Don’t miss the Chicago Two waxing on happiness in the latest posts at the Becker-Posner blog; the January 10 posts are impoverished economic analyses attempting to explain why Americans are unhappy. Neither the Nobel economist nor the federal judge seems happy with his conclusions.
Even as they both begin to move away from the Chicago School’s famed ignorance of psychology, the problem still seems to be with their approach, as John Cassidy explains in his January 8, New Yorker article, “After the Blowup”: “A useful new economics will need to integrate an awareness of human nature with extensive practical knowledge and high-level mathematical expertise” (32). It’s not that an attempt to explain human nature is lacking in the Becker-Posner posts. They both conclude that the pursuit of wealth is the paramount claim of value for Americans, but they ignore their colleague Rajan’s argument “that the initial causes of the breakdown [the recent crash] were stagnant wages and rising inequality” (32-33), that upward mobility, in other words, is a metaphorical, ultimately unreachable carrot, for as one moves upward, so does the top.
Their analyses do not mention half-day commutes in mortgaged, gas-expensive rigs to institutionalized jobs (public and private) so Dad can pay the mortgage and Mom get the health benefits and pay for daycare until the divorce where everyone gets the Community Chest card that says “Return to Go.” Posner argues in his conclusion that “People have a strong preference for more income over less and thus for a rising standard of living. Adam Smith argued in The Wealth of Nations that people fooled themselves in thinking they would be happier with more money. Maybe so; but as long as people do have this strong preference, economics can explain a great deal of human behavior.” The faulty assumption in Posner’s argument is the claim that more income leads to an improved standard of living. Rising income results in rising costs of living and a breakeven that continues to move upward, like the unreachable carrot.
Becker seems closer to reality: “My conclusion is that happiness data have been useful, and the relation with income is plausible. Yet happiness data do not enable us to directly measure utility and wellbeing. I admit I do not know why average degree of happiness has not risen in recent decades in the US as incomes rose.”
Posner gives Adam Smith short shrift, for Smith is much more devastating in his argument than merely suggesting that “people fool themselves”: No doubt we do fool ourselves, about many things, but about money buying happiness the fooling is an aggressive and dynamic belief, not passive and benign, a belief that requires as a tenet a dichotomy of human worth. This belief is what allows some of us to live comfortably in mansions paid for by the labor in sweatshops of people who live in shanties: Smith says, “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.” This is at least evident in the gated communities that sprung up in response to a new age of fear fostered by the holders of the carrots to secure their own positions of power and wealth, increasing the gap between the claim of value and its reason and exposing the underlying faulty assumption that wealth buys happiness, for as Tennessee Ernie Ford sang in Merle Travis’s classic “Sixteen Tons” (1955):
“You load sixteen tons, what do you get / Another day older and deeper in debt / Saint Peter don’t you call me ’cause I can’t go / I owe my soul to the company store.”
The Coming of the Toads 