Monday, August 6, 2012

OMG Bernanke Defines Happiness

In a speech (via video) this morning before the 32nd General Conference of the International Association for Research in Income and Wealth, Cambridge, Massachusett, Bernanke said:
Although the field is still young, there have been interesting developments in the measurement of economic well-being.  In a commencement address two years ago titled "The Economics of Happiness," I spoke about the concepts of happiness and life satisfaction from the perspective of economics and other social science research.1   Following the growing literature, I define "happiness" as a short-term state of awareness that depends on a person's perceptions of one's immediate reality, as well as on immediate external circumstances and outcomes.  By "life satisfaction" I mean a longer-term state of contentment and well-being that results from a person's experiences over time.  Surveys and experimental studies have made progress in identifying the determinants of happiness and life satisfaction.

Richard Ebeling smacked this type thinking down in an important paper titled,  The New “Happiness” Economics: An Austrian Critique. He warned in the paper where all this is leading to:
...some “happiness policy advocates” hark back to an older notion of real happiness that is dependent upon cultivation of certain aspects of “good character,” including an appreciation and understanding of “beauty,” “truth,” “goodness,” and “justice.” Instead, modern man seeks happiness in the passing and superficial pleasures of the flesh and momentary enjoyments derived from the acquisition of material things. 
 So, what is to be done? The happiness advocate concludes that there is only one cure to this human dilemma: to use the power of the state to socially engineer better and happier outcomes for the vast majority of mankind...The misconception of “pleasure” as the key to happiness can be changed through government “reeducation.” Schools and other educational vehicles should be applied by the state to inform and teach people proper values and virtues to make better and happier.

Ebeling correctly points out that the first problem for these technocratic interventionists is that "happiness" can't be measured:
 Some informative and insightful critiques of the new happiness economics have pointed out the ambiguous and imprecise methods that have been designed to measure and quantify the level of and changes in human happiness.

 I would suggest that another and more fundamental problem with trying to measure happiness arises from the fact that there is nothing to measure. Happiness, like “utility,” is too often still thought of (implicitly) as a fund or an amount somehow derived from the successful pursuit of various actions.

To ask a person where they view themselves on, say, a happiness scale of from one to ten, tells less than some may want to read into it. If a person says they rank themselves at a happiness level of 6 on this scale, does this mean that they are experiencing twice as much happiness as someone who selected a happiness level of 3 on the scale? Or if they were comparing their own current level of happiness with the level of happiness they experienced a year earlier, could we say that this person is twice as happy as they were 12 months ago? Twice as happy in terms of what unit or standard of measurement?
It might be replied that such a scale is only meant to be a general indicator of degrees of difference. Thus, if a person says that they consider their level of happiness this year to be at 9, while last year they thought it only was at a level of 3, in this person’s mind there has been a “big jump” in his level of happiness. That he may feel himself a lot happier now than a year ago may be true in his own mind, but it gives us no way of determining a measured intensity of this difference, and certainly no way to try to calculate how much of some change in his material, personal, or societal circumstances would succeed in bringing about a certain amount of change in his level of happiness. This certainly applies even more to any attempt to estimate the amount of difference in happiness between individuals and how much happiness would be gained or lost by them from some change in their political, social, or economic environment (including one’s brought about through government “happiness policy”).

Now, in fact, and of course, we all do such interpersonal comparisons of happiness all the time, and often act upon it. For example, John thinks to himself, “Sally had really been down in the dumps lately, I really think it would help cheer her up (make her ‘happier’) if I spent the afternoon with her, even though it means not having my usual afternoon coffee time with Bob (and reducing the ‘happiness’ he gets from my company).” Clearly, John makes the implicit judgment call that in this particular instance Sally’s extra happiness will be greater than the loss in happiness suffered by Bob by changing who he spends some time with. But that is what it is – a personal judgment call. There is nothing “scientific” or quantitatively precise about it.

Ebeling then goes in for the kill:
Hayek’s point [is]that in a free society no single scale of values is imposed on all in the society. Rather, each individual is permitted to have and follow his own scale of values guided by his own judgment about what will make him better off, more satisfied, “happier,” including actions that he decides to undertake because he cares about the happiness of others...
It is typical of the social engineer that he is confident that he can determine the one size that should fit all. In this instance, this includes a standard or benchmark for estimating the happiness of individuals and groups, and even the society as a whole. Here is what Wilhelm Roepke long ago called the “hubris of the intellectual,” who believes that he knows enough to superimpose his own beliefs on the rest of society for the good of the society even if the members of that society do not realize – at least not yet! – that it is all for their own good...
Every free man belongs to numerous voluntary associations and institutions in the civil society. Each individual, therefore, simultaneously participants in a variety of “social worlds,” with different people, with each of these social relationships representing different purposes and needs in his life. And cumulatively these various social worlds of  civil society create what Hayek called the spontaneous social order.

The new “Happiness State,” if it comes into existence, will threaten the continuation and functioning of these networks of civil society. They have already been weakened or even “crowded out” by the institutions of the welfare state. The policies of a Happiness State would only reinforce these tendencies leaving the individual few or no avenues in which to decide upon and pursue his happiness other than those permitted or imposed by the government.  


  1. Wait, did Bernanke just acknowledge that economics is a social science?

  2. Simply LOL...thanks for sharing Robert!

  3. Dickens had a pretty good definition of happiness enunciated through Mr. Micawber:

    (Ya gotta read it with W.C. fields in your head)

    "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

    Old Micawber knew a shitload more of real econ than the Beard.

  4. This is like IUCs, only more ridiculous.

  5. Giving Bernanke a swirly would make me happy... I wonder if he'd help out with that?

  6. The face of the boot that will stamp on ours forever and ever is that of a sinister psychopathic clown. Go figure.

  7. The link to the Ebiling's paper is mistargeted. It should go to and instead points out to the HeliBob's mumbling...

  8. Wow. Eberling just sets up a strawman made of absolutely nothing. Not one of the things he argues has anything to do with real happiness research, the science of positive psychology, or what real scientists have been studying for the last 30 years on the subject. He's just making stuff up that NOBODY claims, so he can tear it apart. Great, Eberling blew up his own balloon and popped it, but nobody else is talking about balloons.

    Robert - do some real research. Here are a few names to look up: Mihalyi Csikcsentmihilyi, Martin Seligman, Ed Deiner, Dan Gilbert. Eberling doesn't have a clue what he's talking about.