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Richard Epstein on Happiness

July 9, 2009

Econtalk hosts Richard Esptein on burgeoning happiness studies literature (see link for example).

The findings of this research have formed the basis of an attack on conventional economic thinking, namely that people prefer more wealth to less, and that people are to some degree rational (though there are differing views on what that means) in their pursuit of material ends. Advocates have suggested that the goal of public policy should be to maximize national happiness rather than GDP or other measures of wealth.

Since the concept of “national happiness” implies that it is possible to make interpersonal happiness comparisons and to aggregate happiness across a population, it also implies the legitimacy of wealth redistribution to increase aggregate happiness because, as science has shown, the losers won’t miss it very much any way.

I will summarize Esptein’s points and present a few additional observations.

Epstein discusses the finding of some research that more money does not make people happy. This can be restated as, people earning more money maybe not any happier or perhaps less happy. If you think about it for a moment, this is a perfectly reasonable conclusion because the higher pay of certain jobs is required to compensate the employee for high stress, frequent travel, long hours, and other factors that might make the employee less happy.

Esptein points out that many people willingly take these jobs because they are trading off less happiness for more money. Does this prove the point that money doesn’t make you happy but people go for the money, anyway? Are people systematically delusional? Not exactly. Epstein points out that people are willing to make different trade-offs of happiness for money at different periods of their life. Someone might take a higher paying stressful job either to gain valuable experience that they hope will lead to a job doing what they really want to do a few years down the road, or, to increase their savings because they plan to do something else later in life, say, start a family. Epstein argues that people should not be required to make the same tradeoff between money and other values at all times in their life — rather, they should be free to make this trade-off differently at different times in their life.

The discussion then moves on to the concept of “demonstrated preference”. People have many choices in modern American life. Every day people move from one state to another, quite their job, change careers, go back to school, get married, get divorced, take time off work to raise children, and all kinds of other significant life choices. If, as this research suggests, people are making choices that do not lead to happiness, are people systematically delusional? When presented with this information, why don’t people make different choices?

Epstein also points out that the willingness of some people to work very hard especially in jobs that require a lot of international travel, makes the rest of us better off because of the benefits of international trade. I might add that, to the extent that people are working hard to make money, the additional capital accumulation enables the remainder of the population to work less hard for the same standard of living because overall labor productivity is higher. If some people want to sacrifice their happiness for the betterment of society, should they be prevented from doing so?

Epstein makes a number of good points on the envy issue. Some of the research shows that happiness derives from relative position, which is to say that envious people are unhappy with their relative position. I won’t summarize all of Epstein’s points here. I will add, is envy a legitimate type of preference to base public policy on? If some people drive happiness from the misfortune of others, should government policy treat that as a legitimate preference to be traded off against the property rights of people who have acquired their wealth through labor or commerce?

The last part of their discussion deals with the point that some research has shown that having children brings less happiness than you might expect, or, as Epstein points out, less happiness than the people doing the research might expect.

Epstein argues on the basis of evolutionary psychology that a lot of our innate needs are based on the drive to reproduce our genetic material and that our emtions must be understood in relation to this. That is why people have evolved to care about our offspring. And caring means experiencing a whole range of negative emotions including fear, sadness, worry, regret, which motivate us to keep our offspring safe to avoid harm, and to avoid experiencing these most negative states. Esptein points out that the happiness literature presumes a hedonistic bias, while our emotions are much more complex than this.

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