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July 27, 2006

Jamie Whyte on Happiness

Really rather puts the boot into Layard and the happiness brigade.

Consider just three findings from the “new science of happiness” as Richard Layard, the economist and Labour peer, describes it. Above about £15,000, increasing your income adds little to your happiness. Believing in God makes you happy. Getting divorced makes you unhappy.

These facts explain why Westerners are no happier now than 50 years ago; our increased wealth has been accompanied by more divorce and less belief in God. They also explain why Nigeria is a happier country than Spain and why Indonesia is happier than France.

Do you really want the Government to solve this problem? Do you want it to correct your atheism for you? Or to see to it that you get and stay married?

Further:

To have been born British is to have won first prize in the lottery of life. This is almost as true now as it was when Cecil Rhodes said it. But not because the British are or ever were the happiest people on earth. It is because, unlike those happy Nigerians, we are prosperous and free. Which means we have just about as much happiness as we want.

One thing about Layard’s argument that almost no one seems to have noticed is that he is clearly calling for lower taxation than we have presently. Yet everyone seems to think that he is calling for higher. People do seem to read into books what they want to see rather than the arguments actually laid out.

July 27, 2006 in Economics | Permalink

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Comments

Above about £15,000, increasing your income adds little to your happiness.

Hah! Speak for himself. I've just doubled my salary and it's put a broad grin on my face.

Posted by: Tim Newman | Jul 27, 2006 8:27:15 AM

Tim,

I am, obviously and as you know, a firm believer (hence my gratingly annoying level of happiness) in the use of anecdote over lengthy and detailed statistical study.

In this vein I offer a counter to Tim (Newman)'s shallow and greedy outlook on life. I took a pretty substantial cut in salary recently, but massively increased my happiness. So there.

Actually, now that I think of it, the cut was coincident with a move from London to Edinburgh. I wonder if that might be relevant.

And now that you mention it, if it had been cut to £15k, it's safe to say I would have been sick as a parrot...

What a load of bollocks.

Posted by: The Pedant-General | Jul 27, 2006 9:51:17 AM

Come on, someone, tell us how much in expenses, or attendance pay, or whatever it is, that Layard draws from The Lords. Add that to his University pension (probably half-pay, index-linked), his book royalties and his other little earners. Would it exceed £15k do you suppose? Or is £15k meant to be enough only for the little people?

Posted by: dearieme | Jul 27, 2006 10:44:09 AM

Tim

I'm not convinced that Lord Gloom of Layard is arguing for less taxation in the following sense:
(a) Layard argues (Chapter 10) that as those taking on extra work cause pollution, this externality should be taxed.
(b) Layard also argues that seeking more income is addictive – and should be discouraged by taxation the same way that we attack other addictions such as smoking

Putting (a) and (b) together he says (footnote 17) that this justifies a tax of 60% of additional income and that this is in line with European marginal tax rates. So, while he may not be advocating more taxation, he is certainly arguing against tax cuts (and that taxes are corrective, rather than being viewed as distortions).

That said, to the extent that he is arguing for downshifting and reduced pursuit of higher incomes, there may be a lower tax take. It’s not clear to me that this would be lower as a percentage of the economy.

In any case, I just do not subscribe to his views on pursuing higher living standards as being pollution and addiction. I find his arguments here unpersuasive and am not yet prepared to throw well-founded economics on the distorting impact of taxation out the window.

More directly on what Whyte is saying in his good little article, I like to take Layard’s main argument to its logical extreme. Picture an oppressive dystopia run by bureaucrats whose job is to do anything to achieve improvements in measured happiness (a kind of “hangings will continue until morale improves” world). That is the danger we run when we couple Layard’s conclusion that there should be the pursuit of the greatest happiness of all (eg page 5 of the Penguin paperback) with his view (page 147) that happiness should be a goal of policy, with progress of national happiness measured and analysed as closely as GNP growth. Can you imagine bureaucrats putting this into practice? What does it actually mean - would there be quarterly General National Happiness (GNH) accounts, with GNH compared across countries and a GNH deflator used to put everything on a "real" basis.

Taken literally, his words are utter madness.


Tim adds: On the taxes. If happiness increases up to15 k and not thereafter, and happiness is the main goal of public policy, then taxation should be, by this argument, zero below 15k and 60 % (direct and indirect) above this. That raises markedly less money than the system we have now which starts with NI at something like 60 quid a week and income tax at 5k.

Posted by: stephen c | Jul 27, 2006 10:57:33 AM

[ If happiness increases up to15 k and not thereafter, and happiness is the main goal of public policy, then taxation should be, by this argument, zero below 15k and 60 % (direct and indirect) above this.]

this would only be true if there was nothing else the government did which was relevant to happiness, which is not Layard's view.

Posted by: dsquared | Jul 27, 2006 11:27:13 AM

The problem with the argument about "money won't make you happier" is that it's frequently spoken by people who have plenty already, or at least have tasted wealth and decided they don't want it.

Posted by: Tim Almond | Jul 27, 2006 12:13:02 PM

[The problem with the argument about "money won't make you happier" is that it's frequently spoken by people who have plenty already, or at least have tasted wealth and decided they don't want it.]

Why is this a problem? Who else would be in a position to judge? Anyone else making this argument would be rather like Cliff Richard telling us about sex.

Posted by: dsquared | Jul 27, 2006 12:57:27 PM

dsquared,

I didn't explain too well. And I suppose it's right.

I was just thinking about how it doesn't address the issue for people who don't have much, which is not just about money, but how much people feel in control of their lives. How people chasing owning a BMW won't realise how little it really matters, until they actually own one.

Posted by: Tim Almond | Jul 27, 2006 3:34:07 PM

Well, I can assure Messrs. Newman, P-G and any other interested party that I would be decidedly unhappy were my income to fall to 15K, as it would leave me unable to feed and clothe my family and house them in the pleasant location that we currently live in.

Of course, were that fall in income to accompany a move to the arse end of nowhere, where a nice 3 bed house costs 50p, crime doesn't exists, and labour is cheap and plentiful, I might be rather happier.

Posted by: Sam | Jul 27, 2006 4:23:31 PM

Excess money does indeed make people unhappy, but why wait for the government to solve this problem? I am willing to help you now. Some will criticize you for selfishly pursuing your own happiness at my expense, but don't listen to them! I am a charitable soul, and will endure the burden and unhappiness of taking your excess money if there is even the slightest chance it may improve your happiness. Of course, there are no guarantees your happiness will improve. However, it would be irresponsible of me to return any money in the event that it did not, in case I make things worse. If you wish to avail yourself of this service, do not hesitate to contact me, and I will forward details of where to send the cheque.

Posted by: Ed | Jul 27, 2006 6:09:21 PM

Religion = happiness??

This is a classic example of confusing correlation with causation. As religiousness increases, so does happiness. They argue that religiousness CAUSES happiness. Perhaps, it is reversed, happiness causes religion. The number one reason people give up religion is that somethat bad happens that cannot be accounted for by their religious beliefs (e.g. death, disease, destruction). David Hume called this the problem of evil.

Meanwhile, all these happy people who have very fortunate, lucky lives see no reason to stop believing in god. Thus, I would argue happiness more often causes religion than vice versa.

If you're still not convinced, I offer one additional example for the foolishness of automatically concluding correlation equals causation. The quantity of ice cream a person eats is positively correlated with marijuana smoking! Does this mean that we should ban ice cream to decrease drug use? NO. They are spuriously related do to the fact that younger people tend to enjoy both ice cream and marijuana; old people not so much.

Furthermore, many psychologists argue that religious beliefs are delusions--they are beliefs held because it would be nice if they were true, not based on fact. It seems that people who utilize delusions tend to avoid harsh realities and may report higher (false?) levels of happiness. Many people would be happier if they believed they were trillionaires.

Should the government establish a policy to brainwash everyone into thinking they're trillionaires? No, this is absurd. It should not be the government's policy to promote religion or any other beliefs not based on fact, merely because people would feel happier if these potentially erroneous beliefs were true.

Michael Hoerger
psychmike.com

Posted by: Mike Hoerger | Jul 30, 2006 9:19:03 AM

"If happiness increases up to15 k and not thereafter"

Which is an "if" that has not been proven - hint: "happiness science" is not exactly reliable; the fact that one study contradicts the next should give a clue - and for many individuals, is demonstrably false. People like dsquared, with their simplistic "money can't buy happiness" cant, ignore that MANY factors can contribute to increased happiness, and for plenty of individuals, money well over 15k (and benefits it brings) can be a contributing factor. I know this to be true from personal experience. One can cite "happiness studies" otherwise all one likes, but I know better. There are also "happiness studies" that supposedly show crippled people are just as happy as people who can walk, that Nigeria is the happiest country in the world. Money by itself does not guarantee happiness (for an extreme example, one could be extremely wealthy but locked into a torture chamber, wouldn't necessarily do him much good then, unless s/he could get the right connections and by his way out!), but in the right circumstances, more money can indeed contribute to greater happiness.

Posted by: RJ | Jan 22, 2007 6:44:22 PM