Happiness research

The field of happiness research is one that is easy to mock and is horribly subject to light headed projects. However, there have been some fascinating studies over the past couple of decades. There is an article, Big Brother Wants You to be Happy, by Laura Rowley in Money & Happiness, February 4, 2010. Rowley features Carol Graham's Happiness Around the World: The Paradox of Happy Peasants and Miserable Millionaires. I'll provide a link as soon as we get it in. The article in general, and Graham's book in particular, frame the topic of happiness in all its glorious complexity.

Graham's book reviews the recent research on happiness (more than 100 papers were published between 2001 and 2005 analyzing self-reported happiness surveys). Generally speaking, within countries, wealthy people are happier than the destitute, but after that the relationship is complicated. Once people make a certain amount of income, comparison effects start to kick in, and then happiness depends not so much the wealth we enjoy, but how it compares to what our neighbors, co-workers or other members of our reference group have.

Cross-country studies of wealth and happiness are even more problematic. "Across countries we find that on average wealthier countries are happier than destitute countries -- but after that there's no linear relationship," Graham explains. "People in Afghanistan are as happy as people in Latin America, even though objective conditions are worse in Afghanistan. Kenyans are as satisfied with their health care as Americans."

That's because cross-country surveys are rift with mitigating factors, such as innate cultural traits. "Some of the poorer countries are very happy when you look at average per capita happiness and average per capita GDP, but you are picking up cultural differences in the way people answer surveys," says Graham. "Nigerians, Danes and Venezuelans are naturally cheerful in the way they respond. That gets muddied in cross-country comparisons."

For the real twists and turns in comprehending happiness:

And among the truly quirky findings about happiness: People report that they prefer unpleasant certainty to positive uncertainty. Consider the happiness of Americans at the beginning and late stages of the economic crisis that erupted in late 2007. "Happiness levels were higher in June 2009 than in January 2008, although living standards were markedly higher in 2008," says Graham. That's because in early 2008 no one knew the size of the economic storm the country was sailing into, Graham suggests.

Between January 2008 and June 2009, the Dow Jones Industrial Average had fallen by roughly 30 percent, and unemployment had nearly doubled to 9.5 percent, but "the same respondents assessed living standards as better in June 2009 than January 2008," says Graham. "The idea is, 'I'm poorer than I was before, but now I know what I've got to deal with.'"

Graham has found a similar phenomenon in fast-growing economies: People prefer stability to break-neck growth. When a country such as Brazil experienced double-digit growth, "that was a very destabilizing experience," says Graham. "Things are changing rapidly, rewards are changing; people around you are making big gains, so even if you're gaining it doesn't seem to be as much. The uncertainty bothers you."