Thursday, May 18, 2006

The Pursuit of Happiness

Economists have become increasingly interested in data on self-reported happiness. (Examples: Here and here and here.) I therefore enjoyed a recent article in Slate. Here is an excerpt:

Economists David Blanchflower and Andrew Oswald have suggested that a lasting marriage produces as much happiness as an extra $100,000 a year in salary. This might sound like a strong case for getting hitched. But many economists have shown that happiness is expensive—$100,000 will buy you only a small amount of joy. Studies like these also hide individual variation. Marriage isn't worth $100,000 to just anybody. A recent German study found that matrimony's hedonic gains go disproportionately to couples who have similar education levels but a wide income gap. Worse yet, on average, people adapt very quickly and completely to marriage. As anyone who's ever consumed seven pumpkin pies in one sitting knows, we quickly get used to our favorite new things, and we just as quickly tire of them. As Harvard psychologist Dan Gilbert artfully puts it, "Psychologists call this habituation, economists call it declining marginal utility, and the rest of us call it marriage."

We submit that a relationship with a PlayStation 3 is worth at least $100,000 a year in happiness for all individuals. Unlike a nagging spouse, the PS3 doesn't care about your income or your level of education—it loves you just the way you are. It is true that you will eventually become accustomed to your sleek new PS3, but this will take an extremely long time. The PS3, after all, has been built expressly to keep mind-blowing novelty coming and coming and coming. Periodic infusions of novelty—new games—will keep the endorphins flowing.

My 11-year-old son would likely agree with this analysis. He is far more interested in his Gameboy than in girls. We'll see how long that lasts, but at least for now, his Gameboy seems to bring him endless hours of happiness.

What I, like many parents, try to impress upon my children is that there is a vast difference between between happiness and satisfaction, that a good life is more important than a happy one. As economists embark on happiness research, that is a lesson we should remember as well. It is tempting for economists to treat self-reported happiness as utility, which in turn enters the benevolent social planner's objective function. That assumption is appealing because it is so convenient, but is it right?

Here is the real puzzler: What if my son tells me that blogging is just my version of his Gameboy? I am not quite sure how I'll respond.