Experienced Utility Notes for October 24

Main points

Professor Brown began with a mini-history of welfare economics. We then discussed two articles that take seriously attempts to measure feelings of happiness or unhappiness.

Questions, questions

It’s not always obvious how to interpret these studies. For instance, Kahneman and Kruger have a preference for the surveys that measure experienced utility as opposed to those that measure remembered utility. But who is to say that the former give a more accurate account of what we care about than the latter do?

One nugget of evidence in their favor would be (and maybe is) that surveys of remembered utility vary pretty wildly. That suggests that, at least, we don’t have stable opinions about what makes life as a whole go well. And that would be odd if that is where we’re looking for what we really care about.

Money and happiness

Here are my prejudices. I believe very strongly that people measure their happiness against what they expect out of life. So I’m all the way there with Blake and Jenn when they report that people who are desperately poor by our lights are actually pretty happy.

At the same time, I find it very hard to believe that life isn’t easier and, yes, happier, with all the modern conveniences that our wealth buys for us.

So I’m not surprised by both sets of results: those that report that there’s very little relationship between income and happiness as well as the ones that Deaton reports, according to which the wealthier are happier than the poor.

I suspect, though of course I can’t prove, that they’re measuring two different effects.

In any event, one thing that was certainly different was the survey question and the available answers. The survey that Kahneman and Kruger reported had three possible answers. The survey that Deaton used allowed eleven.

Those who say there is no relationship between income and wealth use the former surveys: they show that there isn’t a lot of change in the answers given by the members of a society even as it becomes more wealthy. But I would think that it would be very difficult to move the results from a three answer survey even if people were getting more happy. Conversely, I suspect that an eleven answer survey would be more sensitive.

More stuff

I put a briskly written monograph called Happiness, Economics, and Public Policy on electronic reserve. Or, if you don’t want to bother checking into Sakai, just click on the title to get it yourself.

It’s written from a more libertarian perspective, and it is more focused on the political uses of happiness studies, than our other readings have been. I enjoyed it.

The article I referred to at the end, that I said confirmed Kari’s point, is: Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., and Stone, A. A. (2006). “Would you be happier if you were richer? A focusing illusion.” Science, 312(5782):1908 – 1910.

Kari’s point was that people might report they are generally satisfied with their lives even if their moment-by-moment experiences aren’t so great if they aspire to accomplish difficult things.

This page was written by Eleanor Brown and Michael Green for Freedom, Markets, and Well-Being, PPE 160, Fall 2007.
Freedom, Markets, and Well-Being