The American constitution’s deference to individual freedom appears quaint even archaic today. The fledgling 18th century government was created to engender “life, liberty and the pursuit of happiness”: crucially, not happiness itself.

It all starts out so well… Picture: Thinkstock

Yet in the 20th century governments worldwide started trying to maximise national income and minimise unemployment. Witness the hammering politicians receive if gross domestic product starts to falter or the unemployment rate rises.

Now it is fashionable to try to maximise happiness too, rather than simply leave people free to pursue it themselves. As Aldous Huxley foresaw in the 1930s, private happiness has entered the purview of public policy.

Since 2010 the British and French governments have started using surveys to track `national happiness’. Australia’s own Treasury introduced a `wellbeing framework’ to guide its advice to government in 2005, “open to both subjective and objective notions of wellbeing”’, including happiness.

“This reminds staff to consider and outline the impacts [of proposed policies] on both efficiency and distribution’‘, the Treasury notes, implying income inequality can make people unhappy.

But new surveys of people’s life satisfaction make a mockery of this approach, lending support to the timeless adage money doesn’t make you happy.

Princeton economics professor Angus Deaton has shown self-reported happiness since 2008, as measured by daily surveys of millions of Americans, tracked sudden gyrations in the stock market far better than it did people’s own income or employment status, even among those who didn’t own any shares.

“Measures like happiness are more affected by the arrival of St Valentine’s Day than a doubling of unemployment,” he concludes in his 2012 Sir John Hicks lecture at Oxford University.

“There are serious problems in using well-being measures for tracking the performance of an economy over time because they can’t be expected to change much in response to even historically large changes in economic activity”. he adds.

A new Australian study from the Melbourne Institute, which looked at how weather affected responses to a comprehensive survey of life satisfaction, is equally sceptical. One of the authors, economist John Feddersen, says it shows a sunny day increases individuals’ happiness as much as doubling their income, holding all other factors constant.

The surveys, where respondents reported their lifetime satisfaction between zero and 10 along with their other socio-economic characteristics, also showed extra sunlight boosted men’s happiness more than it did women’s, while windy days disproportionately made women unhappy.

The authors pointed out the influence of day-to-day weather affected life satisfaction by a similar amount to acquiring a mild disability, defined as one which didn’t affect the ability to work.

Increasing household income by 10 per cent had practically no impact on happiness. Indeed, factors entirely out of government’s control were overwhelmingly more relevant, such as the inherent propensity to be miserable or chirpy.

“It is very difficult for governments to try and improve reported life satisfaction,” says Professor Wooden, another co-author.

The impact of changes in income and weather, although of similar size, were nevertheless very small; people’s outlooks are remarkably resilient. “Even very large changes in circumstances tend not to change life satisfaction by even one unit on the 1 to 10 scale,” he adds, pointing out being separated sapped happiness by 0.4, a little less than acquiring a severe disability did.

“Substantially more work is needed if as advocated by the governments of the UK and France - we genuinely intend to use these measures to evaluate social progress and assess government policy,“Dr Feddersen tells The Punch..

Not only do these findings cast doubt on the validity of surveys of `wellbeing’ that have not controlled for the weather, but they undermine the increasingly fashionable trend for governments to try and improve their citizens’ happiness.

Steeply increasing marginal income tax rates, which every economist concedes crush economic activity and ultimately make everyone worse off, are based on the idea that dollar going to a richer person generates less `wellbeing’ than a dollar doing to a poorer person. If that is not true than why should we endure the massive economic costs and complexity of progressive taxation?

Such a move might actually boost happiness to boot. Government can’t do much about people’s private lives, but the study showed unemployment caused reported happiness to fall 17 times as much as a 50 per cent cut in come.

Cutting personal and business taxes indubitably creates the most favourable environment possible for job creation.

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    • Grey says:

      04:47am | 07/12/12

      “indubitably”.  I love that word, probably my favorite.
      It is meaning is hard to pin down, something along the lines of my entire previous text has failed to demonstrate my thesis in the slightest, so I will throw in “indubitably” in order to distract attention from that.  Because obviously if you had proved your point, you wouldn’t have needed “indubitably”

    • St. Michael says:

      09:22am | 07/12/12

      Data used it on Star Trek, your argument is invalid.

    • Philosopher says:

      09:41am | 07/12/12

      the author babbles for most of the piece about weather and public holidays, then concludes by suggesting that tax cuts for the wealthy are the key for happiness, thus failing to prove his own thesis by coherent argument. Indubitably he is a shining light of Oxford, the oldest university in the world.

    • Philosopher says:

      10:01am | 07/12/12

      Data’s oily, smug tones and wimpily sensitive features annoy me intensely. Argument validated beyond refute. Et tu, St. Michael?

    • Observant says:

      02:34pm | 07/12/12

      @Philospher

      Granted there is little preceding arguement to the concluding sentence, the author clearly states “personal and business taxes” - a general fiscal policy affecting EVERYONE; including the wealthy but NOT exclusively so.

      Mayhaps some more reading practice would serve you [and a little less of your divisive class warfare on the topic would be appreciated too].

    • Philosopher says:

      03:16pm | 07/12/12

      well Observant, if you can follow how the author - who used to advise Coalition policy, BTW - got from Point A to Point B, then you’re smarter than I am. Because I just couldn’t make sense of the argument.

    • Observant says:

      04:39pm | 07/12/12

      @Philosopher

      It’s not a matter of intelligence, it’s a matter of reading what was actually written. I acknowledged the arguement (i.e. ‘from Point A to Point B’) was lacking. That doesn’t legitimise your straw man/misreading of his words:

      “Cutting personal and business taxes…”

      Again I repeat just so you don’t again misunderstand: this sentence clearly refers to EVERYONE, including but NOT exclusively “the wealthy”.

      It’s not that hard to read.

    • Shane From Melbourne says:

      04:55am | 07/12/12

      The government can’t make you happy but it can certainly make lots of people unhappy if it cut off the middle class family welfare junkie-parasites. They might have to take some responsibility for their own actions…..

    • James D says:

      04:57am | 07/12/12

      The government doesn’t exist without first taking something from someone. So the government cant give anyone anything (to make the happy) without first taking it from someone else by force. The government then pays itself for this act of violence. So in short the government cannot raise the level of happiness it can simply redistribute it and lower the amount of happiness overall as it pays itself.

      So using government to make anyone happy is not only illogical it is also immoral as the government doesn’t exist without violence. And anytime you ask for government intervention to ‘solve’ a problem you are simply asking for a violent solution to a complex problem.

      Using the government to make people happy is like using an axe to make short people taller. You can do this of course by chopping the legs off tall people.

    • acotrel says:

      05:15am | 07/12/12

      Perhaps happiness is relative - how would you like to be living in Greece instead of Australia where the economy is almost under control ?

    • acotrel says:

      05:20am | 07/12/12

      ‘Steeply increasing marginal income tax rates, which every economist concedes crush economic activity and ultimately make everyone worse off, are based on the idea that dollar going to a richer person generates less `wellbeing’ than a dollar doing to a poorer person. If that is not true than why should we endure the massive economic costs and complexity of progressive taxation?’

      How does the ‘trickle down effect of wealth’  affect that idea ?  It makes me happy to know that at least somebody has got money, and could become a philanthropist.

    • SAm says:

      06:11am | 07/12/12

      I think we’d all be happy if governments stopped trying to ruin our lives

    • acotrel says:

      06:39am | 07/12/12

      In society, there is you and everybody else.  The government represents the interests of them. ‘No man is an island’ however much you might believe in ‘the cult of the individual’.

    • SAm says:

      07:01am | 07/12/12

      im all for the ‘greater good’, but when governments continually interfere with everyone to benefit a select few, as has been the case since federation (and throughout history for every peoples) then I cant genuinly say that governments give a damn about the greater good alco.

    • Pattem says:

      11:01am | 07/12/12

      @SAm, when it is the Minority Lobby Groups who have the itches to fight for rights, and the Majority wallows in apathy, then this country is defined and refined by MLG wants and desires; the Majority becomes a crowd of faceless people whose images get blurrier.

      The man from the Majority who stands up for his rights…woe to him, for he becomes the bigot and intolerant one.

    • Observant says:

      02:51pm | 07/12/12

      As opposed to the cult of the collective, eh acotrel?

      There are two extremes the pendulum can swing to. Seems like you only acknowledge one of them.

      Perhaps a straw man on your post is in order, to balance yours on SAm.

    • Colin says:

      06:15am | 07/12/12

      Happiness always has been - and always will be - the Best Use of the Thing In Itself..

      Human beings are at their happiest when they are able to best use their attributes, faculties, skills, and abilities in a fashion that keeps them sated, occupied, and content. And as being content leads to happiness, the Best Use of the Thing In Itself in humans is to allow them to live a life that as closely as possible physically manifests the inherent, intrinsic wants and needs of our psyche. And no idiotic, government-produced generic attempt to roll-up all individual happiness into a set of quantifiable goals will ever achieve that; particularly as most of those attempts involve some herd-mentality nonsense like sport or income tax…

    • Pattem says:

      10:45am | 07/12/12

      @Colin, you state: “....And as being content leads to happiness…”

      I would argue that you have that the wrong way round.

      Happiness is a temporary state of mind, a reaction to an external influence. 

      Contentment is a long term state of being, an internal sense of satisfaction.

    • Philosopher says:

      11:09am | 07/12/12

      aah, Aristotle? Excellent.

    • Pattem says:

      01:46pm | 07/12/12

      @Philosopher, here are a few very quick quotes on what Aristotle had to say about happiness:

      “Happiness is desirable in itself and never for the sake of something else.”

      “He is happy who lives in accordance with complete virtue and is sufficiently equipped with external goods, not for some chance period but throughout a complete life.”

      “To judge from the lives that men lead, most men seem to identify the good, or happiness, with pleasure: which is the reason why they love the life of enjoyment. The mass of mankind are evidently quite slavish in their tastes, preferring a life suitable to beasts.”

    • Philosopher says:

      02:14pm | 07/12/12

      Pattem, and he also thought that tradespeople, slaves and the uneducated had no chance of achieving happiness, yet alone virtue (arete). He would look on most of us as pretty pathetic specimens indeed.

    • Pattem says:

      02:30pm | 07/12/12

      @Philosopher, you stated: “He would look on most of us as pretty pathetic specimens indeed”.

      Indeed.  Evolution…pfft…Devolution more like!

      But, really, I am an optimist smile

    • murph says:

      06:18am | 07/12/12

      Personal freedom is quaint???

      Spoken like a true fascist.  You people are scary.

    • acotrel says:

      07:32am | 07/12/12

      Fascism has often appeared as a quick answer to problems.  It is OK except if you are on the receiving end. It’s proponents have never heard of Kharma.

    • Jaqui says:

      04:20pm | 07/12/12

      Scratch a leftie, find a fascist.

    • ronny jonny says:

      06:41am | 07/12/12

      Oh my god, imagine if Gillard embarked on an ambitious scheme to make everybody happy. Actually, she could do that very simply by just holding an election. I predict a massive upswing of happiness towards the end of next year.

    • acotrel says:

      07:36am | 07/12/12

      So you would be happy with Tony Abbott as leader ? - HMMMM !
      There is nothing wrong with that ?

      Well, he’s a decent, honest,  fun-loving sort of guy with great ideas.

    • ramases says:

      08:00am | 07/12/12

      Ronny, just imagine if she resigned, the celebrations in the street would make Xmas or New Year look like a funeral party, except of course for acotrel who would lose the love of his life.
        If there is a Santa that’s my Xmas wish.

    • ronny jonny says:

      08:47am | 07/12/12

      Oh ramases, stop it, it is too much too hope for. That would be a New Year truly worth celebrating, big style!!

      acotrel, for once you are right, I agree with you.

    • Economist says:

      07:38am | 07/12/12

      This is certainly an interesting topic, but I disagree with a number of Adam’s assertions.

      Firstly is the irony in criticising well being surveys/indexes. That some Austrian economists are focused on money as the ultimate measure of wants and needs, rather than the more complicated notion of utility. Its ironic in this case because the same proponents that criticise well-being indexes advocate the global competitiveness index and certainly made a huge hoot about that despite its methodology not being as robust wink

      Secondly the wellbeing surveys themselves may be rubbish but should be complemented with other factors to make an index.

      Thirdly, they are simply an instrument. So one creative economist looks at weather and says the measures are rubbish because a sunny day equals a doubling of income, but fails to ask the fundamental question as to why this is the case. Is it because the individual already has a satisfactory level of income, is it because they live a a stable democracy and really don’t have anything to complain about. Could it be that centralist governments have been so successful in putting in place a stable democracy that things out of the governments control are the main factors.  Isn’t that a good thing? No the author tries to twist it to an absurd conclusion of the opposite, that we don’t need government in our lives.

      Fourthly I suppose it distresses the Austrian economists that a government that runs a successful centralist mixed economy like Australia consistently ranks in the top three wellbeing indexes type measures. That those countries above us have considerably higher tax rates. That countries with more market based policies rank lower. So why wouldn’t you want to get rid of this notion of measuring satisfaction. GDP should be the only measure goddamnit.

    • AdamC says:

      08:56am | 07/12/12

      Economist, I would argue that some of the interest in these ‘woo-woo’ measures of wellbeing is driven by the inadequacy of devices like GDP (simply a calculation of economic activity) to accurately measure people’s material wellbeing. Even I accept that the fixation on GDP growth needs to end, and I am a passionately neo-liberal economic rationalist. (As you know.)

      A good illustration of the shortcomings of GDP is the present Australian situation where, despite reasonably robust GDP growth, everyone is howling about deteriorating standards of living. One reason for this is that a large component of current GDP growth is mining investment. This is a good thing - those investments will be creating income for decades - but mining investment does not reflect people’s day-to-day material quality of life in the same way as, say, retail sales.

      Maybe both parties should get together with academics, bureaucrats and business groups and create a ‘balanced scorecard’ method to measure national economic wellbeing. As well as GDP (which would still be the main measure) this could include factors such as trend unemployment, rates of long-term welfare dependence, literacy rates and key health indicators.

      To avoid the political problems that arise from including income inequality as a measure, you could instead develop and track metrics of genuine hardship. For example, the scorecard could include rates of eviction, meal skipping and forced sales of possessions, etc. (I think everyone agrees these are signs of poor wellbeing.)

      Tracking private emotions could be a component of this balanced scorecard, but I would exercise caution. I know my moods can depend on weird stuff. (I was in a funk for two days when Romney lost the election, for example. I guess, as you highlight, your moods can change at will when you do not really have anything to worry about!)

    • Trevor says:

      11:25am | 07/12/12

      AdamC

      David Suzuki has some very interesting things to say about this topic.

    • Observing says:

      04:31pm | 07/12/12

      “Fourthly I suppose it distresses the Austrian economists that a government that runs a successful centralist mixed economy like Australia consistently ranks in the top three wellbeing indexes type measures. “

      Most Austrian economists would comment that your conclusion is premature, much like most commentary stating GFC having ‘ended’.

      The countries with “more market based policies” still operate a socialist monetary & banking system - just like ours. That they have SLIGHTLY less taxes here, or a few less regulations there, is immaterial.

      Australia’s relative performance is more attributable to geopolitical and resource factors, rather than economic and political.

      Can’t say I agree with everything Austrians have to say, but their monetary analysis is unrivaled. It would do for you to research before further revealing your ignorance on the matter.

    • NESLIHAN KUROSAWA says:

      07:38am | 07/12/12

      Hi Adam,

      In my personal opinion governments can’t make you any happier!  However they can manage to make certain part of the population slightly richer than the rest, right?  That might lead to some kind of unsettling feelings and unhappiness. Unless of course we happen to be talking about the ideas true socialism which could be easily be a dying art form.  Also are we talking about enjoying good living standards, a good quality of life with no health problems, actual longevity and on top of all that being unbelievably happy?

      I truly believe that having extra money can make our lives so much easier however it doesn’t make us any wiser or happier. It has more to do with having the right attitude in life such as being positive, mentally and physically healthy, being social, being true to ourselves as well as surrounding ourselves with positive and sort of happy people. People of Cuba are enjoying longer, healthier and happier lives, but it has nothing to do with their incomes. I truly believe that it has more to do with their climate, positive outlook on life and their life styles. 

      Same could also be said for some Japanese living in Okinawa district are actually enjoying a longer, more productive and healthier lives but only due to their diet, being active and having much less expectations than the rest of the Western world combined!  For me personally life is what we all make of it.  True happiness isn’t actually due to external forces like having material wealth and the right possessions.  It can only be achieved by having the right ideals, the right ideas and the right people around us.  Kind regards.

    • Economist says:

      07:39am | 07/12/12

      This is certainly an interesting topic, but I disagree with a number of Adam’s assertions.

      Firstly is the irony in criticising well being surveys/indexes. That some Austrian economists are focused on money as the ultimate measure of wants and needs, rather than the more complicated notion of utility. Its ironic in this case because the same proponents that criticise well-being indexes advocate the global competitiveness index and certainly made a huge hoot about that despite its methodology not being as robust wink

      Secondly the wellbeing surveys themselves may be rubbish but should be complemented with other factors to make an index.

      Thirdly, they are simply an instrument. So one creative economist looks at weather and says the measures are rubbish because a sunny day equals a doubling of income, but fails to ask the fundamental question as to why this is the case. Is it because the individual already has a satisfactory level of income, is it because they live a a stable democracy and really don’t have anything to complain about. Could it be that centralist governments have been so successful in putting in place a stable democracy that things out of the governments control are the main factors.  Isn’t that a good thing? No the author tries to twist it to an absurd conclusion of the opposite, that we don’t need government in our lives.

      Fourthly I suppose it distresses the Austrian economists that a government that runs a successful centralist mixed economy like Australia consistently ranks in the top three wellbeing indexes type measures. That those countries above us have considerably higher tax rates. That countries with more market based policies rank lower. So why wouldn’t you want to get rid of this notion of measuring satisfaction. GDP should be the only measure goddamnit.

    • Tubesteak says:

      08:51am | 07/12/12

      Humans aren’t capable of happiness. We are capable of being momentarily satiated through consumption. Our drivers are to sustain our survival so we are driven to constantly consume. Our reward centre in our brain rewards us when we consume. This we mistake for happiness.

      We are now caught up in the delusion that we can be “happy”. This conceit arose in the rise of consumer culture about the time of the industrial revolution. It is a pointless pursuit because of the above reason.

      We are no more capable of happiness than we are of flapping our arms and flying. At best we can be content for a while. But we get used to that and adjust ourselves to our normal selves.

      Governments worrying about this came from the usual middle-class welfare parasites who think that it is a government’s concern to look after their citizens. It’s a government’s concern to do no harm and not hinder their citizens. To allow their citizens to pursue their self-interest and provide infrastructure where market failure will not provide it.

    • Pattem says:

      12:11pm | 07/12/12

      @Tubesteak, consumerism will never slake our lust.

    • Tubesteak says:

      05:35pm | 07/12/12

      Correct. There is ni slaking our lust. Our lust is the epitome of our survival instinct. Without this drive we would have died of starvation in the very lean times because we would not have had the drive to pursue more.

    • expat says:

      08:55am | 07/12/12

      The smaller a government is and the less it tries to interfere and control peoples lives, the happier people will be.

    • Don Paul says:

      09:27am | 07/12/12

      Loving your articles Adam, more of please!

    • Economist says:

      10:36am | 07/12/12

      Sorry ICB. I love the fact that Adam cites marginal tax rates crush growth. A lovely theoretical concept that Austrian economists claim yet the evidence is to the contrary. http://www.businessinsider.com/study-tax-cuts-dont-lead-to-growth-2012-9

      Perhaps one should look at effective marginal and average tax rates instead. The study show that lower marginal tax rates increase inequality and this is supported by the fact that in the US over the period in which labour productivity doubled wages income remained stagnant, while the value of the stock market quadrupled.

      I love the fact that the investigation into indexes looked at increasing income, but made light of the last paragraph i.e. taking income away. Behaviour is a funny thing. Asking about income doubling will always give a different result that asking about income halving. Human psychology is a funny thing.

    • AdamC says:

      03:11pm | 07/12/12

      Economist, I do not think you can simply look at marginal tax rates, like your linked article does. While marginal income tax rates may have fallen in the USA, total tax collected has not. (Neithet has spending, of course, which has risen.)

      The negative aspects of taxation (resource misallocation, reducing the resources available to private sector wealth creators, etc) arise mainly from the size of the total tax take, rather than marginal rates. Having said that, marginal rates can become a disincentive to work or invest. But they have to be pretty high to do that, I should think.

    • Observant says:

      05:17pm | 07/12/12

      @Economist

      Your characterisation of the Austrian position is inaccurate and incomplete; it is just wrong.

      The Austrians are against central banking and currency debasement - the main cause behind decreasing real wages. So you can’t just look at fiscal policy in isolation for this issue, monetary policy analysis is imperative.

      This study of yours covers 1945-2010. This period has had centralised money and credit in the Federal Reserve and the private banking cartel.

      Such a monetary system was not the case in 18th and 19th century America, which your study offers no analysis of, yet was a period of tremendous economic growth for the United States. This period also had EXTREMELY low rates of taxation and no income tax [for the most of it, excepting the civil war].

      As AdamC commented, marginal income tax rates may have fallen, yet total tax revenue, total government expenditure and total debt [private and public] has exploded over this period. The money supply has also exploded over this period, especially after the U.S. defaulted in 1971 and started creating unbacked ‘pure fiat’ money.

      Lets not forget that inflation is after all, a hidden tax. So your arguement is wrong - the period surveyed was of very high, increasing taxation. The $16+ trillion ‘official’ debt and $200+ trillion ‘unfunded liabilities’ are quantitative measures that can attest to this.

    • Mark says:

      10:55am | 07/12/12

      Are we talking about actual pure happiness or an artificial social construct of such? It seems to me that happiness is purely subjective, where as the majority of governments try to be inclusive in their policies. This means they cannot achieve national happiness through action. It is bound to make some people un happy.

      The other thing is. Most people haven’t experienced happiness as such. They experience joy and excitement, but rarely happiness. Money cannot lead to happiness, but money is what most people live for.

      Even if you think you’re happy, you aren’t. Happiness is pure unadulterated love for the time and place you exist in, as well as every living thing around you. These feelings do not exist naturally in the Western World. We just tell ourselves we are happy, because we think we should be.

      Too bad we don’t put any effort in to changing the things around us that block us from being happy. Such as work, responsibility and money.

 

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