HAPPINESS AND ECONOMISTS

Economists seem to have discovered only recently the academic psychology literature on happiness -- and it seems to have caused a bit of soul-searching among them. The research shows, of course, that money does not buy you happiness. �So why are we designing policies with the aim of giving everyone higher incomes if that will not make them any happier?�, some economists are now asking. The simple answer: �Because almost everybody WANTS higher incomes� does not seem to have occurred to all of them yet.

They seem to think that if money will not necessarily make you happy they should go on strike in their efforts to get more of it to you. But satisfaction, comfort, convenience, leisure options, security etc are not the same as happiness. The thing that most influences how happy you are is probably your relationships with others. Given satisfaction with your relationships, you will probably remain roughly as happy through a wide range of incomes. But you will still want more of the things that money can buy if you can get them. So you will still say �Yes, please� to the possibility of more money.

There have been some breathtaking non-sequiturs among economists over the matter. Some note that a big thing that causes UNhappiness is unemployment. And they conclude from this that maybe we should stop all economic reform because economic reform may give most of us more money but it also tends to cause some short-run unemployment. But this is pusillanimous. Would it not be much more logical to deduce that we should in fact make a major attack on ALL unemployment? Given the high levels of our unemployment, surely the obvious conclusion is that we do indeed need BIG reform.

And one technically easy reform that would reduce unemployment rapidly would be to cut the legal minimum wage by (say) 25%. That would make many of the chronically unemployable worth employing again. And motivating the unemployed to seek work is needed too. Cutting (say) 20% off what the government gives them would be a big help there. They did that in New Zealand not too long ago under Roger Douglas so why not elsewhere? More courageous thinking needed!


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SWEDEN AGAIN

Mark Kleiman has posted quite a clever counterblast to my post about Sweden but I won�t bore people by Fisking it. The topic is a bit done to death by now. I cannot resist noting however that all the countries which Kleiman mentions as poorer than Sweden have suffered heavily from even worse socialism than Sweden. Sweden is a high tax and high �welfare� place but they have always left it to businessmen to run their businesses -- unlike most of the rest of Europe. That is why the comparison between the USA and Sweden is so interesting: Two highly capitalist economies of long standing that differ mainly in the different proportion of the national income that they divert into �welfare� expenditure. No prizes for guessing which one has forged ahead.

Kleiman also glides over the point that once you start trying to measure wellbeing instead of productivity you run into pluses as well as minuses. Swedes, for instance, have more leisure but also have to spend a considerably higher proportion of their income just to keep warm. All of which goes to show that economists who claim to be able to measure wellbeing simply reveal their politics. They should stick to the dollars and cents.

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BLOGGER BRAINS

Prof. John Quiggin (an economist at the ANU) and I recently had an email discussion of the idea put up by him and Ken Parish to the effect that there are �Right-brain� and �Left-brain� bloggers. I argued that he was mistaking a sociological phenomenon for a psychological one. He said he would put the debate up on the net for the delectation of all and I see from Google that he has now done so. I cannot see where he has given out the link to it, however, so here it is: