The Pursuit of Happiness by Carol Graham—Key Takeaways

Chapter 1—This chapter is the background of the book. It sets the context of what happiness economics is, how it is different from classical economics, and what possible benefits it might uncover. The rest of the book then explores happiness economics’ effectiveness in delivering on its promises.

Book seeks to answer:a) The extent to which happiness metrics can be used as proxies for utility. b) Should policy makers be in the business of telling people what will make them happy?c) Should policymakers be concerned with happiness itself, or the ability to pursue happiness?d) By looking at measures of happiness, can we find new insights about the importance of

global health or how to better improve it?

Types of q’s asked in happiness surveys: Happiness q’s —gauge how happy people feel about their lives in general.

o They are useful because they do not impose a definition of happiness onto others. Life Satisfaction q’s —evaluate a person’s life circumstances as a whole as well as the

person’s happiness at present. Ladder of Life q’s —compare your life to the best possible life you can imagine.

o Answers often correlate to answers about income. o Often people compare their lives to international or national norms when answering

this question. Well-being q’s —evaluate human welfare beyond the components that income can

accurately capture.

How is happiness measured? Via “the results of large-scale surveys, across countries and over time, of hundreds of

thousands of individuals who are asked to asses their own welfare.”

Classical Economics vs. Happiness Economics:1) C-econ assumes you cannot tell a person’s preferences by asking them; you must look to

how they spend their money. H-econ instead uses surveys to discover answers on preferences and happiness.

2) C-econ assumes all humans act rationally 100% of the time. H-econ assumes that choices by consumers aren’t always made rationally. Some reflect loss aversion while others reflect choices driven by norms, addiction, or self-control problems.

3) H-econ might be particularly useful for measuring policies or institutional arrangements that individuals are powerless

--In all countries, a stable marriage, good health and enough (not too much) income are indicative of increased happiness. --People have a hard time adapting to uncertainty.

Therefore bad but certain outcomes will be preferred to a chance between a better or terrible outcome.

o Policy Implication : (from author) Uncertainty findings tell us that “the nature and pattern of growth matter,” and suggest that policy should “be directed at mitigating the uncertainty and inequality related to very rapid economic growth.” (pg 54)

Two types of happiness:1) Bentham concept of welfare: (hedonic utility) maximizing the contentment and pleasure of

the greatest # of people as they experience their lives. 2) Aristotle concept: the opportunity to lead a purposeful life.

Chapter 2—This chapter explores the two definitions of happiness more in depth and examines how these definitions help answer whether policymakers should care about happiness itself or the pursuit of happiness.

Important definition: Agency = human capabilities and capacity A person’s agency = what sort of life he/she is capable of leading given income, education,

information and other constraints.

Key Points from Chapter:--Countries that are poorest by relative standards seem to prefer happiness in the Benthamian sense while richer countries seem to focus on Aristotelian happiness.

--Gallup Healthway survey found that a higher % of those without health insurance reported worrying the previous day than did those with insurance. (pg 37)

--Research seems to indicate that, on average, people would gain happiness from the opportunity to pursue a fulfilling and purposeful life (aka increased agency). (pg 41)

--“People are much less bothered by bad health where bad health is the norm.” (pg 43) Ex : Guatemalans are satisfied with their health insurance despite having sub-Saharan

African levels of care. o Policy Implication: (my analysis) people might not demand better health to the

extent that they should giving govt the wrong impression that they don’t need to improve the health care system.

--Research by author shows that people with higher prospects of upward mobility are more likely to adopt good health practices compared to people with low expectations of the future. (pg 43)

Policy Implication : (my analysis) We may be able to indirectly increase health quality by focusing on increasing agency and upward mobility.

--Process of acquiring agency may result in short term unhappiness. o Policy Implication : (my analysis) a policy meant to increase agency may be

unpopular in the short term making it harder to pass/enact. o Ex : Obamacare

Chapter 3—The evidence. This chapter presents you with a lot of empirical research to either support claims made in chapters 1 and 2 or to set up a discussion of things to come in chapters 4 and 5.

Main Takeaways from Different Country Evidence:

Russia, US, and Latin America: research found that “both self-reported health and objective measures of health are positively correlated with happiness.” (pg 67)

However, research could not determine the direction of causality: o does increased health make people happier or are happier people healthy.

This matters because it tells us which element to target to improve health (do we target health directly or happiness and therefore health indirectly?).

Africa: One reason why we might find happier people in Africa than in say the US despite the stark contrast in relative living conditions is because optimism (and therefore happiness) might enhance the survival prospects of the poor in such adverse conditions. (pg 74) 

Afghanistan: While Afghans rate high on most happiness indexes, “when asked to assess their situation relative or framed terms, they are well aware they do not have the best possible lives.” (pg 77)

Chapter 4—This chapter essentially delves into the anomalies and seeming contradictions that some of the happiness data in chapter 3 presents.

Contradiction: Growing economies see happiness dip in the short term. Should we be concerned?

o No because data from the Gallup World Poll suggests that the negative effects of growth become insignificant in later stages of the policies. (pg 85)

Policy Implication: Govt policy, which grows an economy rapidly, might initially be unpopular but will provide much larger dividends in the long run.

Contradiction: People in areas with high crime and corruption experience less of a loss when they are victims of either. In essence, they protest less about the issues despite being most affected by them.

Should we be concerned? o Yes. Research from Latin America suggests that individuals adapt to their

surroundings and thus are less likely to do anything about them. (pg 97-100) Policy Implication: Govt should step in to correct high crime and corruption

rates instead of waiting for enough of a demand from the people to do so. This contradiction explains why societies tolerate very bad regimes (i.e. why regimes

like Mobutu’s in Zaire (now Democratic Republic of Congo) or Fujimori’s in Peru were able to stay in power for so long).

**Cohort 1 should especially read and pay attention to pgs. 99-103, “Adapting to Illness: Variance in Health Norms Across Cohorts and Countries.”**

Contradiction: Reports of disabilities and conditions like diabetes and hypertension are higher in the US than in poorer countries.

Why? Because awareness and reporting of such conditions is very low and inaccurate.

Key Point: “Across all countries, health norms are mediated by income and education.” (pg 99)

Key Point: “Poor health norms may contribute to creating poverty and health traps.” Poverty trap = any self-reinforcing mechanism which causes poverty to persist

(Wikipedia) Ex: Author found that someone who is obese and poor is less likely to move on to a

better job and has less incentive to reduce his/her weight. o Question to consider: Would increasing the upward mobility of the poor then

decrease obesity?

Key Point: “Demand for better health care often is lower in societies that have poor care than it is in those that have better care and also have very different norms of health and higher aspirations based on those norms.” (pg 103)

Key Point: In health, while people with expected conditions and ailments often find it manageable to adjust to them, people cannot adjust to uncertain health outcomes (i.e. epilepsy).

Chapter 5—This chapter returns to looking at the broad question of why we should care about happiness economics (like in Ch. 1). However, this chapter draws on conclusions from the book to provide more concrete examples of how happiness measures could directly improve policy.

How Happiness Measures Could Help:Ex 1: “A policymaker considering a budget cut that could affect the availability of health

insurance or the amount of disposable income would at least have a sense of the value of good health” in a scientific/numerical way. (pg 111)

Ex 2: Happiness measures help explain why the demand for changing phenomena that have negative affects on well being for everyone (i.e. bad environmental quality or poor governance), is not as high as it should be.

We have seen that people adapt to poor conditions when poor conditions are the norm in order to survive.

o Knowing this, a policymaker may be more motivated to tackle such issues without a specific mandate from the people.

Ex 3: Happiness measures help us understand behavior not driven by optimal choices i.e. addiction.

Policymakers may be better informed and thus be able to better tackle issues like smoking, obesity, etc.

Key Point: Happiness measures help explain “why demand [for public service reform] often is lowest in precisely the places that improvements are most needed.” (pg 114)