Wednesday, October 5 2022

Feelings matter. It’s pretty obvious. What is less obvious is what social scientists and policy buffs should do about it. I have written many times about efforts to measure happiness, but these efforts have yielded information that sometimes seems disappointing.

It turns out that people are less satisfied with their lives when they are in poor health or unemployed or when their marriage is falling apart. These are not revolutionary counter-intuitions.

A common question to measure wellbeing is simply asking people to rate their own lives: How satisfied are they, on a scale of 0 to 10? A sensible question, but one that seems crude compared to the battery of data we can collect on prices and income.

Indeed, I once gently teased the happiness research community by suggesting that we wouldn’t learn much about how to reform a nation’s economic institutions by asking citizens: “Overall , how rich do you think you are these days, on a scale of 0 to 10? The question seems silly and serves as a reminder of how little we know about wellness.

Well, the joke is on me. This is perhaps precisely the question we should ask ourselves. A recent study by Federica Liberini, Andrew Oswald, Eugenio Proto and Michela Redoano looked at the impact of what people think about their finances. Liberini and his colleagues delved into a question from a long-running academic survey, Understanding Society: “How well would you say you are doing on your own financially these days?” Responses ranged from 1 (live comfortably) to 5 (find it very difficult).

Researchers found that people who said they lived comfortably were more likely to support the Remain campaign in the UK. Those who found their finances very difficult tended to sympathize with Vote Leave. Indeed, write the researchers, “British citizens feelings about their income were a much better predictor of pro-Brexit views than their real income.

Then there is inequality. Objectively speaking, it is far from clear that income inequality is increasing. In the UK, income inequality reached high levels during the 1980s and has remained broadly stable since. On a global scale, there is no obvious reason for alarm either. Incomes have grown much faster in China and India – two large poor countries – than in the United States or Europe, putting downward pressure on income inequality.

But people’s feelings? They tell a different story. Jon Clifton, the director of Gallup, who has been tracking global well-being for many years, notes a polarization in assessments of people’s lives. Compared to 15 years ago (before the financial crisis, smartphones and Covid-19), twice as many people now say they have the best possible life they could imagine (10 out of 10); however, four times as many people report living the worst life they can conceive (0 out of 10). About 7.5% of people are now in psychological heaven, and about the same proportion in psychological hell.


Does it reflect our subjective realities, or have we all learned to put everything forward, good or bad? I’m not sure, but Gallup isn’t alone in finding clear evidence of widespread psychological distress.

“It looks like something about to explode,” Nobel laureate Daniel Kahneman said at a recent Oxford conference on wellbeing research and policy. Oswald, one of the authors of Federica Liberini’s study, also spoke there and presented a somber series of slides on mental distress and trust in government. “We need detailed data on feelings of human resentment, frustration, anger and delay,” Oswald said.

But we must not forget to also collect data on more optimistic emotions. At the same conference, Carol Graham of the Brookings Institution focused on hope. That’s important, Graham said, because “people who believe in their future are much more likely to invest in it.” Hope triggers positive action.

For example, a study by Graham and Kelsey O’Connor found that in the United States, people who are hopeful about the future tend to live longer – and that this optimism is a better predictor of future health. ‘lower mortality than income. Another study (by Graham and Julia Pozuelo) found that in a low-income neighborhood in Lima, Peru, young people had high aspirations. Most had college as their goal, even if neither of their parents did. The higher the aspirations for the future, the more promising the actions of the present. For example, aspiring students were less likely to abuse drugs and spent more time on schoolwork.

Meanwhile, in St Louis, Missouri, Graham and O’Connor found that low-income African American youth had higher educational aspirations and more support for those aspirations than low-income white youth. This despite the fact that, objectively, white respondents seemed better off. They had more income, more access to health insurance, were more likely to have both parents living at home, and more likely to have one parent with college experience.

As in other areas, there is a gap between people’s objective circumstances and how they feel about those circumstances.

By studying this gap, we can hope to develop better and more responsive policies. If we don’t, then there is a downside to optimism, clearly expressed in the title of Graham’s next book: hope and despair.

Tim Harford’s new book is ‘How to make the world add up

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