Asking people what makes them happy and trying to design public policy around their responses is fraught with dangers.
What makes us happy? Professor Paul Dolan, Professor of Social Policy and a West Ham United fan, might imagine it would be watching the Hammers win the Premiership. But as a behavioural economist he also knows that he is not very reliable at predicting what will make him happy.
Standard economics works on the assumption that the things we want most are the things that we will enjoy best and that our imaginations are good forecasters of the impact of future events. In contrast, behavioural economics incorporates the lessons of psychology into the laws of economics and demonstrates that this isn’t always so.
Dolan explains: “It’s all about ‘attention’. The issues that we think about when we forecast our happiness and well-being are not actually the things that we pay attention to as we live our lives. And that can lead us to miscalculate the effect of events on our well-being.
“If you ask someone, for example, how much pleasure they get from driving their car on a scale of 1 to 10 and then correlate that with their car’s value, you’ll find a correlation of about 0.4. So, according to this, people who have more expensive cars get more pleasure out of driving their cars.
“Except, if you ask the question, ‘How much pleasure did you get the last time you drove your car?’ and correlate that with the value of the car, the correlation is zero. And that’s because of attention. When you are actually driving your car you are thinking about the idiot in front of you or arguing with your kids or your husband or wife – you are thinking about all those other things that are nothing to do with how flash your car is.”
This inability to predict accurately how happy or unhappy something will make us can be seen in some of Dolan’s research on health. He asked people to imagine that they had a particular health problem and then asked them how much of their lives they would be willing to trade to not have those problems.
People rated having ‘some problems walking about’ and ‘moderate depression and anxiety’ as being equally bad and were willing to trade off, on average, 15 per cent of their life expectancy to avoid both problems.
But for Dolan, the participants’ thinking was flawed. “We know that the experience of depression is much worse than having ‘some problems walking about’ because it is a constant attention-seeking condition in a way that ‘having some problems walking about’ is not,” he explains.
Similarly, we are not very good at imagining the benefits that might come from a policy change. A US study, for example, showed that smokers were actually happier when taxes on cigarettes went up. Most people would rather not smoke and so taxing them more means they cut down, which makes them happier.
So, poor judgements about our happiness are not just unfortunate for us personally. The risk for policymakers is that decisions may be made that make people feel worse rather than better.
Dolan points out that, “Happiness is what ultimately matters to us – and it should be what ultimately matters to policymakers too”.
Economists working with happiness data have tried to overcome these problems by using regression analysis – a statistical tool for measuring the link between phenomena – to try to directly measure experience. They have sought to explain what causes happiness by a whole range of factors that cause happiness, without asking people directly.
This research shows that generally people are happier if they are young or old, healthy, wealthy – especially compared to other people – and in work.
Importantly, it also shows that we are very good at adapting and withdrawing our attention from many negative things over time. Dolan used regression analysis to look, for example, at the effects of 9/11 on mental well-being in the UK and found that there was a significant effect in 2001 through September and into October but by November and December it had disappeared.
New methods and measures have also been developed to measure the flow of happiness over time. People are asked to think of yesterday as a series of episodes in a film and then to say what they’re doing, who they’re with and how they felt during those activities.
Dolan says: “The important thing about these happiness data is that they allow us to say what is important in people’s lives when they are not thinking about how important those things are. I can’t overstate how important that is.
“We do need more research on the connection between happiness and behaviour. Ultimately some of the best behaviour-changing policies will be the ones that improve happiness – where we see a direct feedback between behaviour and happiness.”
This article is based on a public lecture Absolute beginners – human behaviour and happiness
For full details of Professor Paul Dolan's research and publications see his profile on the LSE experts directory: Paul Dolan