Posted by Eric Posner:
Happiness Research and Legal Scholarship.
http://volokh.com/archives/archive_2009_02_01-2009_02_07.shtml#1233611522
�Behavioral law and economics,� which combines insights from cognitive
psychology with the rational choice paradigm used by law and
economics, has so far relied on an economics-y standard of
evaluation�efficiency�or forgone normative arguments altogether. But
economists and psychologists have begun developing an alternative
normative standard for evaluating law and policy, sometimes called the
�happiness� approach, because it relies on surveys of self-reported
happiness. These scholars argue that government should attempt to
advance self-reported happiness rather than efficiency based on
willingness-to-pay. The Journal of Legal Studies has just published
the proceedings of a conference that addressed ways that this work can
be used in legal scholarship. You can find it [1]here. A few
paragraphs from the introduction to the conference issue follow:
Economists who make normative proposals traditionally assume that
policy should advance �efficiency,� usually in the Kaldor or Hicks
sense, which defines efficiency in terms of whether the project�s
winners can hypothetically compensate the project�s losers. A
compensation criterion is used because it can be based on ordinal
utilities, which puts a smaller information burden on the decision
maker than cardinal utilities do. Ordinal utilities, unlike
cardinal utilities, can (in principle) be inferred from
observations of consumer behavior. By seeing how people trade off
goods, willingness-to-pay (or willingness-to-accept) amounts can be
derived and summed, so that alternative policy outcomes can be
easily compared.
This approach has received a great deal of criticism over the
decades, but it has survived mainly because no alternative method
has commanded widespread agreement. In recent years, however, a
small group of economists and psychologists have argued that an
alternative method is available. This method, often called the
�happiness approach,� relies on surveys that ask people to rate
their happiness on a scale. Econometric analysis then finds
correlations between ratings on the scale and various
characteristics or experiences of the survey respondents�wealth,
income, family relationships, and so forth. Though still regarded
with skepticism in many quarters, the happiness approach has scored
some notable successes. The various factors that are correlated
with happiness appear to be robust: they recur in different surveys
and are correlated with other factors that are plausibly linked to
happiness such as physical well-being as measured with clinical
tests.
In addition, many of the findings have a certain plausibility,
while at the same time deviating from the results of
willingness-to-pay and willingness-to-accept measures. Happiness
improves with wealth but only to a point, and people are less happy
when their neighbors are wealthier than they are. Happiness is
correlated with health, but the happiness levels of people who
suffer grievous injuries rebound with the passage of time. Happy
people have friends and families, but adults with teenagers are
less happy than adults with younger or older children. Educated and
politically engaged people are happier.
The idea that policy should focus on happiness rather than
preference orderings is hardly new. Indeed, the happiness view
predates the preference-orderings view. Jeremy Bentham advocated a
form of utilitarianism that maximized pleasures and minimized
pains, an idea that is similar, though not identical, to the
premise that self-reported happiness measures should be used.
Economists subsequently abandoned this view in favor of ordinal
utility functions. But the Benthamite approach never really went
away. It has lurked at the margins of mainstream economic thought
for decades. The most famous example is the Easterlin paradox.
Richard Easterlin (1973) was the first to observe that
self-reported happiness is correlated with wealth at the individual
level but not, above a threshold, at the aggregate level: he found
that happiness does not appear to increase with gross domestic
product in wealthy countries (this finding has been challenged; see
Stevenson and Wolfers 2008).
References
1. http://www.journals.uchicago.edu/toc/jls/2008/37/s2
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