Wednesday, January 04, 2006

What matters

The latest NBER Digest includes commentary on The Happiness of Nations research. David Blanchflower and Andrew Oswald find the following:

"1. For a person, money does buy a reasonable amount of happiness. But it is useful to keep this in perspective. Very loosely, for the typical individual, a doubling of salary makes a lot less difference than life events like marriage.

"2. Nations as a whole, at least in the West, do not seem to get happier as they get richer.

"3. Happiness is U-shaped in age -- that is, it falls off for a while, then stabilizes and rises later in life. Women report higher well-being than men. Two of the biggest negatives in life are unemployment and divorce. More educated people report higher levels of happiness, even after taking account of income.

"4. At least in industrial countries such as France, Britain, and Australia, the structure of the happiness equation looks the same.

"5. There is adaptation. Good and bad life events wear off -- at least partially -- as people get used to them.

"6. Comparisons matter a great deal. Reported well-being depends on a person's wage relative to an average of 'comparison' wage. Wage inequality depresses reported happiness in a region or nation. But the effects is not large."

It is nice to have one's priors corroborated. So why is this report not satisfying? Because it is big-think research that seems to miss the bigger picture.

In my view, the bigger picture was nicely portrayed in the NY Times Magazine piece of January 1, "The Case for Contamination: No to purity. No to cultural protectionism. Toward a neo-cosmopolitanism" by Kwame Anthony Appiah.

A world in which more people are free to make more choices -- even ones that dilute some heritage -- is what matters the most.

While I cannot connect these actions to responses that the individuals involved might give to a happiness survey, I suspect that they are happy (there's the word) to be able to choose.

The Friedmans did title their book Free to Choose.