It was late at night in a dimly
lit radio studio, and I was among a trio of experts invited to discuss the role
of economics in the modern world. The group included one professor of cultural
studies, one member of the House of Lords and myself, a representative for
economics.
"I saw a report that talked about well-being and health and the
things that people really care about," the professor said. "Why doesn’t
economics ever concern itself with things like that?"
 | | (Art by Matt Mahurin.) |
After a brief sputter, I managed to reply that economists are
at the forefront of the investigation to find out what it is that makes people
happy. In the United Kingdom, one leading economist, Richard Layard, the
founder-director of the Center for Economic Performance at the London School of
Economics and an advisor to the government, has even suggested that the
government expand the availability of taxpayer-funded psychotherapy; his idea is
currently under consideration.
I suspect that many people want to see economists embrace the
issue of well-being, mainly because they anticipate we will confirm the belief
that money does not enhance society’s happiness levels, thus proving that our
emphasis on the importance of economic growth is also somehow flawed.
We can point to widely cited findings that confirm happiness
levels in a country rise with the level of income, but only to a certain point
(at approximately an average annual GDP of $15,000 per capita). Beyond that,
happiness stops rising with incomes, which presumably means wealth does not buy
happiness, even in the world’s richest countries. These results are
unsurprising: Average GDP is the kind of variable that can rise without limit,
but it’s hard to imagine bliss increasing in increments of 2 percent or more per
quarter perpetually.
Today researchers give the so-called paradox of choice much
attention in happiness studies. Barry Schwartz, a professor of social theory at
Swarthmore College in Pennsylvania, uses this term for the title of his book,
which draws on psychological experiments and questionnaire results that indicate
too much choice makes consumers feel stressed and helpless.
Many psychology experiments suggest that, in some
circumstances, when people have too many consumer choices, they don’t make
rational decisions and fall victim to the "hedonic treadmill." That is
psychology-speak for the rat race, where individuals get caught up in making
more and more money, even though it isn’t making them any happier.
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