Blog cafe Economics of happiness

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: In Happiness: A Revolution in Economics, Bruno S. Frey writes (p. 30):

“Human beings are unable and unwilling to make absolute judgments. Rather, they constantly draw comparisons from their environment, from the past, or from their expectations of the future.” Hold that thought. Let Y = a person’s happiness. Let X = a person’s income.

One could take it as given that Y is an objective measure of happiness. Frey’s point would then be that the effect of X on Y depends on how people look at X in relative terms. The inability of people to make objective judgments applies to their assessment of X. I evaluate my income by looking at the income of others around me.

But I think that the inability to make absolute judgments applies to Y, the dependent variable. I just cannot concede that Y is an objective piece of data. When someone is asked how satisfied they are with life, the response has to be along the lines of, “Well, I ought to feel—, based on how I compare myself to others, including myself at other points in my life.”

I think of Y as a subjective, social construct. It is a measure of what a person thinks that he or she ought to feel. All of the appeal of happiness research is based on presuming, as Frey does, that Y is absolute and objective. However, in order to make such a presumption you have to think of Y as an exception to the inability of humans to make absolute judgments.

Note that when happiness research is applied, it is under the assumption that everyone is the same. If the majority of people without children are happier than people with children, then it must be a mistake for me to have children.

In economics, it is given that people have different tastes. In happiness policy, the assumption is the opposite.