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Ignoring Easterlin: Why Easterlin’s Correlation Findings Need Not Matter to Public Policy

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Abstract

Many believe that the lack of correlation between happiness and income, first discovered by Richard Easterlin in 1974, entails the conclusion that well-being policies should be made based on happiness measures, rather than income measures. I argue that distinguishing between how well-being is characterized and how that characterization is measured introduces ways of denying the conclusion that policies should be made based on happiness measures. It is possible to avoid the conclusion either by denying that well-being hedonism is true or by denying that happiness measures are a better way of operationalizing hedonism than income measures are. By making these possibilities explicit, we find that less hinges on whether income and happiness are correlated than is often thought.

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Notes

  1. Easterlin attributes this inconsistency to what he sees as the adaptability of mankind (Easterlin 1974, pp. 118–119).

  2. I include Subjective Well-Being (SWB) measures in this group.

  3. Not everyone finds a lack of correlation between happiness measures and income measures. Some happiness measures appear to be correlated with income measures, for example recent work by Kahneman and Deaton (2010) shows that affective measures correlate reasonably well with income. However, the arguments here do not hinge on what happiness measure is used, only that if it diverges from income measures this need not worry us.

  4. Easterlin is aware that the terms do not all refer to exactly the same thing: “The terms SWB, happiness, and life satisfaction are used interchangeably; though not identical in concept, they are closely related (Easterlin et al. 2010, 89, 10304).” (Easterlin 2013).

  5. Broome (1999), for example, discusses the problem of equivocation between utility as it is used by economists as a technical term and the way it is used by the layperson to mean ‘having value’. Alternatively, Sumner (1996) argues that well-being is constituted by authentic happiness, thus drawing a clear distinction between happiness per se and well-being. Moreover, it is worthwhile to leave open some conceptual space for claiming that while smoking, for example, can increase some people’s happiness, does not increase their well-being. Alternatively, we might claim that while it annoys me and causes me unhappiness to be forced to take vacation days from work, it is nonetheless conducive to my well-being. Whether these examples resonate with the reader, depend at least in part on how they conceptualize both happiness and well-being. The point is that these two concepts need not be thought of as one and the same.

  6. These include the UK prime minister, David Cameron (Cameron 2010), former president of France, Nicolas Sarkozy (Stiglitz et al. 2009), and former chairman of the US Federal Reserve, Ben Bernanke (Bernanke 2012), among others.

  7. See Haybron and Tiberius (2015) for a different view.

  8. See Hersch (2015) for a discussion on this issue.

  9. See Cartwright and Hardie (2012) for a discussion of issues regarding evidence-based policy.

  10. Others take issue with Easterlin’s findings as well. Deaton (2008), Diener (2009) and Kahneman and Deaton (2010) find that there is a positive correlation between income and life satisfaction, even if there is a weaker or no correlation between income and affective happiness. These critics might be solely motivated by an academic interest in the subject matter. Nevertheless, as discussed earlier, at least Hagerty and Veenhoven (2003) and Stevenson and Wolfers (2008) see the empirical disagreement has having policy implications as well.

  11. In a 2016 working paper Easterlin again argues that his critics are mistaken (Easterlin 2016).

  12. This is not the only argument that has P2 as it’s conclusion.

  13. One reason that there are so many counterexamples to theories of well-being is that well-being is a concept that lacks a central core, yet theories of well-being demarcate some area of the well-being concept as the central core. Trivially, if no core actually exists it is not very surprising that there are many examples that fall outside the non-existing core.

  14. Haybron and Tiberius (2015) make the point that hedonsim is still fashionable among many social scientists, e.g. Layard (2006).

  15. There is a lot of empirical research that suggests that Sen is right, beginning with Brickman et al. (1978) (see also Frederick and Loewenstein 1999; Diener et al. 2006).

  16. Angner (2011), in his paper “Are subjective measures of well-being ‘direct’?”, proposes that even if we deny well-being hedonism, SWB measures might still be useful measures of well-being as long as we treat SWB measures as “(imperfect) indirect measures of well-being” (p. 126). In “Happiness Surveys and Public Policy: What’s the Use?” Adler (2013) discusses the preference-realization defense of SWB, which takes an individual’s self-reported SWB as a defeasible indicator of her preference realization (or satisfaction), rather than a measure of her hedonic state. In their arguments, both Angner and Adler point to the possibility of severing the link between happiness measures and well-being hedonism.

  17. Diener et al. actually discuss Subjective Well-Being (SWB) measures, but for the sake of simplicity and because it does not matter for my purposes, I will stick to the term happiness measures.

  18. I thank an anonymous reviewer for asking me to discuss this possibility.

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Acknowledgements

I thank Nancy Cartwright, Saba Bazargan-Forward, Craig Agule, Alexandre Marcellesi, Casey McCoy, Martin Binder, Kelsey O’Connor, and two anonymous reviewers for comments on earlier drafts. I also thank the audience at the 17th INEM/CHESS Summer School in Economics and Philosophy for helpful comments.

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    Gil Hersch

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Hersch, G. Ignoring Easterlin: Why Easterlin’s Correlation Findings Need Not Matter to Public Policy. J Happiness Stud 19, 2225–2241 (2018). https://doi.org/10.1007/s10902-017-9920-8

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