UnLtd Blogs - economic growth

Happiness and The Moral Consequences of Economic Growth

Wed, 30 Aug 2006 08:40:54 +0000

Polly Toynbee has written a piece asking "why have we never had it so good". She argues that:

There has never been a better time to be alive in Britain than today, no generation more blessed, never such opportunity for so many. And things are getting better all the time, horizons widening, education spreading, everyone living longer, healthier, safer lives.

However, it doesn’t seem as if all of these "[u]nimaginable luxuries and choices" have increased our happiness levels: it is also not clear that the opportunities and benefits that she describes with such approbation are available to all. Many people are involuntary participants in the postcode lottery that governs whether or not you are eligible for a variety of procedures on the NHS (e.g., cardiac catheter ablations). And the increase in foreign travel and holidays is limited: the number of British people who did not take a holiday over the course of a year has remained stable at 41 per cent over the last three decades.

Brad DeLong has posted an extensive and interesting review of Ben Friedman's thought-provoking The Moral Consequences of Economic Growth.

Freakoutonomics

Sat, 03 Jun 2006 08:19:04 +0000

I've just learned a new word from Charles Morris: freakoutonomics. In the New York Times (normally behind a paywall but (Economist's View has helpfully reproduced Freakoutonomics), Morris describes the sort of uneasiness and lack of confidence that Ben Friedman wrote about in The Moral Consequences of Economic Growth.

Friedman argues that economic growth is essential to moral, social, political and cultural progress. He writes that the financial and social anxieties created by living in a stagnant economy lead people to look for explanations and answers in intolerance and fear. Furedi expands a form of this argument to argue for its role in the widespread internalisation of conspiracy theories: "[t]oday, acts of misfortune are frequently associated with intentional malevolent behavior".

Friedman outlines the comparisons that underlie the influence of income on well-being. For the first, we contrast our present and past circumstances: if we are better off financially that we used to be, and we can buy more with that money, then we feel better off. For the second, we use our present circumstances as a yardstick to compare ourselves to our notional peer group: if we are more prosperous then we feel better; if we are worse off, then we feel worse.

Tony Robinson and The Costs of Caring

Wed, 29 Mar 2006 16:27:14 +0000

Tony Robinson filmed a documentary about caring for his mother, who had Alzheimer's: he generously gave an interview and Q&A session about his caring experiences to Times Online. One of the comments that Robinson makes is that

care workers need better pay, more training and a proper career structure.

In the course of the programme, carers frequently raised the issue of how angry they were about the inadequacy of the Carers' Allowance. Juxtaposed to Robinson's above recommendation for care workers, its seems as if carers get substantially less pay, no training, and that caring destroys their own career structure. One striking example of this was Janice Marrs. Marrs revealed that she had given up a well-paid, senior post to care for her mother. Along with the job and salary, she gave up many of her pension arrangements and other necessities that would have given her security in her own future. She made the cogent point that she is paid just £45 a week to care for her mother for 24-hours a day. "Sometimes I'm up four times in the night - why is it just because she's old and very ill that I'm written off as well?"

Marrs contrasts her payment with that of Foster Carers, who she said receive £250 per week. I take her point as to the difference in treatment, but I'm not sure that the seeming animosity displayed towards the comparatively generous allowances awarded to Foster Carers on the Carers UK forums is appropriate, galling though many of the comparisons must be (particularly that a Foster Carers Allowance is paid per child, but a Carers Allowance is fixed, irrespective of the number of people for whom one cares).

Falling Behind The Joneses

Wed, 01 Mar 2006 11:06:10 +0000

Happiness discussions frequently examine the phenomena of jockeying for social status and consumption. The topics range from virtuous consumerism, the freedom to choose, the collateral damage caused by our financial markets and social structures, and the moral consequences of economic growth, to what has been identified as a quiet crisis of unhappiness.

There are vigorous defences on both sides. Some commentators argue that consumerism is damaging our individual well-being and social fabric. Others argue that consumerism drives economic growth and that is essential to improving everybody's well-being and quality of life.

Rick Harbaugh is firmly grounded in the latter camp. He argues for the economic and social upside of chasing status and consumerism in Falling Behind the Joneses: Relative Consumption and the Growth-Savings Paradox.

Consumers in rapidly growing economies should borrow against future earnings to smooth consumption, or at least should save at a lower rate than consumers in countries with stagnant or falling incomes...the pattern in most rapid-growth economies has been for rapid income growth to precede sharp increases in household savings rates...
...Rising incomes would appear to induce excessive consumption as consumers attempt to "keep up with the Joneses"...Rather than increasing consumption, concern for relative consumption can induce a fear of falling behind which raises precautionary savings. As societal income growth increases this fear intensifies, allowing for a positive effect of growth on savings rates and potentially explaining the growth-savings paradox.

Some of the comparisons Harbaugh describes are similar to those discussed by Ben Friedman in The Moral Consequences of Economic Growth. Friedman details the social and political consequences of economic growth. He argues that economic growth is essential but because it is an investment in a public good (rather than something that is owned by an individual or a group of individuals such as a family) individuals will undervalue it and not allocate appropriate resources to it. Friedman says that the government can redress this imbalance through adjustments to fiscal policy that reward savings and investments. I think that Harbaugh argues that individuals can be relied upon to supply their own motivation because the drive to maintain status and consumption contributes to the apprehension about "falling behind the Joneses" which is the tax/fiscal motivation to stimulate investment in growth.

FEAR and Happystance

Sun, 19 Feb 2006 23:09:32 +0000

Both in everyday encounters and during workshops, I frequently come across the power of FEAR (False Expectations Appearing Real) and how it can blight our current experience of our life. I described a visit to a pre-school group that had prompted me to consider the topic of chaos theory and happiness. It does seem as if some people’s current unhappiness is grounded in apprehensions about the future and a sense of helplessness about influencing those wider concerns and future events.

So, I recognised the phenomenon when I read Dr. Sanity’s tongue-in-cheek account of command hallucinations and the creation of FEAR. We need a Happystance to resist these strong command hallucinations and to provide us with personal and social resilience in the face of all the dire news that confronts us on a regular basis.

In The Moral Consequences of Economic Growth, Friedman argues that the financial and social anxieties created by living in a stagnant economy lead people to look for explanations and answers in intolerance and fear. Furedi provides his own explanation for this behaviour. He claims that the phenomenon is responsible for the widespread internalisation of conspiracy theories: "[t]oday, acts of misfortune are frequently associated with intentional malevolent behavior".

Michael Crichton recently gave a lecture on Fear, Complexity, Environmental Management in the 21st Century. He gives a remarkable account of the mis-information surrounding the impact of Chernobyl. He summarises some of the statistics of estimated deaths and health-related problems and goes on to discuss how wrong they have proved to be. Crichton quotes a UN report from 2005 that says the largest public health problem created by the incident at Chernobyl is the:

Happiness and The Moral Consequences of Economic Growth

Tue, 03 Jan 2006 18:26:20 +0000

Polly Toynbee has written a piece asking "why have we never had it so good". She argues that:

There has never been a better time to be alive in Britain than today, no generation more blessed, never such opportunity for so many. And things are getting better all the time, horizons widening, education spreading, everyone living longer, healthier, safer lives.

Brad DeLong has posted an extensive and interesting review of Ben Friedman's thought-provoking The Moral Consequences of Economic Growth.

In praise of the volunteer consumer

Thu, 29 Dec 2005 18:37:44 +0000

Richard North has published a provocative piece arguing that Consumerism is virtuous. Similarly, Bob Friedland of the Center on an Aging Society argues that concern over the demographic time-bomb of paying for pensions and the health care of older citizens is overplayed. Friedland points to the virtues of economic growth in sparking

startling productivity gains. Even as the share of the population in the workforce has fallen, the output of each worker has more than offset the change. The result: Someone born in 1940 has experienced an 875 percent increase in his or her standard of living.(quoted in the National Journal: Must it be gloom and doom for the baby boom?)

However, it is interesting that neither author claims that this remarkable increase in our standard of living in the western world has been accompanied by an increase in happiness. Happiness and well-being are typically measured by indices such as personal satisfaction with life, the enjoyment of friends and family and feeling fulfilled by work or other activities. There are some life qualities that can not be transformed into commodities that can be traded.