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Thread: Happiness: Lessons from a New Science

  1. #1 Happiness: Lessons from a New Science 
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    Mar 2007
    Has anyone read Happiness: Lessons from a New Science by British economist Richard Layard? Basically, he brings together research in psychology and other areas to advance the notion that societies should be trying to maximize the happiness of their citizens, rather than strive for economic efficiency, which is something entirely different. I wrote about the book on my blog, and am pasting that post below.

    Anyone interested in discussing the book?

    Just finished reading “Happiness: Lessons from a New Science” by British economist Richard Layard. Despite being written by an economist, the book is very readable, and quite groundbreaking.

    Layard gathers data from a variety of sources to discover why Americans are no happier now than they were 50 or 25 years ago, despite an increase in material wealth. (Ditto for Europe over the last 25 years.) He arrives at a number of fascinating insights:

    1 - Once someone is above the poverty level, additional wealth has only small influence on happiness. In fact, people adapt to what they buy not long after they buy it.

    2 - Family relationships are the most important element in happiness. Adults raised in single-parent homes are significantly unhappier on the average than those from 2-parent homes — and the number of single-parent families has exploded in recent years.

    3 - Happiness is greater in countries where people trust each other than in ones where they don’t. In America, this percentage of trust has fallen over the years, as the crime rate has increased.

    4 - Status and fairness are very important: psychological studies show that if you are given money, but your neighbors are given more, you’re less happy than if no one got anything.

    The book is full of stuff like this. Many of the studies that Layard references have been described in the popular media before, but Layard brings them all together here. And he does this for the purpose of figuring out what social policy should be.

    For instance, if in the name of economic efficiency and lowered prices, some workers are laid off, this is a negative overall because the unhappiness of the unemployed worker — and the newly unemployed suffer a sharp decline in happiness — outweigh any minor advantage from lowered prices. (A revised Utilitarianism is at work here.)

    From a happiness standpoint, redistribution of income via taxes makes sense — the rich will miss the money given to the taxman less than the poor will appreciate getting it.

    The psychological studies that Layard describes basically demolish the concept of the rational man so beloved by mainstream libertarian economists. People aren’t very rational at all. E.g., they place much greater emphasis on what’s happening today than on what needs to be done tomorrow. (Anyone who knows they need to diet but puts it off understands what Layard is talking about.)

    One implication of this is that society, via government, must make the long term decisions for our benefit, because we as individuals aren’t likely to. And we’re more apt to go along with something we think is right if everyone else has to go along with it too. E.g., if taxes were voluntary, even if you knew they mostly went for good purposes, would you pay them if you knew your neighbors weren’t?

    Can’t recommend this book enough, for anyone interested in social policy. There’s a link to the book on Amazon under “A List: Real World Economics” in the Links section on the right. (on my blog)

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