How should public policy assist in “the pursuit of happiness”? Brooks says the data are clear: Policy should focus on earned success, not wealth redistribution. Excerpted from “Arthur Brooks: Free Enterprise Versus Big Government: The Battle for America’s Future,” October 25, 2010.

ARTHUR BROOKS, President, American Enterprise Institute; Author, The Battle: How the Fight between Free Enterprise and Big Government Will Shape America’s Future

 

Can you really measure happiness? The answer, surprisingly, is, Yes, you can. There’s 30 years of data in the social psychology literature [from] anonymous surveys among broad groups of Americans; you get a pretty good, honest idea of how happy those people are.

This is wonderful news to an economist like me, because now I can go to the source of what’s making people tick and I can get some big databases. I can crunch numbers on what makes people happy and what the empirical differences are between happy and unhappy people in the United States.

But I still had one more question before I could start doing research on this topic. With public policy, can we really affect people’s happiness? Can your happiness ever really be permanently affected? You might doubt that that is the case. You might have noticed, as I have, that your moods always tend to go back to where they have been in the past. So if you’re a grumpy person, people all probably say to you, “No matter what good thing happens to you, you always seem really grumpy.” Or you’re cheerful; people say to you, “You’re always cheerful, even when bad things happen.” People tend toward the ruts in their mood. That observation has not been lost on psychologists. Psychologists, noting that mood tends with different people to stay in a particular place even throughout their lives, have asked how much of our happiness is inherited, and how much of it comes from the changes throughout our lives and behaviors and even things like public policies?

How do you figure out how much of happiness is nature and how much is nurture? There are studies of identical twins and other siblings who are put in different households at birth through adoption. Then using statistical techniques, we can see when we interview them as they grow up how much of their personalities are inherited and how much of their personalities come from their different environments. The shocking answer is that much more of our personalities than we ever understood can be shown to be inherited.

Americans like to think that you can change anything about anybody with some sort of perfect intervention. It turns out the data are really not very sympathetic to [that] notion. For example, about 40 percent of how you vote is genetic; 40 percent of how religious you are is genetic; virtually every important part of your personality, from extroversion to criminality to neuroticism to alcoholism, has a huge genetic component to it. So it is also with happiness.

Studies using identical twins show that between 50 and 80 percent of your baseline happiness is actually inherited. When I first came across these studies – and they’re unimpeachable studies – I discussed it with my wife and she said, See, I told you your mother made you unhappy. Turns out, quite literally true for many of you.

What’s the use of looking at what tax policy does to people’s happiness? The answer is that even if 20 percent – especially if only 20 percent – of your happiness can be changed by your behaviors and your circumstances and by your country and your opportunity, you really should get everything right.

I figured that out indirectly. I was working with a guy almost exactly my age. He was an economist, like me. His doctor told him that he had about 15 years left to live. He was in his early 40s and he had 15 years left to live, because of a congenital heart issue. Unless medical science changed a lot, he was very likely to have a catastrophic event before about 15 years were up. Now, what do you hear if you go to the doctor and hear you’ve got 15 years left to live? You don’t come home and mope around and watch a lot of daytime TV. You’ve got 15 years. On the other hand, you didn’t just find out you’ve got 40 years left; you’ve got a fraction of that. So what would you do?

He came home, he thought about it, and said, You know, I’m going to take 40 years of happiness and I’m going to stuff it into 15 years. I’m going to be a better father, and a better husband, and a better citizen, and a better employee, and a better everything. I’m going to have a happier life than I had before. The truth is, he’s doing it. He comes home from work, and he says to his wife, Sweetheart, get the kids, we’ve never been to Turkey – let’s go to Istanbul. It was a life-inflecting event for my friend.

Now, what was the principle of this? If you have less of the resource than you thought, you use it wisely. So if you thought you could change 100 percent of your happiness, and you could only change 20 percent, or 30 percent, or 40 percent, you better get that 20, 30 or 40 percent right. Don’t make any dumb decisions. Don’t make any systematic errors. And if you’re in my business and you try to be ethical about it, don’t promote any policies that are going to make that 20 percent worse for people.

What’s the best system to make the most people most happy? So what would make you happier? When you ask people about this, a lot of people talk about money. For example, if I ask you, What would you do it you hit the lottery? None of you say, Well, I’d start by having somebody close to me take advantage of me and then I think I’d fall into an alcoholic spiral. Nobody says that, right? You think about good things that would happen to you in your life. Most people, when they think of things that could make them happier, their minds go toward things that could change their economic circumstances.

Economists have said, Let’s just settle this thing: Does money buy happiness or does money not buy happiness? Let’s look at the data. There are three ways to answer this question. The first way is we ask, Are rich countries happier than poor countries? The second way is to ask, What would happen if a country got richer – on average, would people get happier? And the third way is to ask, What happens to individuals when they get richer?

The data turn out to be pretty clear. Are rich countries happier than poorer countries? The answer is: usually not. Once countries get above the basic level of subsistence, it’s almost impossible to make populations happier simply with money. If you go to the most miserable countries in the world, you find they are in sub-Saharan Africa, because people are dying of preventable diseases and people are dying of starvation. That doesn’t make anybody happy; everybody hates that.

But you find that once people get above the level of subsistence – and the level of subsistence is actually quite low – people don’t get happier very much just because of money. For example, the French have about three times the average purchasing power than the average Mexicans, but the Mexicans are almost twice as likely to say that they are very happy people.

Why is that? It has all to do with non-economic things. It has to do with family; it has to do with faith; it has to do with community; it has to do with a sense of vocation and attachment to one’s job. All of which the French tend to be very weak on, and the Mexicans tend to be very strong on. That’s the life in life.

The second way is what would happen if our country got a lot richer? Would our country get happier? Now, we can look at this directly. If you go back to the early 1970s and compare it to now, you find that the average citizen has about 50 percent more in purchasing power. How much happier are we? The answer is, We’re not. In 1972, 31 percent of Americans said that they were very happy. Today, 31 percent of Americans say that they are very happy.

Now, if you’re like me, you’re thinking, Fine, all of these aggregates – whole countries over time – that’s all great, but if I got a lot more money, I’d be happier because I know how to use it, I could really spend the money wisely and use it to do all these great things that would make me happier. OK. True? No. No, you probably couldn’t. 

I have data on major Powerball lottery winners, people who go from zero to $30 million overnight. How much happier do you think they get? The answer is that they don’t get happier. When people win the lottery, they tend to be happier for about six months. That’s when the euphoria of having all the stuff and having all the economic security and being able to buy anything you want is still there; but after six months, it wears off. They don’t just go down to where they were; they go below and stay there. Why? The answer is that they never enjoy the little things in life ever again. You find that after people hit the lottery and they come down from the high, they don’t enjoy spending the money any more, and furthermore they don’t enjoy family, they don’t enjoy friends, they don’t enjoy pastimes, they don’t enjoy hobbies, they don’t enjoy watching television, they don’t enjoy going shopping. All of that life gets blunted in its enjoyment.

Truly, if you buy a lottery ticket, the best thing that can happen to you is that you don’t win. It’s a curse, and all forms of unearned income are a curse as well.

I have data on inheritance. Will that make you happy? The answer is, No. We have data that focus on income, that follows people over the course of their lives, [in which] we know where the income came from and we know how happy they are. And statistically we can’t find any connection between inherited income and changes in happiness. Furthermore, when you do larger studies looking at people who have inherited a lot of money, you find that the insecurity that they are most likely prone to is the belief that they have not actually created value of their own merit. Now that truly is a tyranny. Imagine going through your life wondering if you did it on your own, if you really earned your own success.

You might be thinking, Sure, you can’t get happy by having more, but you can get happy having more than somebody else. This is something that psychologists have found, that actually relative income looks pretty good. You find that people who earn $75,000 or more are twice as likely to say they’re very happy as people earning $25,000 or less in the same community. So you find that richer people in a small community tend to be happier than poorer people in a small community. As a matter of fact, people always want to have more than their neighbor. There’s a study from the Harvard School of Public Health in the 1990s that asked people to choose between two alternative communities. Community number one, you earn $50,000 a year and all your neighbors earn $25,000 a year; in community number two, you earn $100,000 a year and your neighbors earn $200,000 a year. Which one did people choose? Fifty-six percent chose community one, in which they were actually poorer, but richer than the schlub next door.

So what does this mean for public policy? A lot of people have looked at these data on their face and said, It’s all just relative, and relative doesn’t matter, and furthermore, when people are just trying to acquire to have more than their neighbors, they do bad things to the environment, they acquire too much stuff, and they are in a rat race, they’re in something economists call a hedonic treadmill. So we’re going to equal it out. We’re going to look at all of you and say, “You have more than average, so I’m going to take some of your stuff away and I’m going to give it to people who have less than average. I might be complicated about it, I might have a redistributionist program that doesn’t look just like taking from Peter and giving to Paul, but ultimately, it’s going to be redistributive, because that’s better for society.” That’s an ideology that’s gone through academia for a really long time.

The trouble is, it’s wrong. The reason it’s wrong is not just philosophically or religiously; reasonable people disagree on that. It’s because the data don’t support it. The variable we have to keep in mind is called earned success. When we ask people how much success they feel they have earned, the differences in money go away, statistically.

Now, what is earned success? It’s the belief that you have created value in your life or the life of other people by virtue of your own merit. If you believe you have earned your success – it doesn’t matter if it is denominated in money or otherwise – you will be happier, according to the data. In a free-market economy, typically people who earn a lot of success draw money to themselves. That’s just how capitalism tends to work. But it is the earned success and not the money that explains differences in happiness. In fact, I have data on social entrepreneurs, who count their success not in dollars, but in souls saved or kids eating or communities cleaned up, or people listening to chamber music or the success of a nonprofit organization like this. Social entrepreneurs have every bit as much earned success and happiness as commercial entrepreneurs, and together, they are the happiest people in the United States today.

How do we get more earned success? One of the things we know is that income inequality on its face will not bring unhappiness. Furthermore, income redistribution for the sake of addressing income inequality won’t bring happiness.

But there’s one more fact, which is when we have policies that try to redistribute income, since they can’t spread around what really matters, which is earned success, what they do is attenuate the willingness and ability of people to be entrepreneurs and they earn less success and they become less happy.

This is the irony and the paradox of income redistribution. It always promises happiness, but it always delivers misery. Why? Because it’s trying to spread around money, and it’s doing nothing to earn success.

This leads me to what I believe is one of the great moral imperatives of our time, which is. How can we lead more people to earn their success? Now, I have an answer to it that you may not agree with, which is that the system that matches people’s skills most with their passions and which most Americans believe leads them to earn their success, and that’s the free enterprise system.

That’s the reason I believe the free enterprise system is not an economic alternative; it truly is a moral imperative. That’s the reason I believe a lot in the free enterprise system, not because of the tyranny of materialism. I don’t care about the money at all, because money in an already-rich country is not about the money. It’s nothing more than a marker of earned success.

I’m not saying that for everybody, because there still are poor people. In my own personal view, in a civilized society we have an obligation to provide a minimum basic standard of living for everybody. I’m talking about above that, most people for whom income redistribution is a curse, whether you’re on the getting or taking side of it. The only way you’ll improve your life materially through the economic system is by earning your success.