happiness around the world andrew oswald university of warwick and cage i am deeply grateful to john...

Happiness Around the World

Andrew OswaldUniversity of Warwick and CAGE

I am deeply grateful to John Helliwell and Shun Wang for their advice and for generously providing their data and tables. I would like to acknowledge that much of this work is joint with coauthors Andrew Clark, Nick Powdthavee, David G. Blanchflower, Alex Weiss, Rainer Winkelmann, and Steve Wu. I thank the ESRC for support.

The background

The background

Is modern society going in a sensible direction?

To be able to know, we have to decide what should be measured.

Yet in 1934

Yet in 1934

• “...the welfare of a nation [can] scarcely be inferred from a measure of national income...”

Hug a tree today

Prof. Simon Kuznets

• The originator of the concept of GDP

• “...the welfare of a nation [can] scarcely be inferred from a measure of national income...”

Today

Governments around the world are starting to change what they measure.

But how could that be done?

• This is in the spirit of speeches by Ben Bernanke: “The ultimate purpose of economics ... is to understand and promote the enhancement of well-being.”

New UK survey questions

New UK survey questions

• Overall, how satisfied are you with your life nowadays?

New UK survey questions

• Overall, how satisfied are you with your life nowadays?

• Overall, how happy did you feel yesterday?

New UK survey questions

• Overall, how satisfied are you with your life nowadays?

• Overall, how happy did you feel yesterday?

• Overall, how anxious did you feel yesterday?

New UK survey questions

• Overall, how satisfied are you with your life nowadays?

• Overall, how happy did you feel yesterday?

• Overall, how anxious did you feel yesterday?

• Overall, to what extent do you feel the things you do in your life are worthwhile?

Typical GHQ mental-strain questions

Have you recently:

Lost much sleep over worry?Felt constantly under strain?Felt you could not overcome your difficulties?Been feeling unhappy and depressed?Been losing confidence in yourself?Been thinking of yourself as a worthless person?Been able to enjoy your normal day-to-day activities?

The distribution of life-satisfaction levels among British people

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cen

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Source: BHPS, 1997-2003. N = 74,481

One backdrop

One backdrop

• The intriguing, and worrying, ‘Easterlin Paradox’

• Economic growth doesn’t seem to be making us happier.

Average Happiness and Real GDP per Capita Over Time in the USA.

1.8

22.2

2.4

2.6

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n H

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Real GDP per Capita Mean Happiness

The very latest evidence

The very latest evidence

Title: China's life satisfaction, 1990-2010

Easterlin, Richard A.; Morgan, Robson; Switek, Malgorzata; et al.

• Source: PROCEEDINGS OF THE NATIONAL ACADEMY OF SCIENCES OF THE UNITED STATES OF AMERICA  Volume: 109 : JUN 19 2012

Modern China’s happiness has not risen

• To get a sense of why, let’s think about human nature.

5 dollars

500,000 dollars

5 dollars

500,000 dollars

“A watch defines a man's look and tone.” Rolex advert.

“A watch defines a man's look and tone.” Rolex advert.

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• How can we make sense of these facts?

Subconsciously, humans seem frightened of falling behind.

There is a huge amount of evidence that human beings care about their relative position.

We are now able to see that inside the brain.

• Title: Social comparison affects reward-related brain activity in the human ventral striatum Author(s): Fliessbach K, Weber B, Trautner P, et al.Source: SCIENCE Volume: 318 Issue: 5854 Pages: 1305-1308 Published: NOV 23 2007

Armin Falk et al

Armin Falk et al

While being scanned in adjacent MRI scanners, pairs of subjects had to perform a task with monetary rewards for correct answers.

Variation in the comparison subject's payment affected blood oxygenation level-dependent (BOLD) responses in the ventral striatum.

Variation in the comparison subject's payment affected blood oxygenation level-dependent (BOLD) responses in the ventral striatum. This brain region is engaged in the registration of primary rewards.

Falk et al in Science

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ROI-defining conditions

Conditions of interest (both correct)A’s income : B’s income

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Conditions of interest (both correct)A’s income : B’s income

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Falk et al in Science

• “The mere fact of outperforming the other subject positively affected reward-related brain areas.”

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But then a focus on total national income (GDP) misses the point.

But then a focus on total national income (GDP) misses the point.

The total amount of relative status is fixed.

So we need measures of

How has the modern work on the economics and social science of happiness proceeded?

Regression equations

Regression equations

Mental well-being = f(Age, gender, education level, income, marital status, friendship networks, region, year…)

A flavour of the key findings in this research field:

Big effects

Unemployment

Income

Marriage

Bereavement

Friendship networks

Health

[No effects from children]

The pattern of a typical person’s happiness through life

4.9

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5.2

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5.6

15-20 21-30 31-40 41-50 51-60 61-70Age group

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U-shaped happiness in apes (published in PNAS)

Strong macro effects too

Strong macro effects too

• Unemployment (negative)• Inflation (negative)• GDP (controversial)

Di Tella et al. AER 2001, REStats 2003

and environmental effects

and environmental effects

• Air quality (positive)• Green environments (positive)• Noise pollution (negative)

Luechinger. EJ 2009, Levinson JPublicEconomics 2012, White et al. Psychological Science 2013

There have been few randomized-trial experiments in social policy.

One, published in Science recently:

“Neighborhood Effects on the Long-Term Well-Being of Low-Income Adults”

• Jens Ludwig • Greg J. Duncan • Lisa A. Gennetian • Lawrence F. Katz • Ronald C. Kessler • Jeffrey R. Kling • Lisa Sanbonmatsu

“Moving from a high-poverty neighborhood ... increased the happiness of low-income adults by an amount equivalent to the gains caused by a $13,000 rise in income.”

J. Ludwig

A second RCT paper

• The Oregon Experiment — Effects of Medicaid on Clinical Outcomes

• Katherine Baicker et al.• N Engl J Med 2013; 368:1713-1722

May 2, 2013DOI: 10.1056/NEJMsa1212321

I am going to describe the patterns of international well-being

I am going to describe the patterns of international well-being -- and how governments might wish to react to those patterns.

One small nation typically is top

UK about 10th in the world

• Source. Figure 2.3 of:

Currently top-4:

Denmark

Norway

Switzerland

Netherlands

Are these measures reliable?

Researchers have shown:

The different subjective well-being measures produce similar patterns.

Across nations, hypertension and happiness are inversely correlated

(Blanchflower and Oswald, 2008 Journal of Health Economics)

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Figure 2.The Inverse Correlation Between Hypertension and Life

Satisfaction: 16 European Nations Aggregated into Quartiles

Countries in the Countries in the lowest quartile highest quartile of blood-pressure of blood-pressure

IrelandDenmarkN'LandsSweden

SpainFranceLuxUK Austria

ItalyBelgiumGreece

E. GermanyW. GermanyPortugalFinland

P

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A brain-science approach (Urry et al Psychological Science 2004)

Salivary cortisol (Steptoe data)

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1 Low 2 3 4 5 High

Happiness quintiles

nm

ol/l

8 samples (08:00 – 22:30)Adjusted for gender, age, occupational grade, smoking, bmi, and GHQ

P = .009

So what do we find when we look across nations?

Richer countries are happier

Latest estimates of what makes countries happy

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Unemployment and inflation• Low crime and corruption• Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Low unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Low unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Low unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Latest estimates of what makes countries happy

• Social spending as a % of GDP*• Unemployment insurance generosity• Clean air (eg. SOx emissions)• Low unemployment and inflation• Low crime and corruption • Openness to trade

• *Ben Radcliff measure: It is a standard OECD measure--covers not just the obvious income maintenance programs like unemployment insurance, but also family allowances, public health spending, housing subsidies, etc, as a proportion of GDP.

Perhaps even a genetic explanation for some countries’ happiness

World Happiness Report 2013

• The following calculations are due to John Helliwell (UBC Canada) and Shun Wang (KDI Korea).

26 Germany (6.672)25 France (6.764)24 Brazil (6.849)23 Oman (6.853)

22 United Kingdom (6.883)21 Belgium (6.967)

20 Venezuela (7.039)19 Luxembourg (7.054)

18 Ireland (7.076)17 United States (7.082)

16 Mexico (7.088)15 Panama (7.143)

14 United Arab Emirates (7.144)13 New Zealand (7.221)

12 Costa Rica (7.257)11 Israel (7.301)

10 Australia (7.350)9 Iceland (7.355)8 Austria (7.369)7 Finland (7.389)6 Canada (7.477)5 Sweden (7.480)

4 Netherlands (7.512)3 Switzerland (7.650)

2 Norway (7.655)1 Denmark (7.693)

0 1 2 3 4 5 6 7 8 9 10

Figure 2.3: Ranking of Wellbeing: 2010~12(Part 1)

Base country (1.977) + residual Explained by: GDP per capita Explained by: social support

Explained by: healthy life expectancy Explained by: freedom to make life choices Explained by: generosity

Explained by: perceptions of corruption

52 El Salvador (5.809)51 Poland (5.822)50 Bolivia (5.857)

49 Ecuador (5.865)48 Malta (5.964)

47 Guatemala (5.965)46 Slovakia (5.969)

45 Italy (6.021)44 Slovenia (6.060)

43 Japan (6.064)42 Taiwan (6.221)

41 South Korea (6.267)40 Suriname (6.269)

39 Czech Republic (6.290)38 Spain (6.322)

37 Uruguay (6.355)36 Thailand (6.371)

35 Colombia (6.416)34 Cyprus (6.466)

33 Saudi Arabia (6.480)32 Kuwait (6.515)

31 Trinidad and Tobago (6.519)30 Singapore (6.546)29 Argentina (6.562)

28 Chile (6.587)27 Qatar (6.666)

0 1 2 3 4 5 6 7 8 9 10

Figure 2.3: Ranking of Wellbeing: 2010~12(Part 2)

Base country (1.977) + residual Explained by: GDP per capita Explained by: social support

Explained by: healthy life expectancy Explained by: freedom to make life choices Explained by: generosity

Explained by: perceptions of corruption

• Why does Denmark do so well?

Understanding the UK?

Understanding the UK?

We do OK.

But we have weakened our welfare state recently.

Summing up

For researchers, the future is incredibly exciting.

For countries, we have to be careful not to emphasise growth above ultimate ends.

The balance of the current scientific evidence:

What makes countries happy:

What makes countries happy:

• High social spending as a % of GDP• Unemployment-insurance generosity• Clean air (eg. low SOx emissions)• Low unemployment and inflation• Low crime and corruption • Openness to trade• Genes

Happiness Around the World

Andrew OswaldUniversity of Warwick and CAGE

Downloadable research papers at: www.andrewoswald.com