Overall, I found the points made by Justin Wolfers and Robert Frank to be quite interesting. Broken up by what each of them had to, below is what I found to be most interesting:
Wolfers:
Wolfers did an extremely good job arguing that overall, people become happier as their income increases. What I found fascinating was that he showed the happiness trends in the US. According to Wolfers, in America, most people haven't had income gains, which explains why Americans aren't necessarily becoming happier.
I found this fascinating because as one of the richest countries in the world, I assumed the US was experiencing income increases. But perhaps as we learned in class, we are not experiencing such astronomical income growths as we did in the past because or economic growth is slowing down.
One other very interesting point Wolfers made was that while it appears income growth is directly correlated with happiness to an extent, it is NOT the desire of all humans to be rich. A perfect example of this is how no one goes from moving from poor America in southern Texas to northern Mexico, where those same Texans who may be poor would be extremely rich in Mexico, a poor country. Thus it appears we are all giving up the option of being rich in a poor country.
Frank:
As I explain in part C, I did not find Frank's argument to be that convincing, which really wasn't his fault. It is difficult to argue something that is proven untrue by statistical evidence, which is why in my opinion, Wolfers had such an easier time arguing his point.
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| This hockey player didn't wear a helmet, perhaps trying to gain a competi- tive advantage. As Frank points out, this resembles the real life economy. |
I really found Frank's example about how hockey players are a good example to show how competitive advantages in society work to be very interesting. He asked the question: Why do hockey players often wear no helmets when they have the chance to, but they will often vote to make helmet wearing a requirement?
Frank's response: If one person takes a helmet off, that player gets a competitive advantage because he can skate faster and move around easier on the ice without having to worry about a helmet on his head. The other team's response to a player taking a helmet off, however, is that they too take their helmets off. The end result is that now everyone skates without a helmet and neither team gains a competitive edge, and we are right back to wear we started.
I thought this was an interesting way to look at competitive advantages in the market because one of the things Frank was trying to show is how valuable competitive advantages are in the economy. In the case of the hockey players, they were willing to risk their lives by taking off their helmets. But competitive advantages are so desired, it is worth such a big risk.
I also found Frank's points about relativivity to be very interesting as well. He talked about how people set the bar for wealth in many instances. Take a mansion for example. People consider a mansion to be a house that is bigger than what is considered a normally sized house. But, if you live in a poor country where houses are small, a "normal size" house might be a mansion.
Also consider the example he shared about celebrity birthday parties. Celebrities spend millions of dollars on birthday parties, so other celebrities are pressured to do the same, and if they don't the party might not be considered a good party.
This is a perfect example of relativity because to one person, a house/party might be great but to another, it might be horrible. Thus, in many instances, we as a society decide what is good or bad and what will makes us content.
B.
1. In my opinion, Frank had the unfair task of trying to prove that income and happiness are unrelated. Have we gotten to the point where we can literally say that income and happiness are 100% correlated?
2. Frank also mentioned how it might be relativity that makes us all happy and not income. Do we as people really care about how much money we make, or is it more about how much success/materials we have in comparison to others in the world?
3. While the data does support that wealthier people seem to be happier, there have to be at least a handful of poor people who are happy (I don't recall either Wolfers or Frank mentioning this in the debate, this is just an assumption on my part). What is it that allows certain poor people to be happy when data suggests income is such a big part of happiness.
C.
The video we watched for our weekly reading assignment was a video that covered the topic of the economics of happiness. In short, it was a debate between the two economic professors about whether or not income and happiness are related. Justin Wolfers argued that happiness and income are related, while Robert Frank argued that happiness and income are not related.
Here is a brief summary of what Wolfers had to say:
Overall, I'd say that Wolfers did a better job presenting graphical evidence about his argument. His argument that happiness and income are related was extremely convincing. One graph in particular that he showed was a graph depicting the 25 largest countries in the world and their reported happiness. What the graph showed was that richer people are happier than poorer people.
Wolfers showed several more graphs that proved his point- that it appears wealthier nations are indeed happier.
There were also some other findings Wolfers presented relating to income and happiness. Here is a list of them:
- People who are wealthier have more enjoyment during the day
- Less depression for wealthy
- More stress in wealthy world- perhaps from having to work harder to generate more income
- More likely to receive respect from people in richer countries
- More likely people ate good tasting food recently in rich countries
- People smile/laugh more in richer countries
- Less pain experienced by people in richer world
I also found one final point of Wolfers to be fascinating: Love is not at all more likely in the rich world. What does the show? It shows that money can't buy a person love. Love is its own entity, and can be attained in any type of culture.
Here is a brief summary of what Frank had to say:
When it came time for Frank to debate his side of the argument, I feel as if he sort of shied away from the topic he was assigned, mostly because it seemed like he didn't entire believe that happiness and income are not related. You can't really blame him either- the is so much evidence to prove that income and happiness are indeed intertwined, so it was a very hard task for Frank to convincingly argue that income and happiness are complete unrelated.
Because of this, he sort of argued that money does buy happiness, but there are other aspects of life as well that lead to our happiness, such as:
- Adapting to the world around us- this is very important
- Relative income- perhaps it is not money that makes us happy, but rather, how much money we have in comparison to others, or how big our house is in comparison to others, or how much food we have in comparison to others
- People care about relative consumption more in some domains than in others
- Such concerns lead to expenditure arms races focused on positional goods, or those goods for which relative position matters most.
- These arms races divert resources from non-positional goods, causing large welfare losses.
- Top earners spend more because they have more money. This too can lead to happiness because these people can have more material gain.
One very interesting point that Frank made for his argument (an argument that actually was very convincing):
- Large US counties with higher growth also had higher growth in commute times, divorce rates, and bankruptcy rates.
- Clearly, all of the above things do not make people happy, which could point to the fact that areas with high income/growth could have unhappy people because of the strains/issues with which high income societies commonly have to deal.
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