“Societies need subjective indicators of well-being to aid policy makers and ordinary citizens in making decisions.” This is the opening line of the recently published book, “Well-being for Public Policy” by Ed Diener, Richard Lucas, Ulrich Schimmack and John Helliwell. The first three authors are psychologists (Diener has played a leading role in the field of happiness research) and Helliwell is an economist.
The final sentence of the first paragraph explains: “Overall, accounts of subjective indicators of well-being will help policy makers make wiser decisions regarding policy alternatives and help citizens be better educated about the choices that affect their lives”.
I am in favour of research to enable people to become better informed about the choices that affect their lives. I hope that what the authors mean by “help citizens to be better educated” doesn’t involve anything more sinister than publication of research findings.
While reading the book I became irritated by what seems to me to be a naive view it presents of the policy making process. Although the nature of policy making is largely incidental to the purpose of the book, I will devote the remained of this comment to policy making. I promise to focus on the substance of the book in a later post.
According to the “public interest” view presented in the book, public policies are made by “policy makers” who would make wise decisions if only they knew what policies would improve the well-being of citizens. In reality, however, the policy making process is a messy business which involves politicians seeking votes and hoping to further their careers, civil servants seeking to expand and protect empires, voters who have little interest in most policy issues and even less incentive to understand likely consequences of the proposals being considered, interest groups seeking to further the interests of the people they represent and electoral rules that may give disproportionate power to particular groups. The process also attracts ideologues of various kinds who wish to advance their particular views of the good society.
In my view, rather than attempting to persuade us that more information on the subjective well-being of citizens would help some hypothetical “policy maker” to make better decisions, it would have been better if the authors had sought to persuade us that this information would enable policy processes to produce better outcomes.
Would this have made any difference to the book? Although the basic arguments about the validity of subjective well-being measures and their potential usefulness would have been unchanged, I think this change of focus would have made some difference. In particular, it seems to me is that the authors would have had less difficulty convincing readers that they “do not advocate the idea that governments should intervene strongly to move society towards a primary goal of increased well-being” (p209). When most of the book seems to be devoted to telling “policy makers” how they can use subjective information to improve the well-being of citizens it is natural enough to expect readers to be concerned that some “policy makers” might act paternalistically in using this information. Some readers might not be entirely reassured that paternalistic “policy makers” would have regard to the findings of happiness research which show that humans tend to feel most satisfied when they perceive that they have freedom to choose how to live their lives.
The problem of how paternalistic interventionists might like to use research findings is placed in perspective once it is recognized that competing interests are involved in policy-making through discussions in a range of different forums. These discussions are about various things, but the matters discussed by vast majority of participants usually relate in some way to the effects of different policies on the well-being of people.
The important issue is whether measures of subjective well-being can make useful contributions to the discussion of policy issues.
Tuesday, June 9, 2009
Monday, June 8, 2009
What are the rules of the game of human flourishing?
Human flourishing, it seems to me, is a game that can only be played by people who are free to decide how they will live their lives and willing to accept the consequences of their decisions. There is no limit to the number of players. The game becomes more enjoyable as the number of players increases.
The aim of the game is for each player to "flourish". The game differs from most other games played by humans because the number of points scored by any one player does not necessarily diminish the number of points that can be scored by other players. Players may score additional points by helping other players.
The game commences when players agree to respect the lives and property of the other players. Each player inherits some cards and is dealt additional cards as the game progresses. Points scored depend also on the skills that the players develop as the game progresses and the opportunities available to them to benefit from cooperation with other players.
Players who trust each other can score many additional points by engaging in mutually beneficial voluntary cooperation. This cooperation can take a variety of forms including the formation of families and community groups which help people to live as they choose and to share gains and losses with relatives and friends. It also includes the creation of business ventures and the development of market institutions that enable players to benefit from specialisation and exchange.
Players can also score additional points by introducing new players. As well as providing additional opportunities for gains from trade this tends to reduce losses from theft by outsiders. The introduction of new players has some risks, however, because existing players do not know to what extent the new players can be trusted.
Players make up the rules of the game as they go along according to voting rules that they agree upon. Players usually make arrangements for provision of some public goods, including appointment of guardians who are permitted to use force to protect players from outsiders and cheaters. The appointment of guardians poses additional problems, however, in devising political rules that will discourage the guardians from plundering the players.
Unhappy players are permitted to voice their concerns and to form associations to lobby for changes to the rules. If players are unable to agree on rule changes, the political dice is rolled to determine the outcome.
Human flourishing is a relatively new game and is rarely played well. The biggest challenge for people who enjoy playing the game is to avoid rule changes that will convert it into a different game such as “serfdom” or “struggle for survival”.
The aim of the game is for each player to "flourish". The game differs from most other games played by humans because the number of points scored by any one player does not necessarily diminish the number of points that can be scored by other players. Players may score additional points by helping other players.
The game commences when players agree to respect the lives and property of the other players. Each player inherits some cards and is dealt additional cards as the game progresses. Points scored depend also on the skills that the players develop as the game progresses and the opportunities available to them to benefit from cooperation with other players.
Players who trust each other can score many additional points by engaging in mutually beneficial voluntary cooperation. This cooperation can take a variety of forms including the formation of families and community groups which help people to live as they choose and to share gains and losses with relatives and friends. It also includes the creation of business ventures and the development of market institutions that enable players to benefit from specialisation and exchange.
Players can also score additional points by introducing new players. As well as providing additional opportunities for gains from trade this tends to reduce losses from theft by outsiders. The introduction of new players has some risks, however, because existing players do not know to what extent the new players can be trusted.
Players make up the rules of the game as they go along according to voting rules that they agree upon. Players usually make arrangements for provision of some public goods, including appointment of guardians who are permitted to use force to protect players from outsiders and cheaters. The appointment of guardians poses additional problems, however, in devising political rules that will discourage the guardians from plundering the players.
Unhappy players are permitted to voice their concerns and to form associations to lobby for changes to the rules. If players are unable to agree on rule changes, the political dice is rolled to determine the outcome.
Human flourishing is a relatively new game and is rarely played well. The biggest challenge for people who enjoy playing the game is to avoid rule changes that will convert it into a different game such as “serfdom” or “struggle for survival”.
Wednesday, June 3, 2009
To what extent are perceptions of freedom based on objective factors?
The Gallup World Poll has asked people in a large number of countries: “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?” Recent research has shown that, even after controlling for other relevant variables, people tend to be more satisfied with their lives in countries in which a relatively high proportion of the population are satisfied with their freedom to choose. (See: John Helliwell, Christopher Barrington-Leigh, Anthony Harris and Haifang Huang, ‘International Evidence on the Social Context of Well-being’, Working paper 14720, NBER, 2009.)
This is hardly surprising. People who feel relatively satisfied with their lives could generally be expected to be satisfied with their freedom to choose what they do with their lives. Do the results have more profound implications? Is the proportion of people who are satisfied with their lives related to economic freedom (encompassing personal choice, voluntary exchange, freedom to enter and compete in markets and protection of persons and their property from aggression by others) and civil liberties? Alternatively, is satisfaction with freedom an emotional state that is unrelated to objective circumstances?
The Figure below has been obtained by matching the Gallup data on satisfaction with freedom with the Fraser Institute’s data on economic freedom and Freedom House’s data on civil liberties for 121 countries, and then ranking countries according to the percentage of people who are satisfied with their freedom to choose what to do with their lives. The results suggest that economic freedom and civil liberties tend to be substantially greater in countries where people are more satisfied with their freedom to choose.
Regression analysis suggests that economic freedom and civil liberties have a positive influence on the degree of satisfaction with freedom in different countries but only explain a modest proportion of the variation in this variable. In some countries (including China) the degree of satisfaction with freedom is much higher than predicted and in some countries (including Hungary) it is much lower than predicted.
In order to test whether there is a link between satisfaction with freedom and emotional states, another data set has been constructed which incorporates data on inner freedom (percentages who feel they have a great deal of choice and control over their lives) from the World Values Survey. Unfortunately the inner freedom data was collected for a smaller number of countries, so the matched data set only covers 70 countries. (Another problem with the inner freedom data is that it does not match very well in terms of the time at which it was collected. It was collected around 2000, substantially earlier than the other data.)
The second Figure, including inner freedom, provides a similar picture to the first one. Countries in which relatively high proportions are satisfied with the amount of freedom in their lives tend to have relatively high proportions who feel a great deal of inner freedom.
Inclusion of the additional variable in the regression analysis results in a substantial increase in the proportion of variation in the degree of satisfaction with freedom explained by the model, but reduces the coefficients on the other variables. This is not surprising in view of the apparent links between economic freedom and inner freedom discussed in an earlier post.
This simple analysis does not enable me to conclude to what extent perceptions of freedom are based on objective factors. The important point that emerges is that all four varieties of freedom tend to go together.
This is hardly surprising. People who feel relatively satisfied with their lives could generally be expected to be satisfied with their freedom to choose what they do with their lives. Do the results have more profound implications? Is the proportion of people who are satisfied with their lives related to economic freedom (encompassing personal choice, voluntary exchange, freedom to enter and compete in markets and protection of persons and their property from aggression by others) and civil liberties? Alternatively, is satisfaction with freedom an emotional state that is unrelated to objective circumstances?
The Figure below has been obtained by matching the Gallup data on satisfaction with freedom with the Fraser Institute’s data on economic freedom and Freedom House’s data on civil liberties for 121 countries, and then ranking countries according to the percentage of people who are satisfied with their freedom to choose what to do with their lives. The results suggest that economic freedom and civil liberties tend to be substantially greater in countries where people are more satisfied with their freedom to choose.
Regression analysis suggests that economic freedom and civil liberties have a positive influence on the degree of satisfaction with freedom in different countries but only explain a modest proportion of the variation in this variable. In some countries (including China) the degree of satisfaction with freedom is much higher than predicted and in some countries (including Hungary) it is much lower than predicted.
In order to test whether there is a link between satisfaction with freedom and emotional states, another data set has been constructed which incorporates data on inner freedom (percentages who feel they have a great deal of choice and control over their lives) from the World Values Survey. Unfortunately the inner freedom data was collected for a smaller number of countries, so the matched data set only covers 70 countries. (Another problem with the inner freedom data is that it does not match very well in terms of the time at which it was collected. It was collected around 2000, substantially earlier than the other data.)
The second Figure, including inner freedom, provides a similar picture to the first one. Countries in which relatively high proportions are satisfied with the amount of freedom in their lives tend to have relatively high proportions who feel a great deal of inner freedom.
Inclusion of the additional variable in the regression analysis results in a substantial increase in the proportion of variation in the degree of satisfaction with freedom explained by the model, but reduces the coefficients on the other variables. This is not surprising in view of the apparent links between economic freedom and inner freedom discussed in an earlier post.
This simple analysis does not enable me to conclude to what extent perceptions of freedom are based on objective factors. The important point that emerges is that all four varieties of freedom tend to go together.
Friday, May 29, 2009
Is the quality of life in New Zealand over-rated?
Some New Zealanders might say that this is a question that only an Australian could ask, but it seems to me to be a good way to raise the issue that I want to discuss. (I hope that when I look back on this in a few days time it will still seem like a good idea!)
The ratings that I am writing about are the ladder of life ratings from the Gallup World Poll – the top step of the ladder represents the best possible life and the bottom step represents the worst possible life. But I could be referring to any of a range of surveys that ask people to place a numerical rating on how happy they are or on how satisfied they are with their lives.
I do not intend to argue that New Zealanders have a peculiar propensity to over-rate their satisfaction with their lives. The issue I want to discuss is what it means when surveys show that New Zealanders are just as satisfied with their lives as people in the U.S. even though average incomes in NZ are only about two-thirds of the U.S. level. I propose to compare the impact of income differences and other factors on the survey measures of subjective well-being in order to enable readers to consider whether the impacts attributable to income differences provide an accurate measure of its impact on the quality of lives.
It is now possible to make fairly accurate comparisons of the impact of income and other factors on average ratings of subjective well-being at a national level. Recent research by John Helliwell, Christopher Barrington-Leigh, Anthony Harris and Haifang Huang has shown that a high proportion of differences in average life evaluations between countries can be explained statistically by differences in a relatively small number of variables reflecting social, institutional and economic circumstances of life (See Table 3, ‘International Evidence on the Social Context of Well-being’, Working paper 14720, NBER, 2009). The most important variables are income (log of per capita GDP), friends (the proportion of survey participants who have relatives or friends they can count on for help when they are in trouble), freedom (the proportion who satisfied with their freedom to choose what they do with their lives) and corruption ( responses to questions relating to whether corruption is widespread throughout government and business).
In the Figure below I have used these research results to show reasons why average survey measures of subjective well-being in several countries differ from the U.S. ratings.
The net differences from U.S. ratings are shown next to the label for each country. If you focus on New Zealand you can see that the perception of NZers that their country is relatively free of corruption outweighs the negative impact on survey responses of the fact that average incomes in NZ are substantially lower than the U.S. average.
If you consider that corruption is as big a problem in the U.S as, for example, in Greece, you might think that this provides an accurate depiction of the relative impacts of income differences and corruption on the quality of life in New Zealand and the U.S. However, when I look at the expert ratings of corruption levels in Transparency International’s corruption index, the U.S. doesn’t look too bad. The rating of the U.S. in this index (7.3) is lower than Denmark and NZ (both on 9.3) and Australia (8.7) but well above Italy (4.8) and Greece (4.7). (It is also interesting that Greeks do not perceive that their corruption problem to be any worse than that in he U.S. and that NZers do not perceive themselves to be as free of corruption as the Danes).
The point is that the influence of various factors on the survey ratings of quality of life depends on the way they are perceived. The ratings are more like emotional responses than dispassionate evaluations. It seems to me that self-reports of how people feel about their lives tell us about their emotional states - which are an important component of well-being but do not tell the whole story.
One way to test survey ratings is to ask ourselves to what extent we would be prepared to rely on them in making decisions affecting our own well-being. It seems to me that income may be more important to people when they make decisions affecting their well-being than when they answer questionnaires about the quality of their lives. If you were in Europe contemplating a choice between moving your family to either the U.S. or NZ, would you consider the importance of differences in average income levels to be adequately reflected in survey ratings of the quality of life?
Postscript:
Survey ratings can also be tested by comparing them with actual migration patterns where free migration is allowed - as between New Zealand and Australia. Migration statistics for New Zealand show that in recent years permanent and long-term departures to Australia have exceeded arrivals from Australia by a factor of more than 3:1.
The ratings that I am writing about are the ladder of life ratings from the Gallup World Poll – the top step of the ladder represents the best possible life and the bottom step represents the worst possible life. But I could be referring to any of a range of surveys that ask people to place a numerical rating on how happy they are or on how satisfied they are with their lives.
I do not intend to argue that New Zealanders have a peculiar propensity to over-rate their satisfaction with their lives. The issue I want to discuss is what it means when surveys show that New Zealanders are just as satisfied with their lives as people in the U.S. even though average incomes in NZ are only about two-thirds of the U.S. level. I propose to compare the impact of income differences and other factors on the survey measures of subjective well-being in order to enable readers to consider whether the impacts attributable to income differences provide an accurate measure of its impact on the quality of lives.
It is now possible to make fairly accurate comparisons of the impact of income and other factors on average ratings of subjective well-being at a national level. Recent research by John Helliwell, Christopher Barrington-Leigh, Anthony Harris and Haifang Huang has shown that a high proportion of differences in average life evaluations between countries can be explained statistically by differences in a relatively small number of variables reflecting social, institutional and economic circumstances of life (See Table 3, ‘International Evidence on the Social Context of Well-being’, Working paper 14720, NBER, 2009). The most important variables are income (log of per capita GDP), friends (the proportion of survey participants who have relatives or friends they can count on for help when they are in trouble), freedom (the proportion who satisfied with their freedom to choose what they do with their lives) and corruption ( responses to questions relating to whether corruption is widespread throughout government and business).
In the Figure below I have used these research results to show reasons why average survey measures of subjective well-being in several countries differ from the U.S. ratings.
The net differences from U.S. ratings are shown next to the label for each country. If you focus on New Zealand you can see that the perception of NZers that their country is relatively free of corruption outweighs the negative impact on survey responses of the fact that average incomes in NZ are substantially lower than the U.S. average.
If you consider that corruption is as big a problem in the U.S as, for example, in Greece, you might think that this provides an accurate depiction of the relative impacts of income differences and corruption on the quality of life in New Zealand and the U.S. However, when I look at the expert ratings of corruption levels in Transparency International’s corruption index, the U.S. doesn’t look too bad. The rating of the U.S. in this index (7.3) is lower than Denmark and NZ (both on 9.3) and Australia (8.7) but well above Italy (4.8) and Greece (4.7). (It is also interesting that Greeks do not perceive that their corruption problem to be any worse than that in he U.S. and that NZers do not perceive themselves to be as free of corruption as the Danes).
The point is that the influence of various factors on the survey ratings of quality of life depends on the way they are perceived. The ratings are more like emotional responses than dispassionate evaluations. It seems to me that self-reports of how people feel about their lives tell us about their emotional states - which are an important component of well-being but do not tell the whole story.
One way to test survey ratings is to ask ourselves to what extent we would be prepared to rely on them in making decisions affecting our own well-being. It seems to me that income may be more important to people when they make decisions affecting their well-being than when they answer questionnaires about the quality of their lives. If you were in Europe contemplating a choice between moving your family to either the U.S. or NZ, would you consider the importance of differences in average income levels to be adequately reflected in survey ratings of the quality of life?
Postscript:
Survey ratings can also be tested by comparing them with actual migration patterns where free migration is allowed - as between New Zealand and Australia. Migration statistics for New Zealand show that in recent years permanent and long-term departures to Australia have exceeded arrivals from Australia by a factor of more than 3:1.
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