana Warren and Robert Drago entitled “Working time mismatch and subjective well-being”, published in 2009, uses HILDA panel survey data to examine the relationship between working hours and levels of work and job satisfaction in Australia. The authors found that neither job satisfaction nor life satisfaction varied much with number of hours worked when the number of hours worked was consistent with the preferences of individual workers. That suggests the OECDs work-life balance indicators are not particularly relevant to the well-being of Australian workers.

Wooden et. al. found that the mismatch between the preferred working hours of individuals and their actual working hours has a significant impact on job satisfaction and life satisfaction. Both underemployment and overemployment have similar negative impacts on job satisfaction, but overemployment has larger negative impacts on life satisfaction than does underemployment. The authors suggest that although the absolute impacts on subjective well-being appear small, “the measured impact of overemployment should be viewed as important”, relative to “quite serious events, such as the onset of severe illness or injury”.

More recent research by Natalie Skinner and Barbara Pocock published in the latest Australian Work and Life Index (AWALI 2014) makes use of a flourishing index (the Huppert and So index discussed in my last post) encompassing characteristics of positive mental health such as optimism, resilience and competence. The survey results suggest that the rate of flourishing among Australian workers is higher than that for European workers. The difference is particularly marked for women workers, with 41% estimated to be flourishing in Australia, compared with only 33% in EU countries. I wonder how that can be explained.

The authors also found that rates of flourishing do not vary with length of work hours, but do vary according to whether working hours fit with the preferences of individual workers. The results are depicted in the chart below.

The rates of flourishing are much lower among women who would prefer more work than among the other categories. (The authors also found that working unsocial hours (weekends, evenings/nights) was associated with lower rates of flourishing for men.)

In order to show that mismatch between actual and preferred hours of work is a big problem in Australia it would be necessary to show that working hour mismatches tend to persist over time. In fact, research by Robert Breunig, Xiaodong Gong and Gordon Leslie using the HILDA data base suggests that most working hour mismatch problems are resolved within one year. Full-time workers who prefer to work less are the only group for which this is not true – the persistence of mismatches is just over 50 percent for this group, but declines in a predictable way over longer time periods. The evidence suggests that workers often resolve mismatches when they change employers.

My conclusion is that people who argue that work-life balance is a big problem for the well-being of Australians have been talking through their hats.

Do major cities create unhappy Australians?

Sydney's eastern suburbs

“Major cities create unhappy Australians”. That headline jumped out at me when I was doing an internet search recently. The source was The Melbourne Newsroom – a media unit at the University of Melbourne. The news release tells us that Australians who live in rural locations or towns of less than 1,000 residents “have significantly higher life satisfaction than those living in major cities”. (Major cities have more than 100,000 residents.)

The news release is linked to a recent publication based on the highly regarded HILDA survey undertaken by Melbourne University. The survey results suggest a boost to average life satisfaction (on the 11 point scale from 0 to 10) of 0.127 points for females and 0.108 points for males from living in a rural location or town rather than a major city. That might seem small, but it appears to imply that living in a major city has an adverse impact on life satisfaction of similar magnitude to being unemployed or divorced.

The authors of the HILDA publication conclude:

“other things being equal, the major cities are the least desirable places to live”.

The qualification in that statement is important. The authors go on to point out that the undesirability of living in cities is somewhat counteracted by the fact that the major cities contain areas of greatest socio-economic advantage.  Life satisfaction is influenced by the effects of the relative socio-economic advantage or disadvantage of the area in which an individual lives.

The main reason I was sceptical when I read the headline “Major cities create unhappy Australians” was because earlier in the day I had read a paper by Arthur Grimes and Marc Reinhardt which found that the differences between life satisfaction in rural and urban areas in other high-income OECD countries disappeared in a model controlling for other variables. The other variables controlled for were own income and reference income (mean income within a country of individuals of the same gender, age and employment status).

A study examining differences between life satisfaction of rural and urban residents of Victoria, undertaken a decade ago by Dianne Vella-Brodrick et al, also found that the significance of rurality disappeared when other variables were controlled for. The other variables in the model included satisfaction with community and perceived level of satisfaction with distance from services.

In a post I wrote on this blog a few years ago I considered the differences at a regional level between the stories told by a range of wellbeing indicators in Victoria. The (rural) local government areas (LGAs) with higher average subjective well-being (SWB) also tended to have higher ratings in terms of satisfaction with being part of the community, social support (ability to get help from friends), citizen engagement (e.g. attending town meetings, writing to politicians), safety (e.g. feeling safe walking in the local area at night) and volunteering. However, those LGAs tended to have lower household income, lower satisfaction with work-life balance and less acceptance of diverse cultures. The latter variables tended to have higher values in Melbourne and in LGAs close to Melbourne.

Do those results suggest major cities create unhappy Australians? I don’t think so. As discussed in a more recent post, major cities in Australia are ranked among the most liveable in the world. People who choose to live in major cities may well do so for good reasons, in full knowledge that they are making choices that are likely to reduce their life satisfaction. Life satisfaction is important, but it is not the only argument in individuals’ utility functions. For example, it can be rational for people to sacrifice some life satisfaction now to obtain more life satisfaction later (e.g. by accumulating wealth to fund their retirement in a more pleasant location). There is also some evidence that many people are prepared to sacrifice their own happiness in making location choices in order to provide better opportunities for their children.

Should self-funded retirees be concerned that interest rates on term deposits have declined?

Some readers will wonder why I am bothering to ask this question. It appears to be fairly obvious that people who are relying on interest on term deposits to fund their retirement must have greater difficult in surviving without drawing upon their capital when interest rates are as low as they are now.

However, it is by no means clear that the relevant interest rate is lower now than it has been over most of the last 15 years or so.

So, what is the relevant interest rate? First, nominal interest rates should be adjusted for taxation since the interest income that people are able to spend is the amount left after tax has been paid.

Second, it is also necessary to take inflation into account in the calculation. Inflation tends to deplete the purchasing power of the amount deposited, so some part of the after-tax interest has to be saved in order to prevent the real value of the nest egg from being depleted. Retirees who do not take inflation into account in their calculations are suffering from money illusion - an affliction that enables them to spend their children’s inheritances without feeling any guilt until they realize how much the real value of those sums have depleted.

So, if a retiree is intent on preserving the real value of her capital, the amount of interest income available to be spent is real after-tax interest. You might well ask why a retiree would want to preserve the real value of her capital. That is a very good question. If she has saved the funds to spend during retirement, it does not make any sense for her to be obsessed with the idea of living on interest and preserving capital. The important point is that awareness of the real after-tax interest rate might help her to avoid depleting the real value of her savings more rapidly than she intended.

The chart below shows trends in Australian interest rates on one year bank term deposits, after-tax interest rates on those deposits assuming a marginal tax rate of 30%, and real after-tax interest rates (deducting the CPI inflation rate for the previous 12 months). The data used in the chart is sourced from the Reserve Bank of Australia.

From the chart it looks to me as though it is about 15 years since retirees have been able to spend any of their interest income from term deposits without depleting the real value of their savings. 

It is easy enough to understand that some elderly people might suffer from money illusion and consider it to be sinful to deviate from time-honoured prudential rules about living off nominal interest. One would hope that professionals in the investment advice industry would encourage such people to modify their views somewhat to take account of tax and inflation.

However, some senior people in the investment advice industry have been encouraging the view that low interest rates have reduced the real spending power of retirees. For example, Jeremy Cooper, chairman of retirement income at Challenger Ltd, and the man who chaired the 2010 review of the superannuation system, has been reported in The Australian as saying:

 “Back when bank deposit rates were around 6 and 7 per cent there was no great problem with self-funded retirees relying on bank interest”.

In the same article, Jeff Rogers, chief investment officer of IPAC funds at AMP Capital, made a similar point. He is reported as saying bank deposit rates “will now adjust to just below 3 per cent, so with core inflation at around 2.4 per cent your real spending power is very small” in a self-funded retirement and warns that even if interest rates do start moving up again, “they won’t be going back up any time soon to the level that provided bank interest of 6 to 7 per cent’’. (Article by Andrew Main, ‘Risk rules for retirees reliant on bank interest’, May 6, 2015.)

It looks to me as though the after-tax real rate was close to zero when bank deposit rates were around 6 or 7 per cent, just as it is now.