The problem with measuring happiness

I've come across a great book, published by the Institute of Economic Affairs, which casts a very sceptical eye over the politics of well-being movement, and in particular happiness measurements statistics.

The authors, Helen Johns and Paul Ormerod, take issue with a famous graph that is known as the Easterlin Paradox (pictured), which plots income levels against levels of reported satisfaction. Many happiness experts, such as Daniel Kahneman, Daniel Gilbert and Lord Layard, use this fact to argue that our societies focus too much on economic growth and consumerism, when in fact more money isn't actually making us happier. Some experts have used this to argue for a more re-distributive and interventionist economic policy.

The IEA, however, quite fairly argues that the fact that reported satisfaction levels have not really gone up or down since records began in the 1950s might simply show that measuring happiness is a very imprecise science. As the authors point out, many happiness measurements are based on a three-point scale, with people asked if they feel unhappy, happy, or very happy.

"Basing government policy on such an imprecise measurement would be like the Bank of England's monetary policy board basing its policy decisions on whether people say they are feeling poor, rich or very rich", they write.

It's not just rising income levels that don't appear to affect happiness levels. Rising levels of violent crime also don't appear to affect it. The high unemployment of the 1980s don't seem to affect it. Nothing seems to affect it. It just continues in a straight, boring line. So what policy conclusions can we draw from this? None, it would be fair to suggest.

The authors do admit that behavioural economists and psychologists have made some real additions to economic research, by showing that humans aren't the 'rational calculators' that orthodox economic theory sometimes asserts. Economists like Kahneman, and psychologists like Daniel Gilbert, have shown how our economic and life decisions are often irrational, and not the best maximization of our utility. This is quite accepted now in mainstream economics.

The authors do accept that it is possible to measure happiness levels, using for example the Beck Depression Inventory, created by the CBT pioneer Aaron Beck, which appears a decent way of finding out how depressed someone is. But that survey is much more in-depth than most happiness surveys, and it measures changes in individuals' psychology and mental attitudes over periods of time. And maybe even the Beck survey is too simplistic...

All I can really have faith in is that CBT was very effective for me, and for many other people, in overcoming mental illness. So I fully support the initiative of Lord Layard to improve the population's access to CBT therapy. That aspect of the politics of well-being I find inspiring.

But I also have scepticism about making broader speculations from happiness statistics. For example, one study suggests happiness levels in China stayed level from 1990 to 2000. Another suggests it actually plummeted. It just seems incredibly imprecise.

In fact, I never took a happiness survey that didn't seem to me like something out of Cosmopolitan magazine. Besides, the really mentally ill, the really miserable, are, perhaps, not properly included in such surveys - they're recluses, so you'd never see them to question them.

Another contradiction I have noticed in the happiness debate, by the way: some happiness experts, such as celebrity therapist Oliver James, argue that we are getting more and more anxious and unhappy. They use this to argue against the free market capitalism of the last 30 years.

This would appear to contradict most happiness data, which suggest that satisfaction levels haven't really moved in the West, throughout Keynesianism, Neo-Liberalism, Blairism, or any-ism.

And, as the authors of the study point out, we are all living longer. So the total amount of happiness we feel in a lifetime has certainly been going up, along with the total amount of discontent.

Anyway, you can read the book, as well as a brief summary of it, here.