Wednesday, June 27, 2012

Shout it across the Rio Grande

Every econ 101 textbook goes through the long list of reasons that GDP per capita is a poor proxy for a nation's material well-being.  But happiness researchers in economics have gone a step further because they worry about non-material well being.  Much has been written about all of the framing problems that come up when questionnaires ask respondents to report how happy they are.  But researchers persist in telling us that self-reported happiness is only weakly related to material well being.

But it gets really silly when operational national happiness measures are proposed.  Writing in today's WSJ, Matthew Sinclair has fun with the Happy Planet Index"How Cuba Became a 'Happy Country' ... Citizens flee on rafts.  But environmentalists know better."

People vote with their feet -- when they can.  Migrations are powerful signals that indicate a lot about material as well as non-material well-being.  Revealed preferences are always best.

But this only works if people are actually allowed to leave a place.  If they are not allowed to leave Cuba, the statistical people have to meet the challenge of measuring and inferring how great a place it really is.

But look at the map.  Mexico gets a better color (score) than the U.S. 

And the Supreme Court had to rule on Arizona's immigration rules!  These are unnecessary.  People crossing the border into the U.S. are just confused.  They are making a terrible mistake, not having seen the HPI.  Just shout HPI scores from the rooftops and save everyone a lot of bother