January 2005

Technology and Happiness

Continued from page 1

By James Surowiecki

Can we trust people to know what makes them happy?
The relationship between happiness and technology has been a perennial subject for social critics and philosophers since the advent of the Industrial Revolution. But its been left largely unexamined by economists and social scientists. The attention that they have paid to the subject of happiness has involved the more capacious relationship between broad material prosperity and well-being. Gregg Easterbrook's book The Progress Paradox grappled with this question directly. The economists Bruno Frey and Alois Stutzer published an academic survey of the subject in Happiness and Economics in 2001. But the truly groundbreaking work on the relationship between prosperity and well-being was done by the economist Richard Easterlin, who in 1974 wrote a famous paper entitled Does Economic Growth Improve the Human Lot? Easterlin showed that when it came to developed countries, there was no real correlation between a nation's income level and its citizens' happiness. Money, Easterlin argued, could not buy happiness -- at least not after a certain point. Easterlin showed that though poverty was strongly correlated with misery, once a country was solidly middle-class, getting wealthier didn't seem to make its citizens any happier.

Easterlin's work did not get much attention when it was first published, but its implications were profound. By suggesting that there was no direct link between wealth and well-being, Easterlin was challenging some basic assumptions of mainstream economics. Most economists begin with the idea that people act in their own self-interest most of the time, and that they usually understand that self-interest pretty well. The choices people make, therefore, must be better than the alternatives (or else people would make other choices). By this argument, wealth is a good thing because it increases peoples options and gives them more freedom to pursue whatever it is they want to pursue. For classical economists, it was almost tautological to say that the wealthier people are, the happier they are, too.

Easterlin's relatively simple study suggested that if what ­people said about themselves was to be believed, you could give people more choices and more wealth and not have much of an impact on their sense of well-being. Well-being is actually the central idea of economics, says Alan Krueger, an economist at Princeton University. But weve never really tried to measure it. We've used proxies, and we've said, If we're richer, and we have more options, we must be better off. But we haven't tried to find out if that's really true.

One response to this, of course, is to say that you can't really trust what people say about themselves in surveys, no matter how well executed. Pay attention to what people do, and youll get a real sense of what they want. On this view, worrying about whether people say they are happy with the choices they make is nonsense. Of course they are. If people spend a lot of money and time buying and using personal computers and wireless phones and personal digital assistants, then these gadgets must make them happy.

There is an inherent logic to this argument, and it has the great virtue of not asking economists to decipher peoples motives. But in the last decade or more, deciphering peoples motives (or at least their behavior) is something more economists have become interested in doing, and to great effect. Behavioral economists have moved away from assumptions about individuals perfect rationality in order to develop what they think of as a more realistic model of economic behavior. They've explored the idea, hardly radical outside economics but pretty radical inside it, that people might sometimes make mistakes, and that their decisions (whether individual or collective) could actually make them unhappy. For instance, behavioral economists have shown that peoples preferences are what is sometimes called time-inconsistent. We would like to save in the long term, but in the short term we'd rather spend. Just as strikingly, behavioral economists have shown that human beings aren't very good at anticipating their own desires. Daniel Kahneman of Princeton University, who won the Nobel Prize in economics in 2002, demonstrated that students, when asked to eat a bowl of their favorite ice cream eight days in a row, had a poor sense of whether they would or would not enjoy the experience.

Considering how many decisions about new technologies are based on little or no concrete evidence and involve guessing about the future, it seems plausible that people can get stuck with technologies that don't make them happy but that are hard to get rid of. Plausible, but not certain: as well see, when it comes to the vexed relationship between technology and happiness, certainty is not an easy thing to come by.