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  • The Problems with Measuring and Using Happiness for

    Policy Purposes

    Mark D. White

    December 2014

    MERCATUS WORKING PAPER

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  • Mark D. White. The Problems with Measuring and Using Happiness for Policy Purposes. Mercatus Working Paper, Mercatus Center at George Mason University, Arlington, VA, December 2014. http://mercatus.org/publication/problems-measuring-and-using-happiness -policy-purposes. Abstract Many governments around the world are considering measures of happiness or subjective well-being as alternatives to gross domestic product (GDP) for the purpose of guiding economic policymaking. Compared to GDP, happiness measures promise to better capture the quality of life of a nations citizens and lead to policies that are more effective and equitable. However, there are a number of problems with the concept of happiness that policymakers should be aware of before adopting it as a policy tool. In this paper, I focus on three interrelated aspects of happinessdefinition, measurement, and policy implementationand explain why each renders happiness a poor guide for policy. In general, happiness is a vague, multifaceted, and subjective phenomenon that is difficult to define precisely enough for measurement, hard to measure in a way that allows meaningful comparison between individuals and groups, and fraught with ethical complexities that complicate policy implementation. JEL codes: D6, D63, E6, E61, H1, I31 Keywords: economic policy, GDP, happiness, well-being, welfare, measurement, psychology, philosophy Author Affiliation and Contact Information Mark D. White Chair and Professor, Department of Philosophy College of Staten Island/CUNY profmdwhite@hotmail.com

    mailto:profmdwhite@hotmail.comhttp://mercatus.org/publication/problems-measuring-and-using-happiness-policy-purposeshttp://mercatus.org/publication/problems-measuring-and-using-happiness-policy-purposes

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    The Problems with Measuring and Using Happiness for Policy Purposes

    Mark D. White

    Economists have long expressed dissatisfaction with standard national-accounting figures such

    as gross domestic product (GDP). In fact, the shortcomings of GDP are so widely accepted that

    every introductory macroeconomics student learns them. For example, GDP misses black-market

    transactions and nonmarket production such as household labor, both of which contribute to

    national output. Thus, GDP underestimates the actual value of the total work performed by a

    nations citizens and specifically underestimates types of work usually done by certain kinds of

    citizens (for instance, it neglects the unpaid labor of stay-at-home partners, who are

    disproportionately women). Also, GDP doesnt account for the value of byproducts of

    production, including negative externalities such as pollution as well as positive externalities

    such as neighborhood improvement. Most generally, GDP does not measure the true quality of

    life of citizens and residents but is, at best, an imperfect measure of the resources available to the

    average person to pursue his or her goals (and even this assumes a certain level of wealth

    equality that GDP does not account for).

    It is the last of these objections that, along with developments in experimental psychology

    and behavioral research, has motivated discussion among economists and policymakers about

    measuring well-being directly, using measures of happiness or subjective well-being developed by

    psychologists, rather than relying on a flawed and incomplete economic proxy. As Richard Layard

    writes, happiness should become the goal of policy, and the progress of national happiness should

    be measured and analyzed as closely as the growth of [gross national product].1 First implemented

    1 Richard Layard, Happiness: Lessons from a New Science (New York: Penguin, 2005), 147.

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    under the banner of gross domestic happiness by King Jigme Singye Wangchuck of Bhutan in

    the early 1970s, the idea of basing policymaking on measurements of happiness and well-being (as

    well as other factors, including GDP) was given renewed life in 2009 by French president Nicolas

    Sarkozy, who enlisted renowned economists Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi

    to study its feasibility.2 The United Nations passed a resolution in 2011 encouraging member states

    to track aggregate happiness, and published the first World Happiness Report in 2012. This was

    followed by the Organisation for Economic Co-operation and Developments Guidelines on

    Measuring Subjective Well-Being in 2013.3 Finally, in recent years the Office of Management and

    Budget in the United States has recommended in its annual reports to Congress that alternative

    measures of well-being be explored as a supplement to using GDP and benefit-cost analysis for the

    purposes of policymaking and regulation.4 As data collection and computing power continue to

    expand, it is safe to assume that the appeal of happiness-based policy will grow as well.

    Given the significant shortcomings of GDP as an estimate of national well-being,

    policymaking based on direct measures of happiness has obvious appeal as a way to reorient

    government action toward having a more direct and positive impact on the lives of a nations

    citizens. However, there are numerous problems with the concept of happiness or subjective

    well-being that cast doubt on its usefulness as a policymaking tool. In this paper, I will survey

    problems in three areas: definition, measurement, and implementation. In short, (1) happiness is

    too vague and multifaceted a concept to define clearly and precisely; (2) even if it could be

    2 Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, Mismeasuring Our Lives: Why GDP Doesnt Add Up (New York: New Press, 2010), http://www.stiglitz-sen-fitoussi.fr/en/index.htm. 3 J. F. Helliwell, R. Layard, and J. Sachs, eds., World Happiness Report (New York: Earth Institute, 2012), http://issuu .com/earthinstitute/docs/world-happiness-report; OECD Guidelines on Measuring Subjective Well-Being (Paris: Organisation for Economic Co-operation and Development, 2013), http://www.oecd.org/statistics/guidelines-on -measuring-subjective-well-being.htm. 4 These reports can be found at http://www.whitehouse.gov/omb/inforeg_regpol_reports_congress; the most recent two reports (from 2013 and 2014) have downplayed this idea significantly.

    http://www.stiglitz-sen-fitoussi.fr/en/index.htmhttp://issuu.com/earthinstitute/docs/world-happiness-reporthttp://issuu.com/earthinstitute/docs/world-happiness-reporthttp://www.oecd.org/statistics/guidelines-on-measuring-subjective-well-being.htmhttp://www.oecd.org/statistics/guidelines-on-measuring-subjective-well-being.htmhttp://www.whitehouse.gov/omb/inforeg_regpol_reports_congress

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    defined, it is an essentially qualitative concept that is difficult to quantify and measure with any

    confidence; and (3) even if it could be measured, designing and implementing policy based on

    happiness raises a number of ethical and political issues that cannot be solved by improving the

    science of measurement. In the end, this paper sounds a strong cautionary note to policymakers

    who might consider incorporating measures of happiness or subjective well-being into their

    policymaking processes and deliberations.

    Definition

    The most fundamental problem with happiness-based policymaking is that happiness is a

    notoriously difficult concept to define. Like justice or beauty, happiness is a vague term

    that means different things to different people; as a consequence, even though everyone knows

    what it means in various situations, we would be hard-pressed to come up with a single

    definition that captures all those aspects for every person. Philosopher Sissela Bok devotes an

    entire chapter of her book Exploring Happiness to this issue; the title of the chapter,

    Discordant Definitions, is indicative of her view.5 As she writes, such abstract terms provide

    ideal vessels into which people can pour quite different, sometimes clashing, meanings.6

    Economists and policymakers rely on the definitions proposed by philosophers and

    psychologists, but, as we shall see, they are of little help.

    Even though philosophers have studied happiness for thousands of years, they too have

    failed to arrive at a single, canonical definition. Aristotle wrote eloquently about the concept of

    eudaemonia, which describes a life of virtuous flourishing and realized excellence in ones

    5 Sissela Bok, Exploring Happiness: From Aristotle to Brain Science (New Haven, CT: Yale University Press, 2010), chapter 3. 6 Ibid., 57.

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    chosen pursuits. This idea resembles modern psychologists notion of life satisfaction but is

    ethically much richer.7 In his seminal work on utilitarianism, Jeremy Bentham relied on a far

    simpler version of happiness, a hedonic conception based on pleasure versus pain. John Stuart

    Mill later elaborated on this, positing higher and lower forms of pleasure as reflected in his

    famous statement that it is better to be a human being dissatisfied than a pig satisfied; better to

    be Socrates dissatisfied than a fool satisfied.8 Modern philosophers accept all these

    conceptions as valid interpretations of happiness but no one of them as definitive; as Wayne

    Sumner writes, no simple theory about the nature of happiness enjoys much support among

    philosophers; there is not even agreement that such a theory is possible. About the only thing

    everyone agrees on is that happiness is a complex and multi-faceted notion, one not easily

    reduced to a formula or slogan.9

    Psychologists who study happinessoften known as positive psychologists, in contrast to

    the majority who study mental disorders such as depression and anxietyalso have not settled

    on a single definition. Ed Diener, one of the founding figures in the area, wrote with several

    colleagues that the nature of happiness has not been defined in a uniform way. Happiness can

    mean pleasure, life satisfaction, positive emotions, a meaningful life, or a feeling of contentment,

    7 On Aristotles conception of eudaemonia, see Stanford Encyclopedia of Philosophy, s.v. Aristotles Ethics, by Richard Kraut, revised April 21, 2014, http://plato.stanford.edu/entries/aristotle-ethics/. 8 Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (Oxford: Clarendon Press, 1786; 1823), http://www.econlib.org/library/Bentham/bnthPMLCover.html; John Stuart Mill, Utilitarianism (London: Longmans, Green, and Co., 1879), http://www.gutenberg.org/ebooks/11224. (The specific quote in the text is from chapter 2.) Philosopher Martha Nussbaum locates Mills version of happiness between Benthams simple hedonism and Aristotles rich eudaemonism. See Nussbaum, Mill between Aristotle and Bentham, in Economics & Happiness: Framing the Analysis, ed. Luigino Bruni and Pier Luigi Porta (Oxford: Oxford University Press, 2005). Nussbaum also criticizes psychologists practice of linking their conceptions of happiness to those of Bentham and Aristotle. See Nussbaum, Who Is the Happy Warrior? Philosophy Poses Questions to Psychology, in Law & Happiness, ed. Eric A. Posner and Cass R. Sunstein (Chicago: University of Chicago Press, 2010). 9 L. W. Sumner, Welfare, Happiness, and Ethics (Oxford: Oxford University Press, 1996), 139.

    http://plato.stanford.edu/entries/aristotle-ethics/http://www.econlib.org/library/Bentham/bnthPMLCover.htmlhttp://www.gutenberg.org/ebooks/11224

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    among other concepts.10 Mirroring Sissela Boks philosophical viewpoint, psychologist Daniel

    Gilbert writes that happiness is nothing more or less than a word that we word makers can use

    to indicate whatever we please. The problem is that people seem pleased to use this one word to

    indicate a host of different things, which has created a tremendous terminological mess.11 Many

    psychologists prefer to use the term subjective well-being, coined by Diener, to encompass both

    hedonic pleasure in the moment and life satisfaction over time, but well see in the next section

    the additional problems this composite definition causes for measurement.

    More than anybody else, philosopher Daniel Haybron has examined the various

    conceptions of happiness used by both philosophers and psychologists. Haybron categorizes

    these definitions into three types, including the two already mentioned: hedonic pleasure and life

    satisfaction.12 Although the nature of each is very different, these two conceptions share an

    emphasis on evaluation: each demands that a person assess his or her happiness either at a point

    in time or over a lifetime. Haybron, on the other hand, favors a third meaning of happiness: a

    persons emotional state itself as opposed to his or her cognitive impression of it. Focusing on

    evaluation puts the cart before the horse; as economists Marc Fleurbaey and Didier Blanchet

    write about life satisfaction, it is not satisfaction that makes a good life, but a good life that

    gives satisfaction.13 Even those who urge the measurement of happiness for policy purposes

    recognize the feeling behind the assessment: Richard Layard writes that happiness is feeling

    10 Ed Diener, Christie Napa Scollon, and Richard E. Lucas, The Evolving Concept of Subjective Well-Being: The Multifaceted Nature of Happiness, in Assessing Well-Being: The Collected Work of Ed Diener, ed. Ed Diener (Dordrecht: Springer, 2009), 68. 11 Daniel Gilbert, Stumbling on Happiness (New York: Vintage, 2005), 33. 12 Daniel Haybron, The Pursuit of Unhappiness: The Elusive Psychology of Well-Being (Oxford: Oxford University Press, 2008). 13 Marc Fleurbaey and Didier Blanchet, Beyond GDP: Measuring Welfare and Assessing Sustainability (Oxford: Oxford University Press, 2013), 171. In the technical language of economists, they write, It is apparently easy for economists to forget that when the economic model makes the individual maximize u(x), this means that the individual cares about x, not u(x). If individuals cared about u(x), they would spend their time working on their mind-set rather than changing the world around them. Ibid., 202.

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    good, and Ed Diener, with his son Robert Biswas-Diener, emphasizes feeling as well as

    evaluation: Happiness is the name we put on thinking and feeling positive...

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