Harcourt HAPPINESS FRONTIERS and how to make others happy Paul Frijters – UQ+ ANU.
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Transcript of Harcourt HAPPINESS FRONTIERS and how to make others happy Paul Frijters – UQ+ ANU.
Harcourt
HAPPINESS FRONTIERSand how to make others happy
Paul Frijters – UQ+ ANU
Life Satisfaction in Australia
6
6.5
7
7.5
8
8.5
9
9.5
10
Lif
e S
atis
faci
tio
n
AGE
Raw Average Life Satisfaction
Australia (HILDA) Australia (Smart Train)
Source: Tony Beatton, 2011 PhD thesis
Very young, very happy.
Midlife: stresses.
Mid-old (60-70) bliss again.
Very old (80-90) health deteriorates: happiness drops again.
-1-.
75-.
5-.
250
.25
.5.7
51
Est
ima
ted
imp
act
on
life
sa
tisfa
ctio
n
-16 -12 -8 -4 0 4 8 12 16Quarters since major worsening in finances
Without Fixed Effects With Fixed Effects
Interpretation
People are unhappier around the period of the negative shock (financial worsening). You see anticipation effects and adaptation: 2 years after the shock, no more effect.
-1-.
75-.
5-.
250
.25
.5.7
51
Est
ima
ted
imp
act
on
life
sa
tisfa
ctio
n
-16 -12 -8 -4 0 4 8 12 16Quarters since separated from spouse
Without Fixed Effects With Fixed Effects
-1-.
75-.
5-.
250
.25
.5.7
51
Est
ima
ted
imp
act
on
life
sa
tisfa
ctio
n
-16 -12 -8 -4 0 4 8 12 16Quarters since got married
Without Fixed Effects With Fixed Effects
Content: four big issues in happiness
1. Is happiness determined by genes and early childhood?
2. Happiness and relative income.
3. Fluctuations.
4. Economic development and happiness.
Status quo: life Satisfaction basics
Most used question: ‘How satisfied are you at present with your life, all things considered?’ 0 (completely dissatisfied) to 10 (completely satisfied).
Other formats have been used (0-5, or 0-20 scales, or verbal answers happy/unhappy) but the above is the most used one.
Whether one analyses these questions in an ordinal way or a cardinal way makes virtually no difference for results.
Satisfaction levels are much more strongly related to certain observables (income, marriage, work, education) than satisfaction changes.
Gruen
lecture
Validation?
activity in the brain’s pleasure centers (Dr. Heath’s prisoner experiments in 1950s). Happiness (and emotions generally) are suppressed by fear;
health, smiles, positive emotional arousal, and future intentions: the unhappy quit and are unhealthy.
People communicate happiness as information to others people are thus reasonably good at predicting others’ happiness: there appears a universal body language of happiness which we are evolutionary geared to picking up; Happiness and reading it are thus probably hard-wired.
Self-reported happiness relates strongly to…….
Pleasure centre: septal area of the hypothalamus
Amygdala:emotions
Self-reported happiness is known to relate strongly to activity in the brain’s pleasure centers.
Self-reported happiness strongly relates to health, smiles, and future intentions: the unhappy quit and are unhealthy.
People are quite good at predicting other people’s happiness: there is a universal body language of happiness which we are evolutionary geared to picking up. Happiness is thus hard-wired.
....
Self-reported happiness is mainly interpreted as a reasonable, but noisy, measure of experienced utility, i.e. what individuals on reflection would want to maximise.
Most of the literature is empirical and oriented around the question of what makes people happy. Theories of happiness formation are emerging though.
....
Is happiness fixed at early age
Relevant for the following areas: Birth control. Early-life intervention and school. Migration policy.
Is happiness predetermined?
For Britain0
.1.2
.3P
rop
ort
ion o
f sub
sam
ple
0 2 4 6 8 10
High SES at birth
Low SES at birth
0.1
.2.3
Pro
port
ion
of s
ubsa
mpl
e
0 2 4 6 8 10
High test score at age 10
Low test score at age 10
Policy implications
Good news I: changing the genes of the population is not going to help aggregate happiness much.
Good news II: it is not all lost in childhood. Even the emotionally unbalanced troublesome kids often turn out to be quite happy adults.
Bad news: income and good jobs are more predetermined by childhood (up to 30% variation explained).
Frontier: happiness resilienceFIGURE 3. DYNAMIC PATTERNS OF RESPONSES TO SHOCKS BY CLASS
The resilient group I are those with internal control, non-neurotic. These are the well-loved kids, more often male than female.
Income relativity
Relevant for the following policies: Taxation. Savings interventions. Migration and assimilation. International cooperation on tax. Business cycle intervention via the
understanding of rigidities during recessions.
Happiness and income
Are rich countries happier than poor countries?
Are rich people happier than poor people?
Do countries become happier when they get even richer?
What’s probably going on?
1995/2000 World Value survey findings
Tanz
Nig
Uga
MOL
BAN
PAK
ZIM
Vietnam
India
MOR
ARM
ALB
SALV Ven
Ukr
Alg
MacBela
Bosn
Colombia
Dom
Iran
Bulgaria
Bra
Rom
Uru
Mexico
Rus
S.AFR
Chile
Lat
CROA
Arg
Lit
ESTSloHun
MALT
CzePORTSlovenia
GRE
New Zealand
Isr Spa SIN
GerItaly
FRA
SWEFin
Australia UKBelgCan
DenNetherlands Austria ICESwi
NorUS
Irl
0
1
2
3
4
5
6
7
8
9
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
IND
EX
GDP per capita, PPP (constant 2000 international $)
Life Satisfaction World Values Survey
the western countries
Growing countries:East-Germany?
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Year
Lif
e Sa
tisf
acti
on
2000
3000
4000
5000
6000
7000
8000
Rea
l Inc
ome
(DM
)Life Satisfaction RealIncome
and Russia?
FIGURE 2: Life Satisfaction and Real Monthly Income in Russia, 1994-2001
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
1994 1995 1996 1998 2000 2001Year
Lif
e Sa
tisf
acti
on (0
-1)
0
1000
2000
3000
4000
5000
6000
7000
Rea
l Mon
thy
Inco
me
Life Satisfaction
Real Monthly Income
So rich countries are happier countries, but what about within countries?
Income and happiness within Australia0
24
68
10
Sa
tisfa
cto
in
6 8 10 12 14Log Income
95% CI life satisfaction lpoly smooth
kernel = epanechnikov, degree = 0, bandwidth = .39, pwidth = .59
Happiness and income
And in China in 2003?
So is then true that countries that get richer over time get happier?
Basic pictures: Happiness in the US
0
0.5
1
1.5
2
2.5
3
1973 1977 1978 1982 1986 1990 1994 2000 2004
Year
Ave
rage
Hap
pine
ss
0
5000
10000
15000
20000
25000
30000
35000
Rea
l Inc
ome
Per
Cap
ita
Happiness Real Income Per Capita
Other rich countries?
0
0.5
1
1.5
2
2.5
3
3.5
4
1973 1977 1980 1983 1986 1988 1990 1993 1996 2000 2004
Year
Ave
rage
Lif
e S
atis
fact
ion
UK France Germany Italy Netherlands
Coef st. dev. T-val
married 0.4906 0.1035 4.74
nchild -0.0083 0.0267 -0.312
healthgood 0.8546 0.0724 11.804
healthfair 0.4431 0.0613 7.223
health missing 0.4564 0.1236 3.691
working -0.0651 0.0669 -0.973
just married this year 0.2797 0.2524 1.108
just married 4-6 months ago -0.3192 0.3377 -0.945
just marriedl 6-12 months ago -0.1497 0.2747 -0.545
separated last year -0.2149 0.1514 -1.42
just separated 4-6 months ago -0.0393 0.2047 -0.192
just separated 6-12 months ago 0.0363 0.1738 0.209
pregnant last year 0.2548 0.0919 2.774
had a baby last year 0.183 0.0936 1.955
serious illness last year -0.2165 0.0588 -3.68
Typical results: the 3 waves of the HILDA on life satisfaction (conditional fixed effect ordered logit)
jrelillness -0.0502 0.0435 -1.154
jdeathsp -0.0509 0.1753 -0.291
jdeathother -0.065 0.0513 -1.267
jphyscrime -0.1632 0.1342 -1.216
jpropcrime -0.1684 0.0665 -2.531
jjail 0.0105 0.159 0.066
jretired 0.0079 0.1074 0.074
jfired -0.0197 0.0962 -0.205
jchangejob 0.1079 0.0535 2.019
jpromoted 0.0228 0.0712 0.32
jmovedhome 0.16 0.0454 3.523
log income 0.0836 0.0384 2.18
finances got better last year 0.4306 0.1447 2.976
fin better 4-6 months ago -0.0511 0.2149 -0.238
fin better 6-12 months ago -0.5138 0.193 -2.662
finances got worse last year -0.5058 0.1665 -3.037
fin worse 4-6 months ago 0.2163 0.2298 0.942
fin worse 6-12 months ago 0.0006 0.2115 0.003
Mean log-likelihood -0.97393
Number of cases 7553
Shows a kink, because better finances relates
to 2* more money than worse!
And Chinese data (Knight and Song 2004)
Best evidence we have for relativity!
Hence rich countries indeed are happier than poor ones and rich people are happier than poor people. Countries that get richer dont get happier though, unless they come from the bottom.
The relativity story: basic needs get satisfied, what remains is vanity
* '1 2ln( ) ln( / )t t t t tU y y y Z
0
Hap
pin
ess
Relationship across time in a country
Country t0
Log Income
Country t2
Country t1
Relationship within a country at some time
yt individual Income, y*t aggregate income
Direct questions about the role of relative income
Source: Mujcic and Frijters (2011)
Findings from vignettes
Males, young individuals and those from wealthier families are more status oriented. Strong evidence for the existence of status effects (no one in the data consistently chooses the situation with highest absolute income).
Why the opposition to slowing growth? Have a look at these US Gallup polls
A positive outlook matters immensely, which is itself related to a reality of continued relative standing versus other countries.
Hence a country individually is caught in an international status race.
The recession didnt change relativities so what’s going on?
Example of a current index
Development and happiness
Happiness is empirically found to increase in the relative and absolute income of countries: economic development at the bottom is good for happiness. Win Win.
One question is whether this growth comes at the expense of sustainable happiness of itself and other countries. Not clear, but often argued.
Development often comes with new institutions that reduce the severity and incidence of people constantly having their self-esteem under pressure from being in abuse un-loved situations that they cannot escape. Not universally true though: systematic abuse seems to be connected to a combination of low income and culture. Jury still out.
Recap: policy relevant issues Relativity is all-important. People really are
mainly motivated by status races, as Adam Smith already remarked (‘it is our vanity that urges us on’). Hence higher progressive taxation at the world level is probably a good thing.
Relativity seems international, reducing the role of national policy.
Happiness is not fixed at birth or at 10 so there is hope for all and a potential policy role across the life-cycle. The effect of upbringing is mainly on the susceptibility to shocks, less on the average.
What can you do? 3 tips.
1. Your lie is your gift. The most important variable factor in happiness is probably self-esteem, which relies on a positive self-image.
2. Be clear about power. Battles over power are inevitable, but they should be short and clear.
3. Give and demand what is needed for sustainable relationships. Walk away from relationships where this is not possible.
Lunch BreakStudents – your lunch will be provided in the Chemistry
Building (#68) CourtyardTeachers – your lunch will be provided in Room 324 of
the John Hines Building (#62)