Link to the article on the Johnson Business School website at Cornell

Ori Heffetz is now my coauthor many times over. There is a bio of him at the link. Here is his guest post on some of our joint work on the economics of happiness. Ori asks

Should governments monitor citizens’ happiness and use that data to inform policy? Many say yes; the question is how.

Most of our students at Johnson may be too young to remember, but in 1988, for the first time in history, an a cappella song made it to the #1 spot on the Billboard Hot 100 chart. Many of our alumni however won’t forget the huge success of Bobby McFerrin’s “Don’t Worry, Be Happy.” The artist’s unparalleled singing abilities aside, the song became an instant hit much thanks to its simple message that immediately resonated with everybody. After all, nobody wants to worry, and everybody wants to be happy. 

But if everybody wants to be happy, shouldn’t governments be constantly monitoring the public’s level of happiness, assessing how different policies affect it, and perhaps even explicitly designing policies to improve national happiness (and reduce national worry)? Wouldn’t it make sense to add official happiness measures to the battery of indicators governments already closely track and tie policy to — such as GDP, the rate of unemployment, and the rate of inflation? 

Researchers increasingly think so. Some advocate conducting nation-wide “happiness” surveys (or “subjective well-being” (SWB) surveys, to use the academic term), and using the responses to construct indicators that would be tracked alongside GDP-like measures. Although these proposals are controversial among economists, policymakers have begun to embrace them. In the past two years alone, for example, the U.S. National Academy of Sciences’ Committee on National Statistics convened a series of meetings of a “Panel on Measuring Subjective Well-Being in a Policy-Relevant Framework”; the OECD, as part of its Better Life Initiative, has been holding conferences on “Measuring Well-Being for Development and Policy Making”; and the U.K. Office of National Statistics began including the following SWB questions in its Integrated Household Survey, a survey that reaches 200,000 Britons annually:

Overall, how satisfied are you with your life nowadays?

Overall, how happy did you feel yesterday?

Overall, how anxious did you feel yesterday?

Overall, to what extent do you feel the things you do in your life are worthwhile?

These and other efforts follow the French government’s creation, in 2008, of the now-famous Stiglitz Commission — officially, the “Commission on the Measurement of Economic Performance and Social Progress”— whose members included a few Nobel laureates, and whose 2009 report recommends the collection and publication of SWB data by national statistical agencies. No wonder Gross National Happiness, a concept conceived in Bhutan in the 1970’s, is back in the headlines. Can a few simple questions on a national survey, such as the British (Fab) Four above, be the basis of a reliable indicator of national wellbeing? Will the Bank of England soon tie its monetary policy to the “rate of happiness” (or to the “rate of anxiety”), making central banks that still tie their policies to traditional indicators such as the rate of unemployment seem outdated? 

Not so fast. While demand for SWB indicators is clearly on the rise — witness Ben Bernanke’s discussion of “the economics of happiness” in several speeches in recent years — efforts to construct and apply survey-based well-being indicators are still in their infancy. Among the most urgent still-unresolved practical questions are: Which SWB questions should governments ask? And how should responses to different questions be weighted relative to each other? The four questions above, for example, ask about life satisfaction, happiness, anxiety, and life being worthwhile. But does the public consider these the only — or even the most — important dimensions of well-being? And even if it does, how would people feel about — and will they support — a government policy that increases, say, both happiness and anxiety at the same time? 

These are the questions that my colleagues — Dan Benjamin and Nichole Szembrot here at Cornell, and Miles Kimball at the University of Michigan — and I address in our working paper, “Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference” (2012). The idea behind our proposed method for answering the two questions — the “what to ask” question and the “how to weight different answers” question — is simple and democratic, and consists of two steps: first, gather a list, as long as you can, of potential SWB questions that governments could potentially include in their surveys; and second, let the public determine, through a special-purpose survey that we designed, the relative weights. 

To demonstrate our method, we followed these two steps. We began by compiling a list of 136 aspects of well-being, based on key factors proposed as important components of well-being in major works in philosophy, psychology, and economics. While far from exhaustive, our list represents, as far as we know, the most comprehensive compilation effort to date. It includes SWB measures widely used by economists (e.g., happiness and life satisfaction) as well as other measures, including those related to goals and achievements, freedoms, engagement, morality, self-expression, relationships, and the well-being of others. In addition, for comparison purposes, we included “objective” measures that are commonly used as indicators of well-being (e.g., GDP, unemployment, inflation). 

Next, we designed and conducted what economists call a stated preference (SP) survey to estimate the relative marginal utility of these 136 aspects of well-being. In plain English, what that means is that we asked a few thousands of survey respondents to state their preference between aspects from our list (e.g., if you had to choose, would you prefer slightly more love in your life or slightly more sense of control over your life?). With enough such questions, we could estimate the relative weight our respondents put on each of these aspects of life. 

Among other things, we found that while commonly measured aspects of well-being such as happiness, life satisfaction, and health are indeed among those with the largest relative weight (or marginal utility), other aspects that are measured less commonly have relative marginal utilities that are at least as large. These include aspects related to family (well-being, happiness, and relationship quality); security (financial, physical, and with regard to life and the future in general); values (morality and meaning); and having options (freedom of choice, and resources). Using policy-choice questions in which respondents vote between two policies that differ in how they affect aspects of well-being for everyone in the nation — rather than state which of two options they prefer for themselves — we continued to find the patterns above and in addition found high marginal utilities for aspects related to political rights, morality of others, and compassion towards others, in particular the poor and others who struggle. We also explored differences across demographic-group and political-orientation subpopulations of our respondents. 

But these findings themselves are perhaps less important. After all, our sample was not representative, and we had to make practical compromises in our data collection and analysis that governments would not have to make. The main contribution of our work, we believe, lies in outlining a new method, and in demonstrating its feasibility. Our method for evaluating SWB questions and for determining their relative weight in a well-being index can now be discussed, criticized, and, as a result, improved on. The familiar conventional indicators such as GDP, inflation, and unemployment did not start in the refined state we know them today: they have been continually fine-tuned over many decades. We hope that our work will contribute to a similar process regarding a SWB-based index. 

Many practical obstacles still have to be overcome before standardized, systematic measurement and tracking of SWB for policymaking purposes becomes a reality. But if the endeavor is successful, then perhaps our children — who I doubt will have heard of Bobby McFerrin’s #1 hit - will at some point consider a DWBH index - “Don’t Worry Be Happy” index - as standard as GDP and other indicators.

Note: I (Miles) give my take on the same research in my column “Judging the Nations: Wealth and Happiness are Not Enough.”