The case against happiness-based economics

It is the greatest good to the greatest number of people which is the measure of right and wrong.
— Jeremy Bentham

The bones of philosopher Jeremy Bentham may be locked in a case at University College London, but Bentham’s ghost is flying around universities and government buildings, animating nice people. These otherwise intelligent folks are engaging in so-called “happiness economics.” And that should make us a little unhappy, for reasons I’ll explain.

Jeremy Bentham is the fellow who, in the 1700s, set out the philosophy of “utilitarianism.” That’s the moral theory that basically says the “good” or the “moral” is whatever action or policy contributes to the greatest total happiness in society. Bentham thought you could devise a “hedonic calculus” — a measure of aggregate happiness. It’s no accident that some forms of welfare economics grew out of his idea. In fact, some consider Bentham to be a founder of modern economic science. But be warned: utilitarianism is a bankrupt idea.

The main problems of utilitarianism are:

  • It’s impossible to measure happiness or well-being (despite lots of questionnaires);
  • Happiness is fundamentally personal — that is, subjective;
  • Attempting to aggregate happiness means thinking of “society” as having happiness;
  • Policies derived from the latter bullet ignore individual rights;
  • It opens doors to those who claim to know how to make “society” happier, given power;
  • Proponents usually jump to conclude that wealth redistribution satisfies the utility principle, whether or not the methodology works.
  • And there are more.

The extent to which an alternative strain of utilitarianism can address these problems is the extent to which it is a tortured strain. But happiness research and “happynomics” is pretty much just mainstream utilitarianism wrapped up in surveys and questionnaires. That’s why we should be suspicious from the start.

Utilitarianism warmed over

Take Kentaro Toyama’s recent pitch for happynomics in The Atlantic. In “The case for happiness-based economics,” Toyama concludes:

Building a public policy on the foundation of happiness research would be controversial, to say the least. Critics, especially on the right, might accuse Washington of using wishy-washy assumptions about money and happiness to guide our tax and welfare policy. To be sure, causal relationships between income and happiness are still not established, and we care about values beyond income equality. But, focusing on the logarithm of income might make us pay a little more attention to that third pursuit Thomas Jefferson hailed in the Declaration of Independence.

Before doing anything else, we ought to defend Thomas Jefferson. The whole point of that “third pursuit” (the pursuit of happiness) is that it is a right to pursue, not to an outcome. Welfare economics and so-called “happiness-based” policies are, by their very natures, ambivalent with respect to pursuits. In fact, the whole point of utilitarianism is that it is concerned with consequences — e.g., the measure of happiness at some slice in time.

Similarly, redistributing wealth is about the goal of reduced income equality. Jefferson meant something very different when he wrote the Declaration. In other words, Jefferson wasn’t concerned about whether or not you became happy — or rich — but that you had the freedom to pursue happiness your own way. Diverse means and diverse ends. I don’t know which is more troubling: confusion about the term “pursuit of happiness” or conflation of the phrase “all men are created equal” with worries about income equality. But I digress.

  • SpottedHound

    It takes a real pro to insert themes from the Nicomachean Ethics into an opinion piece. Maximum style points awarded.

  • G Gazornanplatz

    Do not be so easily fooled – the media and those who are enemies of individual freedoms are using this insipid term “happiness” to discredit a very valid questioning of the current economic measure of “prosperity”: the GDP. Max, how could you discredit this inquiry without EVEN ONCE mentioning the very term it revolves around? You should join in this debate rather than summarily dismiss it – as it is a valid question – and insist that the statistics proposed to replace the all-determining GDP emphasize individual liberty, which you rightly point out is the best measure of happiness. China has a fantastic GDP, but no one who believes in liberty would choose to be a Chinese citizen! Unfortunately, the (former) King of Bhutan, who kicked off this economic inquiry (as part of his effort to shift his country from monarchy to democracy), used the term “Gross National Happiness” and the “h word” stuck and is now used to discredit an objective science, much to my dismay. While as you point out measuring happiness is completely subjective, there are objective measurements for the aggregate amount of economic and social opportunity of the citizenry, or to be succinct, well-being.

    Would you not agree that the following types of measures would be a better gauge of individual well-being, aggregated by nation, than GDP? (And thereby the measure of how much an individual has the liberty to “pursue happiness” within that nation?)

    Top individual tax burden (aggregate of local, state, and & national)
    Top unincorporated (small business) tax burden (again, aggregated)
    Amount of individual freedom to assemble, to worship, to political speech (measured by social & government-sponsored reprisals)
    Unemployment rate; Proportion of consumer debt to GDP; Inflation rate;
    Median income (as opposed to average income, which obscures extreme wealth disparity);
    Crime rates, divorce rates, rates of civil lawsuits;
    Rate of chronic and severe disease;
    Pollution-related illnesses, worker commute times;
    Rates of child mortality and maternal deaths;
    Number of “brownfields” and property condemned due to pollution;
    Medical-related bankruptcies
    Professional insurance rates, interest rates on real property mortgages
    Rate of personal and real property in the hands of individuals versus corporations

    The GDP is useless in measuring individual prosperity, as a bad score on any and all of these areas of individual prosperity actually RAISES the GDP. Are you saying, then, that we should stick with GDP as our main yardstick? The rethinking of this key economic statistics is gaining power worldwide, and actually is an area where extreme right and extreme left have a common ground, better to give it an in-depth look rather than an analysis based merely on headlines.

    • G Gazornanplatz

      I should add that this list of measures is from my own head, as the appropriate statistical data to include in any new national gauge is very much a part of the current debate.

  • toomuchinfo

    Max, once again, borders on the sublime with this fine philosophic/economic treatise, contemplating the good pursuit of wealth, the bad tidings of welfare, and the ugly consequences of centrally planned happiness. Access to free markets, free education, and freedom from excessive government incursions, are all the logarithms we need. Thanks for the cool reminder. Let freedom ring.

  • BigRmv

    Absolutely right. Liberty and dignity are pivotal in determining my happiness. I couldn’t imagine quietly submitting to a world view where some bureaucrats decided that my happiness depended on their religious beliefs and that I had to pet the dog 5 times a day to not only insure my happiness, but that of the dog as well. And I don’t need Hillary Clinton or the UN telling me how to keep my kids happy, either.