Yale Bulletin and Calendar

March 16, 2001Volume 29, Number 22



Robert Lane



Professor Lane explains the economics of happiness

Robert Lane, the Eugene Meyer Professor Emeritus of Political Science, is an authority on well-being in advanced, industrialized societies.

He is author of the critically acclaimed "The Market Experience" (Cambridge University Press, 1991), in which he examined the workplace and its discontents, as well as "Political Ideology: Why the American Common Man Believes What He Does." He has also written dozens of articles and parts of books, including most recently "Moral Blame and Causal Explanation" in the Journal of Applied Philosophy, and "Diminishing Returns to Income, Companionship -- and Happiness" in the Journal of Happiness Studies.

A Yale faculty member for 38 years, Lane has held the presidency of three major political science organizations -- the American Political Science Association, the Policy Studies Organization and the International Society of Political Psychology. He became a fellow of The British Academy in 1995.

In his latest book, "The Loss of Happiness in Market Democracies," published last year by Yale University Press, Lane looks at what contributes to people's happiness generally and what detracts from it. The Yale Bulletin & Calendar met with him recently to discuss his book and some of its implications. The following is an edited account of that interview.


Would it be fair to characterize the central thesis of "The Loss of Happiness in Market Democracies" as: "Money, once it has satisfied people's basic needs, does not buy happiness"?

If you won a lottery or if you get an increase in pay, it does have a momentary, important effect. You feel better. You're happier. That's short term. Very quickly you adjust to that, and the effect is dissipated, in the sense that you've set your standard higher. Actually for long term there is no way that you can show that the rich are systematically happier than the not-so-rich. At least you can't in advanced countries.

I'd like to make that distinction between the less-developed countries and advanced countries. For every increase in average income in the less-developed countries, there is a clear increase in the subjective well-being, happiness or satisfaction of the population. The relationship is clear, strong and persistent. In richer countries, it's very hard to show any relationship, and you can't do it either over time. As income goes up, happiness does not go up. In fact, since World War II, it has gone down in the United States. That's what journalists want to talk about, but it's not the most important finding. The safest thing to say is that after you've arrived above the poverty level, levels of income have no relationship to happiness.

Spain is a good example. Since World War II, Spain has gone from a developing country to a developed country. So it has gone from a place where increased income buys better diets, better clothing and better public facilities to a place -- as in France or Germany or Britain or the U.S. -- where increased income buys things of far less urgency. It can buy fast foods, more colored televisions, new cars, jewelry. Those things don't have the same effect on people -- properly so -- that a better diet does. That's why there's a difference between less developed countries and advanced countries.


Isn't happiness an elusive concept? How do you define it in your book?

It is an elusive concept. It is a feeling of subjective well-being, and that doesn't always have an objective reference, doesn't leave a trail of evidence. It's hard to get data on it. The industry that's now called "quality of life research" -- with many practitioners, two journals and a large group of scholars -- goes about it by first asking quite directly, "How happy are you? Would you say, taking everything into consideration, that you're very happy, fairly happy or not too happy?" Well, that's a rather simple-minded question. It taps an instant mood, and it's influenced by weather and whether your football team wins. But it nevertheless is a strong indicator of other things that should go with it. If you don't have headaches, if your life is going well, then you say you're happy. Another approach asks for an evaluation, cognitive more than just emotional -- "Taking all things together, how satisfied are you with your life?" That means you're appraising your life, not just how you are now. That's quite close to the happiness question, but there are differences. Of the two, the second is the better question. Then there is something called "positive affect balance," that gets people [to describe] the things that have happened to them recently that make them feel good, and the things that have happened that make them feel bad. You get a balance.


Are the participants' responses valid? Well, you ask their friends. You find out that, yes, their self-reports are fairly accurate. Ask their parents, their children, their teachers. They're fairly accurate.

There are also physiological measures. Positive affect -- that is, happiness -- is a left-lobe phenomenon; negative affect is a right-lobe phenomenon. You can get those measures [by magnetic resonance imaging]. They know whether people are faking it or not.

All of these ways of trying to validate these questions have pretty well satisfied people that self-reports on mood and satisfaction are accurate.


What is the evolution of the idea of happiness as an ideal?

Aristotle says it's the one thing that everybody wants. He has the notion that the way to get it is to be a philosopher, clearly a mistaken notion. Then the concept itself begins to disappear in the Middle Ages and has no salience in the way people think. It's Heaven that they want -- and not in this world, but the next. The references to happiness in literature and so on decline drastically. Then it begins to peep up again in the Renaissance, but you don't get a philosophy of happiness until you get Bentham [English philosopher Jeremy Bentham, 1748­1832) and the Utilitarians. Although he had many misconceptions about it, Bentham launched the philosophy that is the dominant philosophy of modern time -- that money is the best measure of happiness. Then the economists picked it up and talked about happiness for a while. Then Marshall [English economist Alfred Marshall, 1842­1924] got nervous and called it "utility." Ever since then, the economists have been conservators for the idea of utility -- meaning, in fact, satisfaction, happiness and positive mood, but disguising it.

Economics is a discipline or study of wealth, not of happiness or utility, even as they define it: getting what you want, preference ordering. Adam Smith was the economist who best understood this. He said that happiness is not from economic gain in the material sense, but from what other people think of you. And he was so right. He said it was social esteem, not ease of body and mind. Ambition, he thought, led only to unhappiness. I don't think, given the dominance of the profit motive, that current economists have much faith in that.

It wasn't really until studies in the '60s and '70s in the U.S. that people tried to get an empirical measure of happiness. They used the kind of survey questions I just mentioned. And suddenly psychology, from being a science of illness, becomes in a sense a science of well-being and health -- at least one wing of it is.


If creating need and desire is what makes the market run, aren't we in a no-win situation?

Yes. We could be. It's a little late, I know, to talk about materialism which is measured by questions like, "Are you happier when you have more goods and services?" "Do you envy people who have better cars?" "Do you think making money is an important purpose of your life?"

People who rank high in that kind of measure are not happy people. The higher people are on the materialist scale, the lower they are on the happiness scale. Why is that? It seems that the very nature of that reward as well as the nature of what they do to get it is what's called an "extrinsic" reward. It's controlled by somebody else. There's no indication of enjoyment of the process. I am hesitant to say that we should all be very grateful to those materialists, particularly small businessmen, because they have sacrificed themselves, and the rest of us -- journalists and academics -- profit from it, because we can do what is enjoyable. I'm not saying you should pity the poor businessman. I'm simply saying that those of you who are in academia, or the arts or journalism, or even civil service, should appreciate the fact that it is because of the wealth that business has created that you can lead the life that you want to lead.


What about human companionship which, I believe, ranks highest as a source of happiness in your book?

Companionship is a word I use to cover friendship and family. The evidence is quite strong in every study of subjective well-being that a good family life contributes more to high subjective well-being -- happiness, if you like -- than anything else, and that doing things with friends contributes more. It's very clear that the number of friends we have, for example, is a much better indicator of happiness than the number of dollars we have. What we're talking about is going back to a basic reward, for which we are biologically programmed. For people who are not economists, it's no surprise. In fact, you can ask people to test it for themselves. Aren't you made happier by your wife's good opinion of you or that your children are thriving than by buying a more expensive car or having a raise? If you test it that way, the current culture that we live in is just out of sync with the lives we lead.


Isn't doing work one finds meaningful another essential element of happiness?

I think it's the second most important source of well-being. That is also evident in the data. If you enjoy what you're doing, it really doesn't matter how much you're earning, provided you're not poor. That's again why certain privileged classes, such as journalists and academics, who can do what they enjoy doing rather than what they have to do, have a greater sense of well-being. My earlier book, "The Market Experience," was devoted to exactly that question. Economists tend to think of work as the sacrifice for which income and leisure are the payments. That's just nonsense. Intrinsic work enjoyment, doing a job you enjoy doing, has two important elements. Doing a job that is not too closely supervised, so that it's your work. And another is non-routine. Working with ideas and people rather than things has some advantages, but I don't want to press that, because artisans work with things and are happy people.


What can we do to change things, to make market democracies more conducive to our happiness?

We have to understand that there are enormous cultural and economic forces encouraging a materialism that is not fruitful for happiness. How do you change a culture? Well, you talk. The journalism profession is one that has some substantial responsibilities. There are some bad guys too. Advertisers -- individually righteous, I'm sure -- are seductive. Their message is that in order to be liked, or have any kind of standing in your community, you must have this. Or to have your husband welcome you when you come home, you must smell like that. Economists bear a responsibility. And they have high stakes. There's no vested interest like an intellectual interest. Only, I think, in Europe and in some American universities are economists beginning to take the question of "What is utility?" seriously and beginning to look at how economics can facilitate it. I hate to sound like a preacher, but I would say, "go forth and tell the world; give it the message." Otherwise, there is no way in which most societies can overcome the sources of their misery.


Is it likely that a downturn in the economy, when people aren't running so much on the materialistic treadmill and when unemployment is higher, will have a positive effect on society, perhaps renew a sense of community?

I doubt it. People are better people when they're secure, when they're well taken care of and have adequate resources. Once they are plunged into a situation where they're unsure about the next meal, the job or someone they know who is unemployed, they're not at their best. Then you go back to the psychology of the developing countries where money has greater effect on well-being. That's the paradox of my message. I think we should try to stay as prosperous as we can so that we can then engage in and enjoy the nonmaterial parts of life.

-- By Dorie Baker


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Campus Notes



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