What are the basic goods of a flourishing human?

A good place to begin is with the discussion of the basic goods of “the good life”, by Robert and Edward Skidelsky in their book How Much is Enough (2012). The relevant discussion is in Chapter 6, entitled ‘Elements of the Good Life’. I published a somewhat critical review of the book on this blog some years ago, but I saw some merit in the authors discussion of human flourishing.

The authors adopt the following criteria to identify basic goods:

Universality: not specific to eras or cultures;

Finality: not just serving as a means to a more basic good;

Sui generis: not incorporated in some other good;

Indispensability: lack of the good leads to loss or harm.

I accept those criteria.

The authors identify the following seven basic goods:

• Health: ‘‘the full functioning of the body, the perfection of our animal natures”.
• Security: ‘‘an individual’s justified expectation that his life will continue more or less in its accustomed course, undisturbed by war, crime, revolution or major social and economic upheavals”.
• Respect: an individual’s feeling that others ‘‘regard his views and interests as worthy of consideration, as things not to be ignored or trampled on”.
• Personality: ‘‘the ability to frame and execute a plan of life reflective of one’s tastes, temperament and conception of the good”.
• Harmony with Nature: ‘‘a sense of kinship with animals, plants, and landscapes”.
• Friendship: ‘‘all robust, affectionate relationships”, including work relationships etc. as well as family relationships.
• Leisure: “that which we do for its own sake”, not just time off work.

That list summarises 17 pages of discussion, so it may not do justice to the authors’ deliberations. Nevertheless, it provides a basis to consider whether items have been identified appropriately, and whether anything important has been left out.

Health is obviously an essential characteristic of a flourishing human. The authors want to discourage “an obsession with longevity”, but it is reasonable to assert that flourishing involves living healthily for the term of one’s natural life.

Security is important, but it serves as a means to other goods, including a long and healthy life and psychological well-being (an important omission from the authors’ list of basic goods).

Having others respect of one’s views and interests feels good, but it isn’t indispensable to individual flourishing. Respect for one’s natural rights (life, liberty and property) is certainly indispensable, but serves as a means to other goods, including the ability to live a long and healthy life, interact with others for mutual benefit, and to the acquire human and physical capital that contributes to flourishing.

“Personality” does not seem to capture adequately the ability to frame and execute a plan of life reflective of one’s tastes, temperament and conception of the good. The authors use the term personality, rather than autonomy or practical reason, because it implies “spontaneity, individuality and spirit”. Those aspects of personality could be more appropriately incorporated under psychological well-being. The basic good corresponding to framing and executing a plan of life seems to me to be best described as accepting responsibility for self-direction.

Living in harmony with nature is important to human flourishing, and not just because of environmental impacts on human health and well-being. As I see it, the motivation for living in harmony with nature stems from deep-seated intuitions about our kinship with other living things.

Friendship doesn’t seem the most appropriate word to capture the wide variety of relationships that the authors put under this heading. The relevant basic good seems to me to be positive relationships.

Leisure is usually thought of as time off work, rather than engagement in doing things for their own sake. Martin Seligman uses the term ‘engagement’ to refer to the relevant basic good in his book Flourish (2011).

The other four elements of well-being identified in Seligman’s PERMA acronym (discussed here) are positive emotion, relationships, meaning and achievement. Of these, Skidelsky and Skidelsky only directly acknowledge relationships as an element of the good life. It seems to me that positive emotion and a sense of achievement are essential characteristics of a flourishing human.

Meaning requires a little more discussion. Seligman defines ‘meaning’ as belonging to and serving something that you believe is bigger than the self. This makes sense if serving the self means pursuit of personal pleasure. Those who see their lives as meaningful could be expected to value more things in life than their own pleasure.

So, here are the basic goods that I would expect a flourishing human to have:

1.  The prospect of a long and healthy life.
2. Wise and well-informed self-direction.
3.  Positive relationships with family, friends, colleagues, acquaintances and trading partners.
4. Psychological well-being: emotional stability, positive emotion, satisfaction with material living standards, engagement in doing things for their own sake and learning new things, perception of life as meaningful, a sense of accomplishment, optimism, resilience, vitality, integrity, and self-respect.
5. Living in harmony with nature.

What do I plan to do with this list? My interest is in the factors that lead to differences in opportunities for human flourishing in different countries. For example, which are the countries where some person chosen at random is likely to have the best prospects of a long and healthy life? How can we explain why the prospects for that individual are better in those countries?

Such questions will be explored in later posts.

Isn't it good to be able to get what you want by helping others to get what they want?

When I was at university studying neoclassical welfare economics - about half a century ago - the standard discussion of the benefits and limitations of free markets began with a demonstration that, under certain assumptions, individuals with stable and internally consistent preferences could maximize their utility through voluntary transactions. As I write, I have a picture in my mind of neat sets of indifference curves in an Edgeworth Box, rather than the gains from trade diagram shown above.

Of course, in the 1960s and 70s a great deal of attention was given to market failure stemming from violation of competitive market assumptions and the existence of externalities. Since then, research by behavioural economists has provided evidence that individuals’ preferences tend to be context-dependent, rather than stable and internally consistent. For example, as we all know, what we choose to buy may be influenced by the placement of items on supermarket shelves.

Just as evidence of market failure led many economists to advocate remedial government interventions, evidence that individuals’ preferences tend to be context-dependent has been used by some behavioural economists to argue for paternalistic interventions to nudge people to make better choices. Wise economists urge that consideration should also be given to government failure - the tendency for government intervention to make matters worse even when politicians intend to produce better outcomes.

Robert Sugden has shone light through the smog caused by the standard neoclassical assumptions about individual preferences in his recently published book, The Community of Advantage. Sugden dispenses with assumptions about individual preferences by substituting the principle of individual opportunity – the idea that individuals will choose to have more opportunities rather than less.

Sugden’s book has been praised by some eminent scholars working at the interface between economics, psychology and ethics. It is pleasing that Cass Sunstein, whose advocacy of paternalistic nudges is challenged in the book, describes it as “one of the very few most important explorations of liberty in the last half-century.

Sugden makes the powerful point that there is no basis for behavioural economists to interpret contraventions of the standard neoclassical assumptions as necessarily attributable to cognitive error or self-control problems. There is no known psychological foundation for human decision-making to be modelled as “a neoclassically rational inner agent, trapped inside and constrained by an outer psychological shell”.

Nevertheless, humans obviously make cognitive errors and experience self-control problems. Should economists wash their hands of those problems and leave them for psychologists to deal with? Sugden suggests that economists may be able to help by adopting a contractarian approach – addressing their recommendations to individuals - usually by showing them how they can coordinate their behaviour to achieve mutual benefit - rather than addressing recommendations to paternalistic governments. It is consistent with a contractarian approach for economists to point out the mistakes that individuals are liable to make and to suggest types of choice architecture (e.g. nudges) that they could use, if they wanted, to avoid making those mistakes.

One of the highlights of the book is the perception it offers of the workings of “the invisible hand” of the market. The invisible hand is sometimes portrayed as something that has to be mysterious since it is able to convert self-interest into community benefits. Sugden suggests that the invisible hand is far from mysterious when perceived in terms of the activities of profit-seeking traders looking for arbitrage opportunities. If some individuals are willing to sell something at a lower price than other individuals are willing to pay to buy it, traders can take advantage of the profit opportunities of that situation. From the perspective of the buyers and sellers the transaction helps realize an opportunity for mutual benefit, whether traders are involved or not.

As I see it, from an individual’s perspective the market provides expanded opportunities along the lines suggested in the gains from trade diagram shown above. A person who subsists without trading with others has little leisure time left after eking out a living. By participating in trade - earning a market income in this example - her consumption possibilities are expanded. She is able to get more of what she wants – more leisure and/or more other goods - by helping others to get what they want.

Opportunities for mutual benefit are not limited to market exchange. Mutual benefit is possible in many different types of cooperative interaction. Sugden provides an insightful analysis of team reasoning, contrasting a contractarian approach in which individual team members seek to achieve mutual benefit with the alternative of perceiving the team as a single entity and seeking to maximize the overall good of the team, as judged from some neutral viewpoint.

The author’s analysis of adherence to voluntary practices is also insightful. He notes that individuals realize mutual benefits directly by conforming to voluntary practices, e.g. tipping conventions, because regularities of behaviour provide salient benchmarks for expectations about one another in specific interactions. By conforming to the practice, they also sustain the expectations upon which it depends and help to maintain it as an institution.

In my view, the most important contribution of the book is its discussion of the ethics of intending mutual benefit. A long-standing and recurring theme of criticism of market exchange is that it involves extrinsic motivations that are not virtuous. That line of thinking implies, implausibly, that the intrinsic satisfaction that I obtain from blogging might evaporate if I were to obtain monetary rewards for my efforts. Sugden observes that when people participate in markets they can act with the intention of achieving mutual benefit, rather than personal benefit. He urges readers to adopt the following principle of mutual benefit:

“When participating with others in a voluntary interaction, and for as long as others’ behaviour in that interaction is consistent with this very principle, behave in such a way that the other participants are able to satisfy normal expectations about the consequences of the interaction for them."

The author explains that one of the merits of the principle of mutual benefit is that what it requires of us individually is independent of the motivations of the people with whom we interact. It is in our interests to seek mutual benefit in interactions with as many other people as possible. The principle never requires us to make judgements about another person’s intentions.

The Community of Advantage is the best book I have read about the economics of human flourishing. This brief review has provided only a glimpse of what it is about. Hopefully, it has whetted your appetite to read the book.

The book has raised several issues that I hope to be able to explore further on this blog:

• Is the principle of mutual benefit consistent with the primacy of personal responsibility as discussed by Douglas Den Uyl and Douglas Rasmussen in The Perfectionist Turn?
• When is it possible for economists who are engaged in provision of public policy advice to adopt a contractarian approach?
• Does the principle of mutual benefit mesh well with the views of Elinor Ostrom on management of common property resources, the views of Vincent Ostrom on politics, and the views of Max Borders about the prospects of a Social Singularity?

Where is the best place to live?

The pathway above Orion beach, Vincentia, NSW, Australia

Over the last few months I have had personal reasons to ponder this question. My wife and I decided that the time had come for us to move closer to family and downsize.

I can’t claim that I reviewed research relating to the question in a systematic way before we decided where we should live. However, I have been reading and writing about happiness research for over a decade, so that probably had some influence.

Since we made our decision I have read some of the more recent literature on the impact of happiness of location. Perhaps my recent reading could be explained in terms of seeking additional evidence to support the decision we have made, but I do find the topic intrinsically interesting.

My intention here is to discuss research findings on the impact of location on happiness rather than to attempt to justify our decision.  Relocation decisions made by different individuals and families obviously need to reflect their differing values and changing priorities at different stages of life.

If you do an internet search on “happiness best place to live” one of the first items to come up is likely to be an article telling you that according to a major Gallup poll, Hawaii is the U.S. state with the highest well-being ranking, with the top score in the physical, financial and community categories. If you search for the cities that are the best places to live, you are likely to find articles based on Gallup polls which suggest that the cities that score highest are near the ocean. When you read on you find that there is more involved than just beachside living. Research by Andrew Oswald has shown that average life satisfaction levels in different places closely correlate with objective measures of the quality of life – as measured sunshine hours, congestion, air quality etc.

Survey data on the happiness of people in different federal electorates in Australia suggests that many of the happiest electorates in Australia are not close to the coast (although the New South Wales south coast electorate of Gilmore, where we have lived for the last 12 years, is among the top five). Some of the unhappiest electorates in the country are in suburban Sydney. Some headlines claiming that major cities create unhappy Australians prompted me to write sceptically on this topic a couple of years ago. I suggested that current life satisfaction is not the only important consideration in making location decisions. Many families face trade-offs between current and future life satisfaction.

I recommend that people considering a move should also read an article by Brad Waters in Psychology Today which draws upon the insights of Daniel Kahneman to make the point that life satisfaction is influenced by many factors other than location. He suggests that people considering relocation should ask themselves: “Does a move satisfy those factors or does it temporarily distract us from satisfying them?”

There is evidence of substantial benefits from living in a location where it is possible to see family and friends frequently. For example, research by Nick Powdthavee, undertaken about a decade ago, suggested that the benefits of seeing relatives and friends “most days” rather than “less than once a month” was greater than the benefit of getting married and was sufficient to compensate for about two-thirds of the happiness loss from such events as unemployment or going through a separation.

A couple of years ago when I wrote about the link between happiness and nature connectedness I speculated that some part of the correlation between nature connectedness and happiness is associated with “feeling connected”. Feeling connected to nature might be similar in that respect to feeling connected with family, friends or community.

Evidence continues to accumulate that actual contact with the natural environment has positive benefits for health and happiness. For example, a study conducted by Simone Kuhn (and others) for the Max Planck Institute for Human Development (discussed in this Forbes article) found that city dwellers who live near forests were more likely to have healthy amygdalas and thus better able to manage stress, anxiety and depression. A study by Chris Neale (and others) using mobile EEG has found that when walking in urban green space old people had a higher level of engagement and lower levels of excitement than when walking in both busy urban commercial streets and quiet urban space. The authors concluded that the urban green space seemed to have a restorative effect on brain activity.

An article by Ming Kuo has identified 21 plausible pathways linking nature to human health and has postulated that one pathway, enhanced immune functioning, may be of central importance.

Thoughts along those line prompted me to begin reading The Secret Life of Your Microbiome, why nature and biodiversity are essential to health and happiness, by Susan Prescott and Alan Logan. Perhaps I will write more about that later.

Meanwhile, my bottom line is that, other things equal, it might be a good idea to find a place to live where you can spend a fair amount of time in the natural environment with family and friends. Unfortunately, many people in this world do not currently have the luxury of making that choice.

Why might economic development influence how unhappy people feel when they don't get the love they desire?

There is evidence that a discrepancy between the amount of self-transcending emotion (e.g. love, trust) that people want to feel and what they actually feel has an adverse impact on their happiness.  Researchers have observed that this adverse impact is greater for people in countries with relatively high levels of economic development.

What is it about economic development that could explain this?

Before canvassing possible explanations I need to provide some background information. The evidence referred to above is in a recent article entitled ‘The Secret to Happiness: Feeling Good or Feeling Right?’  by Maya Tamir, Shalom H. Schwartz, Shige Oishi, and Min Y. Kim. The study was based on a cross-cultural sample of 2,324 participants from 8 countries around the world.  I wrote about the main findings of the article on this blog in my last post entitled: What was Aristotle’s secret of happiness?

As indicated in the diagram reproduced above, the authors found that the absolute discrepancy between desired and experienced self-transcending emotions had a larger impact on life satisfaction and depressive symptoms of people in countries with relatively high ratings on the Human Development Index (HDI).

Evidence that economic development influences the impact of emotional discrepancy on happiness was only observed in respect of self-transcending emotions. The findings of the study suggest that economic development has no influence on the way discrepancies between desired and experienced anger, excitement and calmness impact on life satisfaction and depressive symptoms.

So, what is it about economic development that could explain why it seems to make happiness levels more sensitive to feeling the right amount of love? The authors suggest that perhaps “for people who struggle to meet their basic needs the amount of love they actually feel matters more for their happiness than whether this amount feels right or not”. They suggest that this would not apply to other emotions because love is “linked to social connectedness”, which “is presumably a basic human need and a key determinant of well-being”.

I’m not sure I understand what the authors mean. Anger might also be linked to social connectedness. Angry people might find it harder to maintain strong social connections.

A distinguishing feature of love, relative to emotions such as anger, is that when people are asked how much love they feel they could think of either how much they feel loved by others, or how much love they feel toward others.

If we think in terms of Maslow’s hierarchy of needs, it might be reasonable to speculate that people whose basic physiological and safety needs are satisfied might place higher priority on obtaining love than those who are struggling to meet their basic needs. In economic terms this could be thought of as an upward shift in the marginal utility of love as incomes rise. That could explain why a shortfall in love obtained relative to the desired level seems to have a larger impact on happiness of people in countries with relatively high HDI ratings.

That is just speculation. The authors suggest future research should explore further “when, why, and how” the links between emotion discrepancies and well-being vary across countries. It will be interesting to see what eventuates.

How can we measure human flourishing?

This graph suggests that, at a national level, three quite different indicators of human flourishing tell a similar story about human flourishing. The opportunity measure, shown on the horizontal axis, encompasses economic freedom, income, education, health and environmental performance. The thriving measure, shown on the vertical axis, shows the percentage of the populations who are positive about their present life situation and optimistic about the next five years. The measure of psychological flourishing, shown by the size of the bubbles, reflects the percentage of the populations whose responses to questionnaires indicate competence, emotional stability, engagement, meaning, optimism, positive emotion, positive relationships, resilience, self-esteem, and vitality. 

The focus on European countries was dictated by the data source on psychological flourishing:  an article by Felicia Huppert and Timothy, ‘Flourishing Across Europe’ (published in Soc.Indic.Res. in 2013). The thriving data is from Gallup World Polls using the Cantril scale which asks people to evaluate their lives relative to the best possible and worst possible life. The opportunity measure was created using methodology described in Chapter 6 of my book, Free to Flourish.

The graph raises such questions as whether Scandinavian countries will be able to sustain high rates of thriving and psychological flourishing in future without further expanding individual opportunities.

However, I want to focus in this post on how we came to measure human flourishing in three different ways and what the different measures tell us.

First, consider measures of opportunity. GDP per head of population has been used by economists as a rough measure of well-being for many decades, even though its potential shortcomings for this purpose have been well known since the concept was developed in the 1930s. Recognition of such problems led to efforts to take account of longevity and education, in the UNDP’s Human Development Index, and of a wider range of indicators of the quality of life in the OECD’s Better Life Index and similar indexes - including the opportunity index used in the graph. All those indexes can be viewed as measures of opportunity; they are not direct measures of well-being or human flourishing. It is possible to be wealthy, highly educated and have good physical health and yet to be deeply unhappy.

Second, there are attempts to measure well-being directly using surveys asking individuals to give a simple numerical rating to their happiness or their satisfaction with their lives.  The data on thriving shown in the graph are based on subjective well-being assessments of that kind.

The meaning that should be given to life satisfaction ratings is less obvious than the meaning of happiness ratings. The happiness question clearly elicits responses about feelings. Available evidence suggests that life satisfaction ratings reflect evaluations of lives rather than momentary feelings. Research by John Helliwell et al for The World Happiness Report shows that a large part of variation in life satisfaction ratings among countries can be explained by differences in income levels, social support, freedom to make life choices, generosity and perceptions of corruption.

Analysis of data from long-running national panel surveys for Australia, Germany and Britain provides evidence that adaptation and resilience tend to restore life satisfaction to previous levels following positive and negative changes in circumstances. Nevertheless, recent research by Bruce Headey and Ruud Muffels suggests that most people go through periods of their lives when they have relatively high and relatively low life satisfaction. Positive feedback loops between life satisfaction and variables such as health, social support, frequency of social activities, and satisfaction with work and relationships partly account for extended periods of high or low life satisfaction.

As I have discussed in a previous post, evaluations of life satisfaction can also be interpreted as frames of mind, which influence the extent to which people experience positive emotions. Monty Python (and many philosophers and psychologists) tell us that people who have a disposition to look on the bright side of life are better able to maintain relatively high life satisfaction. The evidence that life satisfaction is influenced by dispositions that are attributable to genetics also supports a frame of mind interpretation. People in Denmark are apparently particularly favoured by genes that promote high life satisfaction.

The main reservation I have about the tendency to use of life satisfaction as the gold standard in measuring human flourishing stems from evidence (for example, findings of research by Daniel Benjamin, OriHeffetz, Miles Kimball and Nichole Szembrot)  that when faced with relevant choices people rank life satisfaction less highly than other criteria such as the overall well-being of their family, being a moral person, having a meaningful life, and having many options and possibilities in life and freedom to choose among them. Some of the findings of this research are not easy to understand, but those noted above are, at least, consistent with the choices people could be expected to make when they exercise their practical wisdom.

That leads me to the third approach to measurement of human flourishing: the eudaimonic approach, which draws some inspiration from ancient Greek philosophers.  In their research, referred to above, Felicia Huppert and Timothy So viewed flourishing as lying at the opposite end of a spectrum to depression and anxiety. The authors identified 10 features of positive well-being: competence, emotional stability, engagement, meaning, optimism, positive emotion, positive relationships, resilience, self-esteem, and vitality.  As noted in my previous discussionof this study, an important finding was that was that the individuals identified as flourishing did not correspond very closely to those identified as having high life satisfaction. For Europe as a whole, the percentage who were both flourishing and had high life satisfaction was 7.3%. Among people who met the criterion for flourishing, 46.0% had high life satisfaction, and among people who had high life satisfaction, 38.7% were flourishing. (The correlation between life satisfaction and flourishing was only 0.34.)

As the philosopher Daniel Haybron has observed recently, there is no consensus among eudaimonic psychologists about what their measures of well-being should look like. Dan Haybron has provided what seems to me to be a good account of the “philosophical basis of eudaimonic psychology” in a chapter of that name in J Vitterso (ed.) Handbook of Eudaimonic Well-being.  I don’t agree with him on the question of whether it is possible for the wicked to flourish, but I don’t think that impinges greatly on the measurement issues. Haybron argues cogently that the main factors that should be targeted in eudaimonic measures of psychological well-being are:

• Agency - personal development, competence and autonomy
• Relationships - close personal relationships, social enjoyments, community trust etc.
• Meaning - engaging in activities that are meaningful or worthwhile
• Emotional well-being - endorsement (or positive emotion) engagement and attunement (tranquillity or peace of mind).

He also acknowledges the importance of some other factors that researchers may wish to measure: authenticity, knowledge and virtue.

In my view Haybron’s contribution should provide a useful basis for further consideration of these matters by psychological researchers, but any consensus they reach will inevitably be somewhat arbitrary and tenuously related to the perceptions of individual survey respondents about the factors that are important to their own flourishing.

I end by raising a couple of questions:

First, how should researchers determine what weights should be given in combining ratings of factors targeted in their surveys? My answer, very briefly, is that this should be left to the practical wisdom of survey respondents. I considered the question here.

Second, would it be enlightening to attempt to combine measures of economic opportunity with measures of psychological flourishing? My initial thought is that before considering that question we should have a clear view of the purpose(s) for which such a combined measure might be more useful than separate indicators of economic opportunity and psychological flourishing. I can’t think of any right now.

Postscript: 

Dan  Haybron has provided the following comments:

Very nice post! It might be useful to see your opportunities index related to the capabilities framework, which in my view is really just a kind of opportunity approach--and possibly better framed as a matter of opportunities (though maybe the connotations of the latter aren't always helpful). 

I suspect policy should consider well-being/outcome and opportunity metrics, and also don't see any clear rationale for combining them, except perhaps in some still broader index including lots of other stuff as well. In my work on capabilities, I suggest that the latter better captures something like parents' concern that their kids have good opportunities (so push them in school), which is distinct from a wish that they be happy/do well, which can sometimes be in tension with giving them the best opportunities. (If your kid goes to Harvard, great opportunities, probably not so happy.) Though in line with your graph, I assume they generally tend to be positively correlated.

On life satisfaction (LS)  measures: you point to one of the odd features of the Benjamin et al work, which generally seems to undervalue emotional goods as well. I suspect the setup skews answers misleadingly on things like that (though I think their work is really cool). But also, partisans of LS should not be bothered by that result: the smart position is to allow that LS itself isn't very important (hence the responses), but is very useful as an indicator of success in the things people do care about. So if LS is a valid measure, it should reflect all those other things, in proportion to how much people care about them. i suspect the Benjamin et al framework might be used to help test LS measures: are they sensitive enough to what people actually care about? Or do they lean too heavily on information that is chronically salient, like day-to-day material concerns? 

How should researchers combine different aspects of happiness into a single measure?

A recent paper by Gus O’Donnell and Andrew Oswald considers the question of how to combine measures of different aspects of subjective well-being into a single overall measure.

The authors focused specifically on the four aspects of well-being measured in annual surveys by the UK Office of National Statistics. These are:

• how satisfied you are with your life nowadays;
• to what extent you feel that the things you do in your life are worthwhile;
• how happy you felt yesterday; and
• how anxious you felt yesterday.

All aspects are measured on an 11 point scale from 0 to 10.

The approach taken by O’Donnell and Oswald in their exploratory study implies that all aspects of happiness should be weighted according to their “social importance” as determined by the average weight given to them by citizens in opinion surveys. The specific method they employ involves asking people to allocate 100 points across the four measures. For example, if all four measures were considered to be equally important, 25% would be allocated to each measure.

This method of developing weights seems to me to be much better suited to combining well-being indicators such as those included in the OECD’s Better Life index (e.g. income, education, health, environment) than to combining survey data relating to different aspects of subjective well-being.

I feel uneasy about the method adopted because I don’t think individual citizens are equipped to make judgments about the “social importance” of the feelings of others. For example, the majority view about the “social importance” of feelings of anxiety might understate the impact of anxiety on the well-being of people who suffer from anxiety.

The authors have reported results from the use of their method of obtaining weights from four different samples: economics students, MBA students, professional economists, and a wider group of citizens chosen using web-based methods. All groups gave anxiety the lowest average weight, but apart from that there is not much common ground in the views of the different groups. The wider group of citizens gave happiness the greatest weight, but the other groups all gave life satisfaction the greatest weight. The economics and MBA students gave “doing worthwhile things” a much higher weight than happiness, but professional economists gave it about the same weight as happiness.

It seems to me that a better way to proceed would be to attempt to estimate the well-being of individuals by using weighting systems that individuals consider to be relevant to their own lives. There are potentially several ways to do that.

First, there is the approach adopted by Daniel Benjamin et al in their paper, “Beyond Happiness and Satisfaction”, discussed on this blog, in which people were asked to choose between hypothetical situations using different measures of happiness and a range of different ratings.

Another possible approach would to ask survey respondents questions along the following lines: “If you were offered an opportunity that would add a 1 point improvement in your feeling that the things you do in life are worthwhile, how much life satisfaction would you be willing to forgo in order to obtain that benefit?” When I ask myself that question the answer I obtained seemed to make sense, but my mind went blank when I ask myself how much life satisfaction I would be willing to forgo in order to obtain a 1 point increase in happiness. The same happened when I asked myself how much happiness I would be willing to forgo in order to obtain a 1 point increase in life satisfaction. So I can hardly recommend that approach!

The third approach is to simply ask survey respondents to allocate 100 points across the four measures according to the weight that they consider should give to the different measures in assessing changes over time in their own personal well-being. That approach has the virtue of being simple and directly related to estimation of relevant weights.

In order to obtain an accurate overall impression of subjective well-being at a national level it is important to know to what extent the weights that individuals consider to be relevant to assessment of their own personal well-being vary according to the circumstances of their lives.

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.

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.

Postscript
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.

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.

Is human flourishing inconsistent with living in harmony with nature?

A view of Sydney in 2014

I like many of the ideas in the Ecomodernist Manifesto, but I don’t like the idea of having to choose between making room for nature and living in harmony with nature. Before discussing this issue I will provide some background.

The Manifesto, published in April of this year, has 18 authors of whom the best known are probably Ted Nordhaus and Michael Shellenberger of the Breakthough Institute.

The Ecomodernists begin with the proposition that the earth has entered into a new geological epoch, the Anthropocene, or age of humans. That provides the backdrop for consideration of the interaction between human flourishing and the natural environment.

Many environmentalists assert that a good Anthropocene is not consistent with the ongoing expansion of opportunities for human flourishing which economic growth provides. By contrast, the authors of the Manifesto are optimistic that the Anthropocene can offer expanding opportunities for humans, as well as protecting the natural environment, if knowledge and technology are applied with wisdom.

I endorse this proposition:

“A good Anthropocene demands that humans use their growing social, economic, and technological powers to make life better for people, stabilize the climate, and protect the natural world.”

My problem is with what follows immediately after:

“In this we affirm one long-standing environmental ideal, that humanity must shrink its impacts on the environment to make more room for nature, while we reject another, that human societies must harmonize with nature to avoid economic and ecological collapse.

These two ideals can no longer be reconciled”.

I don’t see any necessary conflict between the two ideals. It seems to me that the ideal of harmonizing with nature means that we should seek to live in harmony with the natural laws of the world in which we live. That means accepting that humans are in many respects like other animals and have deep emotional connections to the natural environment and other living things. These emotional connections are explicitly recognized in Chapter 5 of the Manifesto.

That suggests to me that the problem is just definitional. Nevertheless, it is hard to understand why the authors of the Manifesto would risk losing support by asking people to make an unnecessary choice between ideals.

What is the real choice that the authors want us to make?  When they object to the ideal of human societies harmonizing with “nature”, it seems that what they are referring to are natural systems - the part of the natural environment that has not yet been significantly modified by human activity. 

The authors argue:

“Natural systems will not, as a general rule, be protected or enhanced by the expansion of humankind’s dependence upon them for sustenance and well-being.

Intensifying many human activities — particularly farming, energy extraction, forestry, and settlement — so that they use less land and interfere less with the natural world is the key to decoupling human development from environmental impacts. These socioeconomic and technological processes are central to economic modernization and environmental protection. Together they allow people to mitigate climate change, to spare nature, and to alleviate global poverty”.

The real choice the authors want us to make is between intensifying human activities in particular regions and allowing them to spread in ways that would be detrimental to the natural environment.

The idea of decoupling human development from environmental impacts seems to me to make a great deal of sense as a broad generalization. I expect that governments will encounter difficulties in implementing such a strategy sensibly, but outcomes are likely to be worse if they do not try. One of the difficulties that is likely to stand in the way of implementation in some areas is the need to recognize the rights of indigenous people to use the natural resources they own. Another difficulty is the tendency of over-zealous supporters of wilderness to oppose the eco-tourism which is likely to be necessary to maintain broad political support for protection of wilderness areas. In some areas the involvement of indigenous people in eco-tourism is helping to meet the twin objectives of improving their economic opportunities and enlisting their support for greater environmental protection.

It seems to me to be particularly important for human well-being that attempts to decouple human development from environmental impacts does not occur at the expense of the ideal of living in harmony with nature in areas of intense human activity. The emotional needs that humans have for connection with the natural environment and other living things are unlikely to be satisfied by observing nature on TV and a once-in-a-lifetime visit to a wilderness area. 

Postscript:
In my next post I discuss the link between happiness and feeling connected with nature. 

Why are old Americans more satisfied with their lives than are old Europeans?

The latest WorldHappiness Report (2015) contains an interesting chapter examining how happiness varies around the world by gender and age. The chapter was written by Nicole Fortin, John Helliwell and Shun Wang.

What would you expect those comparisons to show? I guess many people would expect that, on average, women would be less happy than men because in most of the world the opportunities available to females are still less favourable than those available to males.

The data doesn’t actually show that. When people are asked to rate their lives relative to the best possible and worst possible life (i.e. using the so called Cantril ladder) the world averages show that until they are about 50, women tend to rate their lives more highly than men. Perhaps women are more inclined to look on the bright side of life.

In any event, differences between the happiness of women and men are much less marked than differences between young and old people. On average, happiness tends to decline to about age 40 - a few years later for men than women - and then to stay relatively flat.

That finding was a surprise to me. I was given the impression from research I had read about that happiness was U-shaped over the life cycle. When I looked for more recent literature, just now, I found an article by Paul Frijters and TonyBeatton, published in 2012, based on panel data for Germany, Britain and Australia, which suggests the dominant age-effect is a strong happiness increase around the age of 60, followed by a major decline after 75. So I should have had an open mind about what to expect.

The data in the World Happiness Report shows a great deal of variation in the relationship between age and happiness in different parts of the world. Happiness does not vary much with age in South-East Asia, South Asia and Sub-Saharan Africa. Happiness declines sharply with age in CEE&CIS region (former Soviet Union, Eastern Europe and Central Europe) and less sharply with age in Latin America, Middle East and North Africa and Western Europe. The only regions with the U-shape are East Asia and NA&ANZ (North America, Australia and New Zealand).

It does not surprise me that there is a different relationship between happiness and age in high and low income countries, but I did not expect to see the different patterns in Western Europe and NA&ANZ which are shown below (based on Figure 3.2 of the World Happiness Report 2015).The NA&ANZ data are dominated by America (regional averages are calculated using population weights) so I am seeking an explanation of why old Americans are relatively more satisfied with their lives than old Europeans.

The different pattern between America and Europe also showed up in survey respondents’ reports of some positive emotions experienced the preceding day: smiling and laughing a lot; enjoyment; and learning or doing something interesting. The survey data also shows that older women in Western Europe report experiencing greater sadness, physical pain and depression than do men of comparable age in that part of the world, or people of either gender in America.

A hint about the possible causes of the difference in patterns between America and Europe is given by looking at the determinants of life satisfaction, as indicated in the regression analyses undertaken for the report. Those determinants are income, health, generosity, corruption, freedom of choice and social report.

An inspection of the graphs showing how those variables differ according to the age of respondent suggests that the main area of difference is in respect of perceptions of social support. What this means is that, on average, older people in Western Europe perceive that they are less able to count on relatives and friends for support when they need it than are older people in North America.

It is interesting to speculate about the reasons why old people in Western Europe are less likely to feel that they can count on relatives and friends in times of need. The thought that passes my mind is that the reasons might have something to do with the nature of the welfare states of Western Europe, but that might just reflect my prejudices.