Thursday, August 03, 2006

Theory of Well-Being

Brazen Careerist linked to Richard Easterlin, an economist doing some interesting cross-discipline work researching happiness and economics. His article Building a Better Theory of Well-Being (PDF) is powerful stuff, slicing and dicing existing research on happiness and blazing a new path. A lengthy quote, to help me remember later why this matters:
"More income may contribute to a more comfortable family life, and may facilitate health through exercise machines and recreational expenditures. But time spent in the pursuit of income takes away from the time available for family, exercise, and recreation. Moreover, the net balance of
effects tends to be negative. This is because of the inability of people to foresee the differential change in aspirations by domain. This failure to anticipate the change in aspirations assures that the allocation of time to the pecuniary domain will be excessive and that the more rewarding domains of family and health will consequently receive insufficient attention. In family life, the result is a substitution of goods for time spent with one’s spouse and children.

One may ask if social learning occurs – don’t people eventually realize how their material aspirations escalate with economic achievement, and become aware of the self-defeating nature of the pursuit of pecuniary goals? Perhaps, but the evidence on material aspirations that I have given fails to show evidence of such social learning. Moreover, the change in material aspirations itself works against social learning. When asked how happy they were five years ago, people, on average, systematically underestimate their well-being at that time, because they evaluate their past situation in terms, not of the lower material aspirations they actually had at that time, but on the basis of the new higher level of aspirations they have now acquired (Easterlin 2001a, 2002). As a result, they tend to think they are better off than they were in the past, rather than realizing that there has been no net improvement."

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