Richard Layard Has social science a clue?: income and happiness: rethinking economic policy

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1 Rchard Layard Has socal scence a clue?: ncome and happness: rethnkng economc polcy Lecture Orgnal ctaton: Orgnally presented at Layard, Rchard (2003) Has socal scence a clue?: ncome and happness: rethnkng economc polcy. In: Lonel Robbns memoral lecture seres, Mar 2003, London, UK. Ths verson avalable at: Avalable n LSE Research Onlne: November CEP & LSE LSE has developed LSE Research Onlne so that users may access research output of the School. Copyrght and Moral Rghts for the papers on ths ste are retaned by the ndvdual authors and/or other copyrght owners. Users may download and/or prnt one copy of any artcle(s) n LSE Research Onlne to facltate ther prvate study or for non-commercal research. You may not engage n further dstrbuton of the materal or use t for any proft-makng actvtes or any commercal gan. You may freely dstrbute the URL ( of the LSE Research Onlne webste.

2 Lecture 2 Income and happness: rethnkng economc polcy Habtuaton Rvalry Rethnkng publc economcs Changng values The fallacy of consumer soveregnty The record of the 80s and 90s Equalty Lookng forward Genes and prevous experence 1

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4 Yesterday I showed that n advanced countres happness has not rsen, despte unprecedented ncreases n ncome. Today I want to try to explan ths, and to draw some polcy conclusons. But frst I need to start wth a cauton (Fgure 1). As the golfer says, Researchers say I m not happer for beng rcher, but do you know how much researchers make? In one sense the golfer s on to somethng. For there are two key facts that we have to explan. Frst at any one tme rch people are on average happer than poorer ones. And yet over tme advanced socetes have not grown happer as they have grown rcher. What s happenng s llustrated n ths table (Table 1). In 1975 rch people (n the top quarter) were happer than poor ones (n the bottom quarter). The same was true n 1998, when both groups were both rcher than before (especally the top group). But n 1998 each group was no more happy then before, despte ts hgher ncome. That s the challenge, and the paradox. Table 1 Happness n the US: by ncome Top quarter of ncome Bottom quarter of ncome Very happy Pretty happy Not too happy Source: General Socal Survey tapes. People over 16. It s an absolutely standard pattern n all countres. And ndeed we fnd much the same f, nstead of takng two dates for the same country, we take two countres at the same tme wth one country beng rcher than another. 1 So what s gong on? On the one hand a gven ndvdual n a gven country becomes happer f he s rcher, 1 Parenthetcally, f we take health and compare rcher and poorer countres n the old OECD, we fnd the same agan: wthn any country the rcher ndvduals are healther than the poorer, but across countres the poor country s as healthy as the rch one. At least that s true of lfe expectancy, whch s about the best objectve measure of health that we have. Wlknson (1996). 3

5 and that s why most people want to be rcher. But at the same tme, when the whole socety becomes rcher, nobody seems to be any happer. Obvously people must be comparng ther ncome wth some norm some level of expectatons. And that norm must be movng up n lne wth actual ncome. You can see ths from the followng data collected by the Gallup Poll n the US for many years. They asked, What s the smallest amount of money a famly of four needs to get along n ths communty? Over tme, as Fgure 1 shows, the answers rose n lne wth actual ncomes. 2 Another depressng fact confrms that ths s the mechansm at work. Snce 1972 Amercans have been asked whether they are satsfed wth ther fnancal poston. Although real ncome per head has rsen by 50%, the proporton of people who say they are pretty well satsfed wth ther fnancal stuaton has actually fallen Fgure 1 Requred real ncome and actual average real ncome (1952 = 100) Actual Income Requred Income See Ranwater (1990) Table 1. The queston has not been asked snce 1986 when Gallup moved from face-to-face to telephone ntervewng. 3 GSS data. See Lane (2000) p.25. 4

6 Ths movng up of the norm s comng from two sources frst habtuaton and second rvalry. Frst, I compare what I have wth what I have become used to (through a process of habtuaton). As I ratchet up my standards, ths reduces the enjoyment I get from any gven standard of lvng. Second, I compare what I have wth what other people have (through a process of rvalry). If others get better off, I need more n order to feel as good as before. So, we have two mechansms whch help to explan why all our efforts to become rcher are so largely self-defeatng n terms of the overall happness of socety. I want to dscuss these effects n turn and then to dscuss the polcy mplcatons. I ll begn wth habtuaton, or as psychologsts call t adaptaton. HABITUATION A key feature of any successful organsm s ts ablty to adapt to ts envronment, and human bengs are amazngly adaptable. Ths s a strength and a weakness. In the face of adversty t saves us from abject msery, but t also makes t dffcult to lft us onto a permanently hgher plane of experence. On the downsde, people who become paraplegc suffer greatly mmedately after ther stroke. But after a whle ther happness s only slghtly below the average n the populaton. 4 The same s true on the upsde for example after people get marred. 5 So when our lvng standards ncrease, we love t at frst but then we get used to t and t makes lttle dfference. But we would fnd t very dffcult to go back - to where we started from. I had no central heatng at home untl I was 40, but now I can barely magne lvng wthout t. 4 Brckman et al. (1978). 5 Kahnemann. 5

7 The evdence for habtuaton comes from many sources. One approach s to compare ndvduals wth dfferent ncomes. 6 Each ndvdual s asked, What aftertax ncome for your famly would you consder to be: very bad, bad, nsuffcent, suffcent, good, very good? From these answers we can pck out for each ndvdual the ncome level whch s md-way between suffcent and nsuffcent. Ths requred ncome vares strongly wth the actual ncome of the ndvdual: a 10% rse n actual ncome causes a roughly 5% rse n requred ncome. 7 Alternatvely we can look at reported happness over tme. In panel studes of ndvduals n the UK job satsfacton s unaffected by the level of wages and depends only on ther rate of change mplyng a strong negatve effect of habtuaton comng from the prevous lagged wage. 8 At a more aggregate level, n a panel of countres D Tella, MacCulloch and I (2002) found that lagged ncome reduced average happness by two thrds as much as current ncome ncreased t. (Thus a steady rse n ncome dd ncrease happness somewhat, but n the hstorcal record ths effect was off-set by the negatve effects of other changes hgher dvorce, crme and so on.) So people measure ther stuaton largely by reference to where they have recently got to. They are on what psychologsts call the hedonc treadmll. They try to rse up a rung but n the next perod that rung s once agan at the bottom, from whch they agan try to rse. We have essentally a problem of addcton, where people s past standard of lvng affects n a negatve way the happness they get from ther present lvng standard. In ths way t s just lke smokng. If we just got used to everythng equally, that mght be the end of the story wth no clear polcy mplcatons. But, as Robert Frank has argued strongly, the thngs that we get used to most easly and then take for granted are our materal possessons our car, our house. We do not have the same experence wth the rest of our lfe, the tme we spend wth our famly, nor wth the qualty and securty of our job. 9 6 Van Praag and Frjters (1999) 7 Smlar results are found n 9 dfferent countres. The requred ncome also vares wth famly sze n a way that produces sensble equvalence scales for famly ncome requrements. 8 Clark (1999). 9 Frank (1999), chapter 6. 6

8 If we do not foresee how we get used to our materal possessons, we shall over-nvest n acqurng them, at the expense of our lesure. There s lots of evdence that people underestmate the process of habtuaton. 10 (For example, academcs thnk that ganng tenure wll make them happer for longer than t actually does.) The result s a dstorton of our lfe towards work and away from other pursuts. I want to stress that that s the man dstorton rather than the dstorton between spendng and savng. And a natural way to offset the dstorton s to tax spendng (just as we tax smokng) n order to dscourage excessve self-defeatng work. 11 RIVALRY Let me turn now to the second factor explanng the paradox of ncome and happness: I mean the phenomenon of rvalry. Let me begn wth a smple queston. Let me ask you whch of these two worlds you would prefer, assumng prces constant (Fgure 2). Fgure 2 Whch world would you prefer? (prces are the same) A. You get $50k a year and others get half that B. You get $100k a year and others get more than double that In a recent study, graduate students of publc health at Harvard were asked just that queston. 12 The majorty preferred the frst type of world. They were happy to be poorer, provded ther relatve poston mproved. 10 Ths ncludes those who start smokng, see Loewensten and Schkade (1999), and Loewensten et al (2000). 11 See Layard (1980, 2002). 12 Solnck and Hemenway (1998). 7

9 Many other studes have come to the concluson - that people care about other peoples ncomes as well as ther own. 13 We are all upset when others get a rase but we do not. And the only stuaton where we mght happly accept a pay cut s when others do the same. That s why there was so lttle economc dscontent n the Second World War. By contrast the great nflaton of the 1970s created great dscontent, because throughout most of the year other people s wages were rsng rapdly, whle one s own wage was constant. 14 When people compare ther wages, t s generally wth people close to themselves, rather than wth flm stars or paupers. What matters s what happens to your reference group because what your reference group gets mght have been feasble for you, whle what Davd Beckham gets s not. Hence much of the most ntense rvalry s wthn organsatons and wthn famles. In organsatons, calm can often be mantaned only by keepng peoples salares secret. In famles, t has been found that the more your spouse earns, the less satsfed you are wth your own job. 15 And among women, f your sster s husband s earnng more than your own husband earns, you are more lkely to go out to work. 16 In other words people are concerned about ther relatve ncome and not smply about ts absolute level. They want to keep up wth the Joneses or f possble to outdo them. If people change ther reference group, ths can serously change ther happness. Let me gve you two examples where n both cases people became objectvely better off but felt subjectvely worse. One s the case of East Germany where the lvng standards of those n work have soared snce 1990, but ther level of happness has plummeted because they now compare themselves wth the West Germans, rather than wth other countres n the Sovet bloc. Another case s women, whose pay and opportuntes have mproved consderably relatve to men, but ther level of happness has not. Indeed n the US women s happness has fallen relatve to men s, perhaps because they compare themselves more specfcally wth men than they used to, and are therefore more aware of the gaps that stll exst. 13 Clark and Oswald (1996). Runcman (1966) 14 Ashenfelter and Layard (1983). 15 Clark (1996). 16 Neumark and Postlewate (1998). 8

10 Gven rvalry, the fndngs of our table are not very surprsng. The rch are happer than the poor, because from ther lofty poston the people they compare themselves wth nclude a greater fracton of people who are poorer than they are. And the opposte s true of those at the bottom of the ple. But for a socety as a whole the mplcatons are massve. Imagne the most extreme case, where people care only about ther relatve ncome and not at all about ther ncome as such. Then economc growth cannot make people better off. The only excepton s f people were to adopt reference groups that were lower n the peckng order than before. But, f the reference group remaned stable and relatve ncome were unchanged, everybody s happness would reman the same. However the evdence suggests that thngs are not qute as bad as that. If we compare states n the USA we fnd that, f other people n your state get more, you do feel worse off. 17 But the negatve feelng s not so large that t completely cancels the gan, provded your ncome rses as much as everyone else s. So there s hope after all. To be precse, f my ncome ncreases, the loss of happness to everybody else s about 30% of the gan n happness to me. Ths s a form of polluton, and to dscourage excessve polluton, the polluter should pay for the dsbeneft he causes. So the polluter should lose 30 pence out of every 100 pence that he earns a tax rate of 30% on all addtonal ncome. Assumng the tax proceeds are returned to hm through useful publc spendng, he wll work less hard and the self-defeatng element n work wll have been elmnated. But for ths concluson to be correct, one further condton must be satsfed: though people are comparng ther ncome wth that of other people, they must not be comparng ther lesure. Is that n fact how we behave? To throw lght on t, we need to look at a second queston whch was asked of the Harvard students. They were offered two further possble worlds, C and D (Fgure 3). 17 Blanchflower and Oswald (2000). 9

11 Fgure 3 Whch world would you prefer? C. You have 2 weeks vacaton, and others have half that D. You have 4 weeks vacaton, and others have double that Only 20% of the students chose world C. So most people are not rvalrous about ther lesure. The result s that we consume too lttle lesure, unless ths s corrected by publc polcy. In reply to ths argument, lbertarans often argue that the rvalrous person has only hmself to blame, and he should not be protected by publc efforts to dscourage others from earnng money. But ths s to mss the mark. We may be able to modfy human nature. But we cannot annhlate our exstng nature and lbertarans should be the frst to take that as ther startng pont. RETHINKING PUBLIC ECONOMICS In fact the phenomena of rvalry and habtuaton are so mportant that they requre a complete rethnkng of the theory of publc economcs. By publc economcs I mean the theory of mcroeconomc polcy as developed n partcular by James Meade, Amartya Sen and Tony Atknson, all from LSE, as well as James Mrrlees. The normal startng pont n that theory s that taxaton dstorts the choce between lesure and ncome makng people work too lttle. The taxaton may be justfed by the value of the publc expendture or the redstrbuton whch t fnances. But, when comparng the tax cost wth the benefts of the spendng, we should always allow for a substantal excess burden of the tax, comng from the dstorted choces t s supposed to have caused. In ths sense the presumpton s always aganst state actvty. 10

12 Rvalry and habtuaton lead to a qute dfferent concluson. They tell us that n an effcent economy, there wll be substantal levels of correctve taxaton. And so long as taxaton s not hgher than that, cost-beneft analyss of publc expendture need not worry about any excess burden comng from the costs of fnancng the expendture. So what s the approprate level of taxaton at the margn? The quanttatve evdence s only begnnng to accumulate, but I have already suggested 30 per cent to deal wth rvalry, and the evdence suggests at least as much to deal wth habtuaton. Thus 60 per cent would not seem napproprate, and that s n fact the typcal level of margnal taxaton n Europe f you allow for drect and ndrect taxes. 18 I suspect that n some almost unconscous way the electorate understand that the scramble to spend more s n some degree self-defeatng and ths makes them more favourable to publc expendture. But the tme s now rpe to make ths argument explct as one of the central features of Socal Democracy, or dare I say t the Thrd Way. We should be clear that such taxaton s almost certanly reducng our measured GDP, by reducng work effort. But we should be equally clear that ths does not matter, because GDP s a faulty measure of well-beng. CHANGING VALUES So far we have taken people s values as gven, and thought about how people can have the best lfe, gven these values. That s a reasonable frst step and t s one that economsts are good at. But values are not of course gven, and socety has a major mpact on them. So I want to end ths lecture by dscussng frst how far our rvalrous atttudes can and should be modfed, and second whether exstng tendences are tendng to exacerbate them. 18 See also Layard (2002). Ths argument assumes that few people compare ther ncomes wth those n other countres. 11

13 Clearly a degree of rvalry s wred nto our genes. Among our monkey relatves the top male monkey gets the females. In consequence monkeys wth the strongest drve to reach the top reproduce most and that drve has become spread throughout the speces. The mechansm that produces that drve s nterestng. It s not so much the desre to reproduce as the sheer pleasure of beng top. Serotonn s a neurotransmtter that accompanes good feelng, and McGure and hs colleagues at UCLA studed how the level of serotonn vares n vervet monkeys. 19 When a male monkey becomes top monkey hs serotonn level soars. But, f the researchers artfcally dsplace hm from that poston, hs serotonn level drops. Smlar effects are evdent n humans, so that people who wn Oscars lve 4 years longer than people who are nomnated but fal to wn. 20 So the desre for poston and status seems to be a unversal among our ancestors and among ourselves. Clearly ths compettve nstnct enhanced reproductve ftness n the wld. But, snce our lfe has become easer, we have reconsdered our stuaton. We now preserve weaker members of the speces who would have pershed n rougher tmes. What should we do about our compettve nstnct? To queston the compettve nstnct s not to be a Communst. We all know that lfe goes better when most people make most of ther own arrangements for satsfyng ther needs. The market system delvers better products and more personal autonomy. But there remans the problem that actons undertaken n pursut of status are truly frutless at the level of socety. In case ths s stll not obvous, I want to spell t out once more. For I can hear people sayng, I don t mnd f my carmaker s only motvated by status, provded he gves me a good car. 19 McGure et al (1993). 20 Redelmeer and Sngh (2001). 12

14 THE FALLACY OF CONSUMER SOVEREIGNTY The fallacy here s to thnk of consumers and producers as dfferent. We are each of us at one and the same tme a consumer and a producer. We both consume the output and produce t. Of course I value much of what I consume, for ts own sake. But, f I also seek further ncome and consumpton as a route to status, that part of my effort s self-defeatng. To see ths let s look at the happness functon of the th person. Happness = f (Lesure, Valued Consumpton ) + α Rank (1) I sacrfce Lesure both to ncrease Consumpton that I value for ts own sake, and to get Rank. But, f I now look at socety as a whole, Happness = f (Lesure, Valued Consumpton ) + Constant So, even f we do value much of our consumpton for ts own sake, the extra work that s done to acheve rank s totally counterproductve. It acheves nothng because the total of rank s fxed. The game s zero-sum. When we brng people up, we should therefore try to reduce ther α s and avod creatng nsttutons that focus attenton on rank. That s the negatve agenda: t says we should avod those games aganst other people, whch are ntrnscally zero sum. But there s also a postve agenda: to promote enjoyment of games aganst nature, where we develop our talents to the hghest possble level because such achevement gves us satsfacton. We should support benchmarkng desgned to show us what we could acheve. But we should queston benchmarkng where league table scores are hghly publc and delberately made publc n order to motvate people through the quest for rank. For ths condemns as many to fal as to succeed not a good formula for rasng human happness. The utlty functon we should be promotng through our system of chldrearng s Happness = f (Lesure, Valued Consumpton ) + α Rank + β Output 13

15 where α s as small as possble and β as large as possble. Above all we want people to enjoy ther contrbuton to the socal product a noton unknown to standard economcs but experenced by each one of us. The vrtue of the last term n the equaton s that when summed across all people t can grow wthout lmt t s nonzero-sum. THE RECORD OF THE 1980s AND 1990s α Aganst ths background, how has socety evolved n the 1990s? I would say: up and β down. There has been ncreasng stress on gettng ahead, and on fnancal ncentves as the way to motvate people. The whole am n modern pay polcy s to algn pay and output as closely as possble n other words performancerelated pay. Ths s easy to do when output s smple to measure, as t s for many mechancal tasks and for some ndvdualstc ones n the fnancal sector. It s more dffcult to algn pay wth output the more the task s mult-dmensonal, long-term and based on teamwork. In these cases people have to be evaluated by a relatve rather than an absolute standard how they compare wth ther peers. By focussng on comparatve performance, ths nevtably rases α. And there s also another effect. Economsts and poltcans have tended to assume that when external motves for performance are ncreased, other motves reman the same. But that s not so, as our colleague Rchard Ttmuss ponted out long ago when dscussng the supply of blood. 21 Let me report two suggestve studes. Edward Dec gave puzzles to two groups of students. 22 One group he pad for each correct soluton, the other he dd not. After tme was up, both groups were allowed to go on workng. The unpad group dd much more further work due to ther ntrnsc nterest n the exercse. But, for the group that had been pad, the external motvaton had reduced the nternal motvaton that would have otherwse exsted. 21 Ttmuss (1970). 22 Dec and Ryan (1985). 14

16 A second example s a real lfe case from Swtzerland n 1993 when two communtes had been selected as potental stes for the storng of radoactve waste. An economst Bruno Frey arranged a survey of most of the nhabtants. 23 They were asked two questons. Frst, Would you be wllng to have the repostory here? 51% sad Yes. Followng that they were asked, If you were offered a certan amount of compensaton (specfed), would you be wllng to have the repostory here? To ths second queston under 25% sad Yes. Thus focussng on fnancal rewards reduced people s wllngness to act on the merts of the case. In the lght of ths t seems that Brtsh governments over the last 20 years have made serous errors n ther approach to the reform of publc servces. They have stressed ever more the need to reward ndvdual performance, rather than provdng an adequate general level of pay and stressng the mportance of the job and the promoton of professonal norms and professonal competence. I want to end ths secton wth one other ssue. As you wll remember, we are tryng to explan why happness has not rsen, and why depresson, alcoholsm and crme have especally n the golden perod of economc growth It s no good blamng economc growth n general snce n some earler perods of economc growth lke alcoholsm and crme both fell. So what was new n the postwar world? The most obvous transformaton of our lfe was the arrval of televson, whch shows us wth total ntmacy how other people lve. Where people once compared themselves wth the people round the corner, they can now compare themselves wth anyone they lke, up to J.R. n Dallas. It would be astonshng f such comparsons were not unsettlng. Televson dffers from any prevous medum of communcaton n two ways. The frst s mmedacy. But the second s the sheer amount of exposure. The typcal (medan) Brton watches televson for 3½ hours a day roughly 25 hours a week. 24 Over a lfetme a typcal Brton spends more tme watchng televson than dong pad work. In most European countres vewng s rather lower but t s above 2 hours a 23 Frey and Oberholzer-Gee (1997). 24 Smth (1995). 15

17 day n most countres. So t s not fancful to suppose that TV has had a profound nfluence on our lves and on our well-beng. Most of the publc dscusson about televson has focussed on the ssues of volence and sex. Ths research generally supports the commonsense vew that repeated volence on TV tends to legtmse volent behavour, just as repeated scenes of adultery tend to legtmse adultery. For example n the 1950s televson was ntroduced n US dfferent states n dfferent years and the research has estmated that n the year that t arrved t ncreased larceny by 5% and we can only guess ts subsequent cumulatve effect. 25 Moreover ths research says lttle about the drect effect of TV upon happness, so that here we are forced to rely on conjecture and ndrect nference. The followng research must be relevant. In a seres of psychologcal experments wth women, Kenrck showed them pctures of female models. 26 He evaluated ther mood before and after dong ths. After seeng the pctures of the models, the women s mood fell. So how must televson affect the mood of the women who watch t? In 3 hours of vewng TV each day a woman cannot fal to see a parade of beautful women. Ths s unlkely to enhance ther mood. And what about the effect on men? Kenrck also showed the pctures of models to a sample of men. Before and after ths, he evaluated ther feelngs about ther own wves. After seeng the models, most men felt less good about ther wves. 27 Ths research provdes clues to a more general hypothess. Televson creates dscontent by bombardng us wth mages of body shapes, rches and goods we do not have. It does ths both n TV drama and n advertsements. Among the most mpressonable vewers of advertsements are young people and t s them the advertsers target most assduously. Because all chldren see the same advertsements, they must all have the same thng n order to keep up wth the Jones. That pressure, whch s deep n human nature anyway, s nevtably ncreased through televson. In Norway and Sweden advertsng drected at chldren under 12 s 25 Henngan et al (1982). In the year when transmsson began, t reached 50% of households. 26 Kenrck et al (1993). 27 Kenrck et al (1989). See also James (1998). 16

18 banned. Why not elsewhere? And why should advertsng not be lmted to the provson of nformaton? EQUALITY Fnally let me revert to the theory of publc economcs. The proponents of that theory from James Meade onwards nssted bravely that utlty was measurable, for wthout such a noton t s mpossble to consder the queston of the optmal dstrbuton of ncome. They assumed that extra ncome was more valuable to the poor than to the rch. But they were unable to produce emprcal evdence n support of ths. We can now do so. For example usng Eurobarometer, to compare ndvduals, one can show that the margnal utlty of relatve ncome dmnshes sharply as ncome rses. 28 Equally, usng the World Values Survey to compare countres, John Hellwell has estmated that ncreases n average ncome only rase average happness n countres below around $15,000 per head. 29 So here we have strong arguments for reducng the nequalty of ncomes both wthn and across countres. And these arguments are renforced by the low excess burden of taxaton, whch I dscussed earler. SUMMARY So what have I been sayng? 1. If my ncome rses I am happer, especally n the short term. 2. But ths makes others less happy and the effect on me fades n ways I dd not foresee. 3. So correctve taxaton s needed f my work-lfe balance s to be effcent. Ths should be a key doctrne n the Thrd Way. 4. We ought not to encourage ncome comparsons and the zero-sum struggle for rank. 28 D Tella, MacCulloch and Layard (2002). Happness here s the latent varable n an ordered logt where 4 states of happness are dentfed verbally. 29 Hellwell (2001). Happness here s self-reported happness, usng a scale from 1 to

19 5. External ncentves can undermne our nternal motvaton to do good work. So PRP should be used only wth care. 6. Advertsng should be controlled, especally towards chldren. 7. We should redstrbute ncome towards the poor. LOOKING FORWARD Fnally let me set the scene for tomorrow, when I shall look at all the other factors whch affect happness, and ther polcy mplcatons. In desgnng polcy our am s to choose polces whch maxmse the sum of happness, subject to our causal model and the lmtatons of our ntal resources. Causal model Happness depends on Genes, Experence, and Stuaton Experence depends on Genes, Background, Natonal resources, and Polces Stuaton depends on Dtto (Polces nclude economc system; educaton system; health system; moral system; laws about famly, work, advertsng etc.) As you can see, I ve ncluded the genes at every stage n ths approach, because I don t want you to thnk I beleve t s easy to make people happer. So let me end ths lecture wth a word about the role of the genes. GENES We all know from comparng sblngs that people are born dfferent, and these dfferences are then amplfed by subsequent experence. So our happness depends on our genes and our experence (past and present). Any socal reformer has to be manly nterested n the role of experence snce that s all that we can change. But we wll never understand that bt unless we understand the complete realty, and the complete realty ncludes a strong role for the genes. 18

20 Table 2 Correlaton of well-beng across pars of twns Identcal Rased together Rased apart Non-dentcal So here s a typcal fndng, drawn from the Mnnesota study of mddle-aged twns. For each par of twns the researchers knew whether they were dentcal or nondentcal, and whether they were brought up together or separated soon after brth. There were thus four groups (see Table 2). Each person was tested for ther level of well-beng usng the Mult-dmensonal Personalty Questonnare (MPQ). 30 Wthn each group the researchers then correlated the well-beng of one twn wth that of the other. The correlatons were above.4 for dentcal twns and roughly zero for nondentcal twns and whether the twns were separated at brth or not made lttle dfference to the correlaton. I thnk t s mportant for parents to recognse that a part of our nature arses n ths way, and t s even more mportant n the case of mental llness where we know that heredty plays a major role n schzophrena and n depresson, especally n manc-depresson. Those lke Ronne Lang who have blamed the behavour of parents for everythng that goes wrong have greatly added to the unhappness of the world. Havng sad that, I want to make an extremely basc pont. If happness depends on genes and envronment and the average envronment mproves, average happness ncreases but the standard measure of hertablty may be unaffected. For hertablty looks at the varaton of ndvdual happness around the average, and then measures the extent to whch ths varaton can be explaned by the genes. If a better envronment made everybody happer, hertablty mght reman just as hgh as before. But everybody s lfe would have mproved. Ths s exactly what has happened wth heght. In the last century average heght has ncreased by many nches. But as far as we know the hertablty of heght has changed lttle. Even f the 30 Lykken and Tellegen (1996), Table 1. 19

21 hertablty of happness contnues to be qute hgh, t says nothng about what we mght be able to do to the average level of happness, provded we focus on what we can change, rather than on what we cannot. That s what I shall talk about next tme. I beleve there s a great deal we can do and I shall end wth a rousng defence of the vew that the good of our socety should ndeed be the happness of all. 20

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