"The key to happiness is freedom not income"

Off and on, usually provoked by the release of a new study, the media will turn to the question of happiness and incomes. While the Wall Street Journal has exhibited a tendency to tout research that shows that the rich are happier, the results are far less clear-cut. Once a certain income level has been reached (typically, enough to provide for a middle class standard of living in that society and allow one to accumulate a cushion for emergencies) more money does not produce much if any gains in happiness. And some findings have been under-reported in the US. For instance, while some studies have found that being in the top income group or having high educational attainment is correlated with higher levels of happiness, living in socially stratified societies leads to less satisfaction across all groups. And remember, Nigeria, hardly a bastion of wealth, has scored as the happiest country in a multi-year international survey.

An article today in the Financial Times suggests that researchers may have been looking at the wrong axis in looking for a strong correlation between income and happiness. Roberto Foa (a researcher in the same international survey mentioned above) contends that freedom is a far more important factor than economic attainment.

If Foa is correct, the post 9/11 surveillance apparatus and restrictions on civil liberties may have a bigger impact than the security-minded might contend. I’ll admit to being easily riled, but all sorts of people now seem to feel entitled to make intrusive information requests (for instance, hotel clerks demanding to see photo IDs for rooms that are pre-paid). But only someone who had had a lobotomy could be indifferent to airport security, (particularly when they abuse their authority). And the right to assemble and present one’s views, even in passive ways like wearing T-shirts with wrong message, is under attack.

And don’t kid yourself that they aren’t watching. Your humble blogger got an e-mail from the Department of State inviting me to participate in a webcast (on the economics of Colombia, of all things). The fact that the Department of State (and who knows who else) is monitoring bloggers is scary (I suppose I had naively hoped there were so many that we were all part of a crowd).

From the Financial Times:

In recent years, a small army of happiness gurus has lined up to proclaim the ills of modern society, and its failure to make us feel better. We have more money, say some, but family life has eroded. We live longer, but crime has risen. Some have even blamed affluence itself, arguing that the dizzying range of lifestyle options that we now confront frustrates the pursuit of happiness.

Yet contrary to the assertions of pessimists, newly released data, recently published in an article with colleagues from Jacobs University Bremen and the University of Michigan, shows that today’s world is a happier one. From 1981 to the present, more than 350,000 people from 90 countries were asked about their happiness and their satisfaction with life as a whole…

How is it that the world is getting happier? In the words of Thucydides, the secret of happiness is freedom. In each survey respondents were also asked to rate their sense of free choice in life. In all but three countries where perceived freedom rose, subjective well-being rose also. A chart, produced by the authors, shows how these increases in free choice and subjective well-being are strikingly related.

The world in which we live today is unquestionably a free one. For the first time in history, most of the world is governed democratically, the rights of women and minorities are widely acknowledged, and people, ideas and investment can cross borders. Since the study began in 1981, dozens of middle-income countries have democratised, relieving many from fear of repression: every country making a transition from authoritarian rule to democracy shows a rising sense of free choice. In addition, there has been a sharp rise in the acceptance of gender equality and alternative lifestyles. Countries where this revolution has been most pronounced, such as Canada and Sweden, continue to show rising well-being.

Arguably, no region has experienced this transformation as rapidly as eastern Europe. In the space of two decades, several countries that were members of the Soviet bloc have become members of the European Union, with new freedoms to travel, work and live as never before imaginable. Not only has the proportion claiming to be “very happy” risen in every country except Serbia and Belarus, but this trend has been wholly driven by the younger generation. Among eastern Europeans aged 15-24, the proportion saying they were “very happy” was 9 per cent at the start of the 1990s, roughly the same as in other age groups. By 2006, this proportion had more than doubled, and steady rises were also evident among those in their 30s and 40s. Country after country in the study…exhibits this trend…..

So if the world is becoming happier, what are the implications? First, that the expansion of political and social freedoms over the past quarter of a century is vindicated…

Second, the results may engender caution towards attempts to engineer happiness through public policy. The happy countries include social democracies such as Sweden and Denmark, and more laisser faire economies such as Australia and the US. What they have in common are not their policies but institutions: democracy, rule of law and social tolerance. People are largely capable of engineering their own happiness when given the means to do so.

Third, the link from free choice to rising happiness suggests that the appropriate benchmark of development is not income per capita, but individual freedoms and capabilities. This is the human development perspective associated with Amartya Sen, the Nobel laureate. While income and well-being are closely correlated at early stages of development, once the threat of starvation recedes, social and political freedom appears to be as important.

Though the past 25 years have brought a happier world, there is no certainty that the next 25 will continue to do so. Many low and middle-income countries have experienced exceptionally high rates of growth, ranging from 4 to 11 per cent, while richer countries have undergone falling work hours and social liberation. There is no guarantee that either will persist indefinitely.

Meanwhile democratisation is a one-shot occurrence, and the collapse of communism is in the past. Today, there are as many countries that appear to be sliding into soft authoritarianism and state failure as there are countries that are becoming consolidated democratic cultures, while the future of the global economic order is itself in jeopardy. It would be a huge irony if the benefits of liberal institutions for human happiness were to become evident precisely at the moment when those gains are most at risk.

Note that Foa suggested that international mobility, meaning both freedom to travel and ability to relocate, are part of the happiness equation, and both are becoming more rather than less restricted.

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  1. Dean


    May I paraphrase? The key to happiness is the freedom to enjoy your income.

    BTW only a few days back you proclaimed absence of flattey in influencing Fed action as a blogger, yet today you seem positively flattered (albeit a bit concerned of classification)about evidence of the contrary.

  2. russell1200

    Maybe somebody there has read your blog and liked it. Or maybe they just googled you.

    That would be a lot different than
    official monitoring.

  3. Anonymous

    “Your humble blogger got an e-mail from the Department of State inviting me to participate in a webcast (on the economics of Colombia, of all things). The fact that the Department of State (and who knows who else) is monitoring bloggers is scary (I suppose I had naively hoped there were so many that we were all part of a crowd).”

    C’mon. You’ve got fans everywhere in the economics and finance world. It shouldn’t be surprising that one of them works at State.


  4. Mara

    My own definition of happiness is the overcoming of obstacles toward a known goal. Not Hallmark sentiment, but it works. Of course you have freedom, barriers and purposes in all of this. If you have a goal of acquiring lots of money and stuff and you use legal sliminess to get yourself to bypass barriers, maybe you get your goal but find it hard to live with yourself later (or that no one else can tolerate living with you). If you fail to make any goals, I reckon you’d be unhappy as well. In my travels in some (to western standards) ‘poor and dubious’ locations on the globe, these folks seemed to be happier. They didn’t fall into an apathy about barriers and found creative ways to overcome them. Probably just as important, they really didn’t watch TV or fall in line with “coveting thy neighbors possessions”.

    On the other note (of finding out the state dept is onto you) you should’ve told them that you couldn’t come to the thing on Columbia, you were busy with Chavez that day. [Andy Warhol would’ve been thrilled with the internet. It’s so much easier to get that 15 minutes of fame in.]

  5. Peripheral Visionary

    Interesting thoughts. If freedom is happiness, then it naturally follows that slavery is misery. If so, the massive indebtedness of the Western world bodes ill. I rather suspect that we have a wave of unhappiness coming; we borrowed against our future to achieve freedom in the present, but as the future arrives we will find ourselves increasingly in bondage.

  6. Anonymous

    No wonder I got so miffed this weekend while driving with friends and being forced to stop at a police sobriety check-point. If it was in Iran, we’d all be decrying their lack of freedom from government agents….but because it was here–land of the free and home of the brave–I actually got into a disagreement afterward with a fellow passenger who didn’t think there was anything wrong with trying to get drunks off the road.

    So I recounted to him what had actually just happened:

    1. We were stone-sober and law-abiding but were stopped from freely traveling down a public road.

    2. The first two questions from the rather tart state trooper were “Where are you coming from?” and then “Where are you going?” This wasn’t a border crossing! If anything at all, he should have asked something innocuous like, “How are the driving conditions out there tonight?” or “Have you found motorists to be driving safely in this area?”

    3. While interrogating our travel plans, he was simultaneously stepping back along the driver’s side with a flashlight and carefully inspecting faces, laps, seats and the floor areas of our SUV with 3 occupied rows. We were being searched. (Oh, right, I know, it was for his safety….but what about our freedom?)

    And with those three points stressed, my friend said, “Hmmmmmmmm.” And I remain quite unhappy about the stop, and perhaps the lack of objection in others most of all.

  7. "Cassandra"

    Yves, I recall sociological studies in the UK that examined happiness and health (the latter proxied by longevity) controlling for variables (work type, income, etc.) that reach similar conclusions – but framing it in terms of “control” rather than “freedom”. While the distinction is probably semantical, they conclude that the defining element was “control” rather than those variables equating to income, or wealth. Nothing worse, apparently, than being under someone else’s thumb!

  8. twoblow


    Hah! An excellent point. I used to provide medical treatment for exactly this population, and while I would agree, they have no control over their lives, I would not characterize them as “being under anyone’s thumb”.

    To me, “being under someone’s thumb” means someone is telling you what to do, directing your actions, and managing your life. Any wage slave can describe this situation. These folks lead totally undirected lives, no one was telling them to do anything! They had no job, collected welfare, drifted between relationships, drugs, and crime. They did not clean their teeth. I know it’s a hackneyed phrase, but they took no responsibility for their lives, they had no sense of agency. Theadore Darlymple writes about this class in “life at the bottom” which I recommend.

    So, no control, yes, but also not “being under someone’s thumb”.

    Yves: Now that we’ve demonstrated money does not bring happiness, will you begin arguing against income redistribution?

  9. Anonymous

    I find it remarkable that whenever Yves brings up anything even slightly political (except bashing the Fed), some readers get up in arms and try to silence Yves by claiming he’s somehow incapable of discussing these topics. 10:39, you assert that Yves is “over his head” yet provide not an iota of support for that view. Sounds like you simply don’t like the thrust of the post but don’t know enough of the subject area to mount a rebuttal.

    This piece ran in the FT, which targets the same sort of reader that Yves has. He demonstrated knowledge of the research. Said research has also been widely discussed in the MSM.

    This is hardly an esoteric topic. I don’t know what your beef is.

    There seems to be a persistent effort to shut down even modest political discussion here. Economics was originally “political economy”. It’s a legitimate theme here. In fact, I’d argue that talking about economics while trying to expunge any political or sociological context is naive and wrongheaded.

  10. Chris

    With the magic going out of the market place it does indeed seem to be a ripe subject for discussion as part of the ongoing revival of political economy. The relationship between leisure, happiness and human functioning as discussion topics is for sure a very old one, but related perhaps to virtue and purpose in ways that have become even more unpopular than government’s role in the economy. Aren’t these issues which underlie health care, child care, education at all levels, retirement, the relationship between citizenship and employment, tax policy?

  11. Anonymous

    Hmmm anyone check out the samples and methodologies? Very inconsistent. All over the shop. What about sample years. Well GB are 1981, 1990, 1998
    1999 and ??. Anyone hazard a guess as to the happiness factors without needing to look at the data?

  12. Anonymous

    12:33, most social science research stinks. Crudely speaking, either the data was not collected with sufficient consistency and rigor, or it was, but the sample was too small to be able to generalize from the findings.

    My pet peeve is meta-analyses in medical research, but let’s not go there…..

  13. Juan

    FT: Meanwhile democratisation is a one-shot occurrence..

    No. Democratisation – and freedom – are not static but processes which can be codeterminant of greater happiness.

    Communitas, which Victor Turner studied and wrote of, might be the highest level of social self-organization while what has been practiced at Semco has been a more mundane version that at least should be scalable:

    Our “architecture” is really the sum of all the conventional business practices we avoid.

    It’s our lack of formal structure, our willingness to let workers follow their interests and their instincts when choosing jobs or projects.

    It’s our insistence that workers seek personal challenges and satisfaction before trying to meet the company’s goals.

    It’s our commitment to encouraging employees to ramble through their day or week so that they will meander into new ideas and new business opportunities.

    It’s our philosophy of embracing democracy and open communication, and inciting questions and dissent in the workplace.

    On-the-job democracy isn’t just a lofty concept but a better, more profitable way to do things. We all demand democracy in every other aspect of our lives and culture. People are considered adults in their private lives, at the bank, at their children’s schools, with family and among friends – so why are they suddenly treated like adolescents at work? Why can’t workers be involved in choosing their own leaders? Why shouldn’t they manage themselves? Why can’t they speak up – challenge, question, share information openly?
    (Semler, The Seven-Day Weekend

    Semco ’employees’ likely enjoy high levels of happiness.

  14. Banner

    I read one study which concluded that every extra hour of sleep you got was equal to $40000/year of income.

  15. Dormouse

    Perhaps that is the answer.
    Average sleep 1/3rd of our lives. More sleep, less activity, less opportunity for unhappiness. Make bigger tea cups.

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