Happiness
Andrew J. Oswald
University of Warwick
Risk and Rationalities Lecture, Cambridge
Economics is changing
Economics is changing
Researchers are studying
mental wellbeing.
Economics is changing
Researchers are studying
mental wellbeing.
We are drawing closer to
psychology and medicine.
Could we learn how to …
.. make whole countries happier?
and even prime ministers..?
So how does this
research proceed?
Using large random samples of
individuals from many nations:
Researchers examine what
influences the psychological
wellbeing of
(i) individuals
(ii) nations.
A taste of research (1)
Happiness is high among:
A taste of research (1)
Happiness is high among:
Women
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
The young and old
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
The young and old
Married and cohabiting people
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
The young and old
Married and cohabiting people
The highly educated
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
The young and old
Married and cohabiting people
The highly educated
The healthy
A taste of research (1)
Happiness is high among:
Women
People with lots of friends
The young and old
Married and cohabiting people
The highly educated
The healthy
Those with high income
A taste of research (2)
Happiness is particularly low among:
A taste of research (2)
Happiness is particularly low among:
The unemployed
A taste of research (2)
Happiness is particularly low among:
The unemployed
Newly divorced and separated people
A taste of research (2)
Happiness is particularly low among:
The unemployed
Newly divorced and separated people
ps… and children have no effect on
happiness
A taste of research (3)
Economic growth does not make an
industrialized country happier.
A taste of research (3)
Economic growth does not make an
industrialized country happier.
Plus there is evidence that stress
levels at work, and rates of
depression, have been increasing.
A taste of research (4)
Noise levels and environmental
quality matter to happiness.
A taste of research (5)
‘Fear’ depresses happiness.
Countries are happier if they
have generous welfare benefits
and low unemployment rates.
R. Di Tella, R. Macculloch, A.J. Oswald American Economic
Review, 2001.
Statistical methods
But is it really possible to
study happiness and mental
wellbeing in a systematic
way?
Amygdala:
emotions
Pleasure centre: septal area of
the hypothalamus
Self-reported happiness
relates strongly to…….

• activity in the brain’s pleasure centres
• health, smiles, positive emotional arousal, and
future intentions
Brain Responses in Two Pictures
(MRI Scans)
Source: Richard Davidson, University of Wisconsin
Reported happiness is
correlated with…
• Person’s assessment of happiness by
friends, family and spouse
• How many times the person smiles
• Person’s recall of good and bad events
• Heart rate and blood pressure response
to stress
• The risk of getting coronary heart
disease
Typical GHQ mental-strain
questions
Have you recently:
Lost much sleep over worry?
Felt constantly under strain?
Felt you could not overcome your difficulties?
Been feeling unhappy and depressed?
Been losing confidence in yourself?
Been thinking of yourself as a worthless
person?
Some cheery news:
Some cheery news:
In Western nations, most
people are happy with their
lives
The distribution of life-satisfaction levels
among British people
35
Percentage of Population
30
25
20
15
10
5
0
1
2
3
4
5
6
Self-rated Life Satisfaction
Source: BHPS, 1997-2003. N = 74,481
7
But obviously life is a mixture of ups
and downs
Statistically, wellbeing is
strongly correlated with life
events
..good and bad.
Life satisfaction levels…
A) By Employment Status
A) By Marital Status
5.40
5.40
5.35
Average Life Satisfaction
Average Life Satisfaction
5.20
5.00
4.80
4.60
5.30
5.25
5.20
5.15
5.10
5.05
4.40
5.00
4.20
4.95
Employed
Unemployed
Not Married
Source: BHPS, 1997-2003. N = 74,481
Married
There is also an
intriguing life-cycle
pattern
There is international evidence
that well-being is U-shaped
over the life course
The pattern of a typical person’s
happiness through life
Average life satisfaction score
5.6
5.5
5.4
5.3
5.2
5.1
5.0
4.9
15-20
21-30
31-40
41-50
Age group
51-60
61-70
This holds in many settings
This holds in various settings
For example, we see the same
age pattern in the probability of
depression among a recent
sample of 800,000 UK citizens:
[Blanchflower and Oswald, 2006]
New
Perspectives
The
probabilityon
ofJob
depression by age
Satisfaction
Well-Being
Males, LFS data and
set 2004-2006
0.02
DTI’S FOURTH
LABOUR MARKET RESEARCH CONFERENCE
ORGANISER: EMPLOYMENT MARKET ANALYSIS & RESEARCH (EMAR)
Regression coefficient
0.015
0.01
0.005
0
-0.005
-0.01
1938
1942
1946
1950
1954
1958
1962
1966
Year of birth
1970
1974 1978
1982
1986
1990
Age at which GHQ-N6 Mental Distress
Reaches its Peak:
•
•
•
•
•
•
•
•
•
•
•
•
Age at the maximum
Belgium
52
Denmark
35
Greece
53
Italy
49
Spain
56
France
45
Ireland
44
Netherlands
47
Portugal
60
East Germany 46
Austria
48
UK
47
N
1005
995
984
940
981
972
972
957
937
942
963
1285
Now what about money?
Now what about money?
The data show that richer
people are happier and
healthier.
In the literature, one broad
feature is striking:
Eg. these are connected:
The state of the mind determines
the health of the body
The state of the mind determines
the health of the body
Those with high status live longer
(being promoted seems more important
than a healthy diet and exercise)
Married people are healthier (marriage
offsets smoking)
To the gentlemen:
To the gentlemen:
If you must smoke,
To the gentlemen:
If you must smoke,
it is essential to get
married.
Another intriguing feature of
the data:
Humans are adaptive.
They have amazing
resilience: eg. to
(i) divorce
(ii) disability.
Here we can use recent
longitudinal data, with
sources like the BHPS.
An example
Comparing two years before
divorce to two years after, there is
an improvement in psychological
health (on a GHQ score).
"Do Divorcing Couples Become Happier By Breaking
Up?", J. Gardner and A.J.Oswald, Journal of the
Royal Statistical Society, 2006, 169, 319-336.
Divorce eventually makes people
happier
Human beings also bounce
back remarkably from, say,
disability.
However, there is a downside to
that adaptability (eg. marriage)
However, there is a downside to
that adaptability (eg. marriage)
What about happiness in whole
countries?
When a nation is poor, extra
riches will raise happiness.
When a nation is poor, extra
riches will raise happiness.
Say we look at a scatter plot
across many countries:
Life Satisfaction and GDP Per Capita
World Values Survey
Life Satisfaction = -0.9 + 0.8 * Log GDP (t=8.3)
COL
8
7
NGA
6
5
4
TZA
DNK
IRL
CHE
ISL
AUT
NLD
FIN
CAN
NZLSWE
NOR
DEU
BEL USA
Australia GBR
VEN
SLV
ARG
SVN ITA
BRA
SGP
DOM
CHL
URY
CZE
ESP
ISR
PRT
IDN
FRA
GRC
PHL
CHN
VNM
JPN
HRV
PER IRN
POL
KOR
MAR
SVK
ZAFEST
BGD
BIH
HUN
JOR DZA
TUR
UGA
AZEEGY
BGRLVA
ROM
ALB
IND
MKD
LTU
PAK
BLR
RUS
GEO
MDA
UKR
ARM
MEX
MLT
LUX
ZWE
2000
5000
10000
20000 35000 60000
GDP per capita in US$ at PPP (log scale)
Yet
• Growth in income is now not
correlated with growth in
happiness
• This is the “Easterlin paradox”
A simple graph to worry
finance ministers all over the
world:
2.2
1.8
15000
2
18000
21000
Mean Happiness
2.4
24000
2.6
Average Happiness and Real GDP per Capita
for Repeated Cross-sections of Americans.
1975
1980
1985
Year
Real GDP per Capita
1990
1995
Mean Happiness
Wellbeing is flat through time in
the other rich countries
4
Average Life Satisfaction
3.5
3
2.5
2
1.5
UK
France
Germany
Italy
Netherlands
1
0.5
0
1973
1977
1980
1983
1986
1988
Year
1990
1993
1996
2000
2004
and
In the USA, real income levels have
risen six-fold over 100 years but:
Year 1900 Suicide rate = 10 in 100,000 people
Year 2005 Suicide rate = 10 in 100,000 people
Are there diminishing
returns to real income?
Are there diminishing
returns to real income?
Very probably yes.
Source: World Values Survey, 1995
1995/2000 World Values Survey results
Life Satisfaction
World Values Survey
9
Colombia
Mexico
8
SALV
7
Nig
INDEX
Ven
Arg
BraUru Chile
Dom
Vietnam Iran
CROA
MOR
Slo
EST
S.AFR
BAN
Bosn
Hun
Alg
Uga
Bulgaria
Lat
IndiaALBMacRom
Lit
PAK
Bela Rus
MOL
Ukr
ARM
TanzZIM
6
5
4
DenSwi
Irl
ICE
Austria
Fin
Netherlands
Can
New ZealandGerSWE
NorUS
Belg
Australia
UK
Slovenia
Italy
Cze
Isr Spa SIN
PORT
FRA
GRE
the western countries
MALT
3
2
1
0
0
5,000
10,000
15,000
20,000
25,000
30,000
GDP per capita, PPP (constant 2000 international $)
35,000
40,000
Similar results within a nation
(though cardinality questionable)
Take American families in 1994 for example
So what exactly goes wrong
when a wealthy country gets
richer?
We are not certain, but..
Some clues…
• Social comparison (you compare your
3 BMWs to people with 3 BMWs)
• Habituation: people adapt to money
• Mistaken choices (long commutes and
working hours)
Social Comparisons
Producing a happier
society?
Possible ideas
• Envy and social comparisons are counterproductive at the aggregate level
• Some argue for a ‘corrective tax’ system –
one that reduces work effort to a level where
the fruitless incentive to raise your relative
income has been fully offset (Frank and
Layard)
• In terms of positional goods, e.g. luxury cars
– could be taxed much more
Another difficulty: Long working
hours in the EU
Graph 1: % of employees working over 45 hours per week
35%
30%
33
28
25%
24
20%
Women
19
15%
Men
10%
5%
25
12
7
11
9
7
0%
Sw
ed
en
Ge
r
m
an
y
Fr
a
nc
e
UK
Source: European Working Conditions Survey, 2000
EU
15
Some societies certainly
seem to have a work-life
balance problem.
New Perspectives on Job
“I
would
like
to
spend
Satisfaction and Well-Being
much more
time with my family” (% workers)
DTI’S FOURTH LABOUR MARKET RESEARCH CONFERENCE
ORGANISER: EMPLOYMENT MARKET ANALYSIS & RESEARCH (EMAR)
USA
Great Britain
Sweden
Norway
Denmark
Canada
46%
36%
32%
27%
26%
26%
New Zealand
Switzerland
Italy
Netherlands
Japan
Spain
26%
23%
21%
18%
9%
8%
Source: Blanchflower and Oswald (2000a) and International Social Survey Programme, 1997
New work on the long ‘shadow’
of childhood
• An individual’s happiness is lower if a
parent died before they were 18
• His or her happiness is lower if the
parents quarrelled frequently
• The effect of parental arguing on
children’s happiness approximately
disappears if the parents divorced
These childhood
findings hold
in 16 countries.
We will continue to link up
more with science and
psychology researchers
Eg. studying cortisol levels.
Plus we are learning how to
measure the value of subtle
things (eg. Clow’s work)
New Perspectives on Job
Bloodand
pressure
Satisfaction
Well-Beingpatterns
too
DTI’S FOURTH LABOUR MARKET RESEARCH CONFERENCE
• Denmark has the lowest reported
levels of high blood pressure in
our data
ORGANISER: EMPLOYMENT MARKET ANALYSIS & RESEARCH (EMAR)
• Denmark also has the highest
happiness levels
Source: Blanchflower, D.G. and A.J. Oswald (2006d), "Hypertension and happiness across nations"
50
P ercentage of citizens very satisfied w ith their live s
P e rc e nta ge o f c itiz en s v ery s a tis fied
F ig ure 2.
T h e Inv erse C o rrela tion B etw een H y pertension an d L ife
Sa tisfa ctio n: 1 6 E uro p ea n N atio ns A g greg ated into Q u a rtiles
40
30
Ire lan d
D e n m a rk
N 'La n d s
Sweden
S p a in
F ra n ce
Lux
UK
20
10
A u stria
Ita ly
B e lg iu m
G re e ce
E . G e rm a n y
W . G erm a n y
P o rtu ga l
F in la n d
0
C ou ntries in the
lo w est qu artile
o f bloo d-pressure
C ou ntries in th e
hig hest q uartile
of b lo od -p ressu re
What of broader economic
and social policy itself?
Gross National Happiness (GNH)
Policy in Bhutan
• 4 pillars of public policy
- Sustainable and equitable socio-economic
development
- Conservation of environment (e.g. banning of
plastic bags)
- Preservation and promotion of culture (e.g. ban
US programmes and advertising)
- Promotion of good governance
Source: Jigmi Y. Thinley, Minister of Home and Cultural Affairs, Bhutan
A finding from our equations
Friends and partners matter
much more than money.
How much are social relationships worth
in terms of happiness?
See friends once a month
Valuations (in £)
£57,500 p.a.
See friends once a week
£69,500 p.a.
See friends on most days
£85,000 p.a.
Getting married
£50,500 p.a.
Losing a job
Source: BHPS, Powdthavee (2006).
- £143,000 p.a.
So what course should I have done
at university?
As a society, we could also pay
attention to improving public
goods, and the environment in
the broadest sense.
Summing up
Given our current real
income levels:
Summing up
Given our current real
income levels:
Growth is not making the
industrialized nations
happier.
The natural conclusion
Policy in the coming century
will need to concentrate on
non-materialistic goals.
The natural conclusion
Policy in the coming century
will need to concentrate on
non-materialistic goals.
GNH not GNP.
Thank you for coming
Happiness
Papers downloadable at
www.andrewoswald.com
I here owe a great debt to the work of David G
Blanchflower, Andrew Clark, Paul Frijters, Nick
Powdthavee, and Justin Wolfers
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