The Political Economy of Human Happiness (part 2)

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Benjamin Radcliff wants to test the hypothesis that people are generally happier when government takes an active role in promoting economic well-being. The interventionist policies he has in mind include a generous welfare state, support for workers’ right to organize, and strong regulation of business.

Measuring happiness

This study depends, first of all, on being able to measure happiness. Social scientists try to do that without getting into deep philosophical questions about “true happiness.” They find it useful to define the term simply, as Radcliff does when he says, “Whether we call it life satisfaction, happiness, or, as some prefer, subjective well-being (SWB), we are speaking of the same theoretical and empirical entity: the extent to which the individual enjoys life.” Then the measurement of happiness requires only a simple self-report, such as the answer to this question from the World Values Study used by Radcliff: “All things considered, how satisfied are you with your life as a whole these days?”

Radcliff argues for the validity of such self-reports in this way:

…We find exactly what we would hope to find if self-reports of happiness are valid. Thus, people reporting to be happier than average have been demonstrated (among many other things), to laugh and smile more than others during social interactions, to be less likely to attempt suicide or to become depressed in the future, to be more likely to recall positive rather than negative life experiences, to be less introverted and shy, and to be more optimistic about the future. Crucially, self-assessments of happiness also correlate highly with external evaluations from friends and family members, as well as with clinical evaluations.

Simple questions about happiness are also very reliable, since people answer them readily and pretty consistently. In contrast, questions that are too difficult or confusing can produce a different answer each time a respondent is asked. Simple happiness questions also allow comparability across countries, since slight variations in wording or interpretation have been found to have little effect on how countries rank.

Individual and societal variations

Many of the reasons why some people are happier than others are very personal, and have little to do with the political factors Radcliff wants to study. Radcliff identifies the personality traits most strongly correlated with happiness as “extroversion, neuroticism [negatively correlated], optimism, self-esteem, and efficacy (the sense of being in control of one’s own life).” In addition, some personal conditions are predictors of happiness, such as being married and otherwise socially connected, being employed, enjoying good health and attending religious services. People with higher incomes are generally happier, but with some diminishing returns at the highest income levels. “Age displays a U-shaped pattern with happiness, such that both the young and the old are happier than are those in the middle,” other things being equal.

If the unit of analysis is the individual, and a large number of variables are considered simultaneously, then the government policies under which one lives will explain only a small portion of the total variation in personal happiness. That has led some researchers to dismiss political variables as largely irrelevant. However, one can see political effects more clearly by using countries as the units of analysis and making the average level of happiness in the country as the variable to be explained. A lot of individual variations then drop out, and the variation that remains is more clearly correlated with variations in national policy. Not all the national differences that affect happiness are relevant to Radcliff’s thesis. Factors like the general level of prosperity have to be taken into account so that variation attributable to them is not incorrectly attributed to the progressive policies he is interested in. Multiple regression is the statistical technique Radcliff uses to sort these matters out. He conducts separate analyses using first individuals and then countries as the units.

The data for the international comparisons come from the World Values Surveys conducted between 1981 and 2007. Radcliff includes “the twenty-one traditional, core member states of the OECD: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and the United States.”

Political factors affecting happiness

Radcliff uses these measures of the size of government:

  • a measure of “decommodification” developed by Esping-Anderson, intended to measure “the degree to which individuals or families can uphold a socially acceptable standard of living independent of market participation”; this depends on the availability of social insurance like disability or unemployment benefits
  • a similar measure developed by Scruggs, called a “generosity index”
  • government social spending as a share of Gross Domestic Product
  • government taxation as a share of Gross Domestic Product
  • a “size of government” index developed by the Fraser Institute

To assess government efforts to protect workers in particular, he uses:

  • an index of labor market regulation developed by the Fraser Institute
  • the Employment Protection Legislation index developed by the OECD

In both the individual-level and country-level analyses, the relationships are in the expected direction: People are generally happier when the government is more active in these ways. A particularly interesting finding is that the effects extend even to those who are not the most direct beneficiaries of the policies. A more generous welfare state increases the happiness of the wealthy as well as the poor. Protecting workers’ right to organize benefits even those who don’t personally belong to unions. Since we are talking about broad averages here, the findings don’t rule out negative policy effects on certain individuals or businesses, but on balance the more progressive, social democratic nations have the happier citizens.

How large are the effects? The regression coefficients vary from factor to factor, and their meaning is not always obvious even to statisticians (since they depend on what combination of variables is in a given equation), let alone to general readers. Radcliff does the best he can to assess the magnitude of the political effects by comparing them to other known effects. For example, he finds that in the individual-level analysis, the difference between living in the most generous versus the least generous welfare state is greater than the difference between being employed or unemployed, or the difference being married or unmarried.

Radcliff does not provide a ranking of countries on these variables, but he does mention that the United States falls more toward the conservative end of the political spectrum, with a small welfare state and relatively weak worker protections. He also conducts a separate analysis of American states to show that similar relationships hold at the state level. Other things being equal, states with more progressive policies have somewhat happier citizens.

Is “big government” better?

In his final chapter, Radcliff once again states his position rather bluntly:

In the debate between Left and Right over the scope or size of the state, it is eminently clear that “big government” is more conducive to human well-being. As we have seen, the surest way to maximize the degree to which people positively evaluate the quality of their lives is to create generous, universalistic, and truly decommodifying welfare states….Overall, it is clear that the quality of human life improves as more of the productive capacity of society comes under political–which is to say, democratic control. This subjection of the market to democracy thus appears to promote human happiness in precisely the way that advocates of social democracy have always argued.

I can’t emphasize enough that Radcliff is talking only about social democracy. His sample of nations does not include China, Eastern European countries during or after Soviet domination, or any totalitarian system. The real relationship between size of government and happiness may be curvilinear: Happiness rises as long as the state is becoming large enough to give people some economic security, but it falls if the state tries to take too much control of their lives. One of the main impulses of conservative thought is the justified fear of the totalitarian state, so their critique of big government isn’t entirely wrong.

Having said that, there remains much in Radcliff’s study to challenge conservatives. While they constantly sound the alarm about excessive government power, they are so enamored of the “free market” that they tend to overlook the dangers of excessive economic power. To them, freedom often means nothing but freedom from government regulation, never freedom from inadequate wages or catastrophic health bills. Not only do powerful economic interests commodify and devalue laborers to the point of keeping too many of them poor, but they also threaten to undermine democracy by “making the nominally democratic state dependent on pleasing the economic interests of the capital-owning class.” For a look at how one wealthy individual has shaped our politics, see Gabriel Sherman’s The Loudest Voice in the Room, about Roger Ailes of Fox News.

Radcliff points to a fundamental contradiction in conservative thought. Conservatives uphold the classic eighteenth-century liberal notion that rational individuals have the right to organize together in pursuit of an economic goal. That’s the basis for the economic corporation. They insist that such an entity is a legal “person” with the right to speak and act as one. But if workers want to bargain collectively by forming a union, or citizens want to join together to legislate a minimum wage, conservatives see that as an infringement on freedom. So organization that enhances the power of capital advances freedom, but organization that enhances the power of ordinary citizens is, in von Hayek’s words, the collectivist “road to serfdom.” If Radcliff is right, that philosophy may be getting in the way of taking reasonable measures to promote the common good and increase human happiness.

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