The Price of Everything

by Eduardo Porter

  Americans are inveigled by a powerful mirage: that markets don’t ration. In 2007, the Congressional Budget Office issued a report about how the nation might bring spiraling health-care costs under control by measuring the cost-effectiveness of medical treatments, as several other countries do. The report warned that putting a price on life might be politically tricky in the United States. “Many people find the notion uncomfortable if not objectionable,” noted the CBO, incompatible with “the sentiment that no expense should be spared to extend a patient’s life.” The invisible hand of the market is as ruthless in denying health care to the needy as the most coldhearted central planner. Our unwillingness to acknowledge life’s price does not mean it doesn’t have one.

  CHAPTER THREE

  The Price of Happiness

  ONE OF MEXICO’S most famous cultural exports, alongside mariachi bands and drunken spring break in Cancún, is the 1979 telenovela titled Los Ricos También Lloran, or The Rich Also Weep. Dubbed into two dozen languages, the epic soap opera’s tale of the trials and tribulations of a lovely young heiress, Mariana, captivated millions of viewers in more than a hundred countries.

  The show was exported to China and Saudi Arabia. It gave Russia a first taste of capitalist pop culture, drawing an audience of 100 million after making its debut there in May of 1992, shortly after the demise of the Soviet Union. President Boris Yeltsin was a fan. According to the Russian newspaper Pravda, soldiers from Abkhazia and Georgia would reach a tacit truce during showtimes in order to watch the show.

  The telenovela’s plotline is of byzantine complexity. Mariana, the heroine, is ejected from the family ranch by an evil stepmother. A wealthy benefactor takes her in. The benefactor’s handsome son woos her. Her love for the young man is thwarted by a rival, consummated, tested by jealousy. Somehow—don’t ask—Mariana decides to give their baby son, Beto, to a woman who sells lottery tickets. Only after she encounters Beto years later and prevents his father from shooting him will she be happy.

  Despite the idiosyncratic plot twists, and the actors clad in bell-bottoms, the telenovela appealed to millions because it tapped into a romantic archetype, that of the helpless heroine who falls into the lap of luxury yet cannot find happiness until she finds true love. Its message—though delivered in a style of high camp—resonates across time around the world: we may think wealth provides happiness, but they are unrelated.

  The point had been made over a century earlier by the philosopher Arthur Schopenhauer, who argued that “money is human happiness in the abstract; he, then, who is no longer capable of enjoying human happiness in the concrete devotes himself utterly to money.”

  In March of 1968, three months before he was shot to death, Robert Kennedy delivered a scathing critique of the nation’s fixation on economic growth: “Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl,” he said.

  “Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

  This age-old conviction is undergoing a bit of a revival. As people around the world struggled with the fallout from the global financial crisis and a worldwide recession, the sense that there is something wrong with our unbridled pursuit of material riches coalesced among some policy makers into a belief that nations should pursue something other than economic growth. Our narrow drive to maximize GDP, many seem to believe, brings only disaster.

  In 2008, as the French economy slipped toward recession, French president Nicolas Sarkozy drafted two Nobel Prize-winning economists, Amartya Sen and Joseph Stiglitz, and the domestic economist Jean-Paul Fitoussi, to prepare a report on how to better measure people’s socioeconomic progress. “The time is right for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being,” the report concluded. Government, it suggested, should supplement standard economic data with other information, including citizens’ sense of happiness with their lives.

  The tiny Buddhist kingdom of Bhutan, high in the Himalayas, has stretched the idea further—devising a quantity it calls “gross national happiness,” which it plans to use to evaluate policies and keep track of the country’s well-being. King Jigme Singye Wangchuck coined the term in 1972, but it became a reality only after he abdicated thirty-six years later, when Bhutan had its first-ever democratic election, and the Bhutanese approved a new constitution that established the world’s first GNH index.

  The index has six dozen variables, grouped into nine dimensions—including psychological well-being and community vitality, ecology, good governance, and time use. And it sets values to behaviors. People score happiness points if they pray and meditate often and understand their family, and lose points if they feel selfish. Yet more isn’t necessarily better. Playing Langthab, for instance, a game in which opponents head-butt each other into submission, is assumed to make Bhutanese happy. But it is enough to play it once or twice a month. Playing more doesn’t increase the happiness stock. Similarly, money adds to happiness—but only up to 70,597 ngultrum—or about $1,550—per household per year.

  YET DESPITE ITS growing popularity, the belief that money has little or nothing to do with happiness is misleading. Like Schopenhauer’s musings and Mariana’s troubles, the sweeping rhetoric about the emptiness of material wealth supports a dubious proposition that the pursuit of economic progress is somehow a waste of time because it does not deliver what is most important in life. Despite the skepticism about run-of-the-mill economic growth, despite the angry denunciations of materialism, it is usually better to have a big gross domestic product than a small one. Just ask one of the more than 3 billion people—half the world’s population—how happy they are making do with less than $2.50 a day.

  In fact, surveys find that richer people tend to be happier than poorer people. That’s because money provides many of the things that improve people’s lot. Richer countries are generally healthier and have lower child mortality and higher life expectancy. They tend to have cleaner environments, and their citizens often have more education and less physically demanding and more interesting jobs. Richer people usually have more leisure time, travel more, and have more money to enjoy the arts. Money helps people overcome constraints and take control over their lives. Whatever Kennedy said, gross national product does allow for the health of our kids.

  Researchers in Britain found that an extra £125,000 a year increased people’s sense of satisfaction with their lives by one point on a scale of one to seven. A study in Australia pored through surveys to understand how people’s feelings of happiness responded to life’s events. It found that a windfall of $16,500 to $24,500 provided more or less the same boost to happiness as getting married. Losing between $178,300 and $187,600 generated the same level of unhappiness as that caused by the death of a child. A Gallup survey in 2009 found that 30 percent of Americans earning less than $24,000 a year had received a diagnosis of depression, compared with only 13 percent of Americans making $60,000 or more. Happiness can be bought for a price.

  There is a problem with the enthusiasm for replacing GDP with a measure of happiness. Who gets to define what makes people happy? Would it be the very same governments that would benefit if the indicator found a happy citizenry? For instance, media reports from Bhutan suggest the Bhutanese have lost interest in Langthab and other traditional sports. They are nonetheless included among the fonts of happiness. Bhutan is a fairly authorita
rian nation. The government banned television until 1999. In 1989 it made it mandatory for all Bhutanese to speak Dzongkha in public places. In 1985, it passed a new citizenship law that redefined ethnic Nepalese in southern Bhutan who couldn’t prove they had arrived by 1958 as nonnationals, and subsequently expelled about 100,000 of them. It has nice things, like 72 percent forest cover and few tourists. But it also has a lot of female infanticide and feticide and a lopsided sex ratio of 89.2 females per 100 males. More democratic regimes might have problems defining the attributes of happiness. While Bhutan may be a happy nation, this probably has less to do with the many dimensions of their index than with their material wealth. In 1980, Bhutan’s GDP per person was 10 percent higher than India’s. Today it is 75 percent higher. In 2009, as the rest of the world slumped, Bhutan grew 6.9 percent. In 2008 the Bhutanese economy grew by a fifth. Like other countries around the world, it has grown happier as it has grown richer.

  The World Values Survey, a set of polls performed around the world over the past twenty years, found that the happiest country in the world is rich Denmark. The least happy is poor Zimbabwe. The 2006 Gallup World Poll asked adults in 132 countries to rank their satisfaction with life on a scale of zero to ten. The citizens of Togo, whose gross domestic product per person is only $832, ranked their satisfaction at just above three. Americans, fifty-five times as rich, put their happiness at seven.

  WHAT HAPPINESS IS

  Happiness is a slippery concept, a bundle of meanings with no precise, stable definition. Lots of thinkers have taken a shot at it. “Happiness is when what you think, what you say, and what you do are in harmony,” proposed Gandhi. Abraham Lincoln argued “most people are about as happy as they make up their minds to be.” Snoopy, the beagle-philosopher in Peanuts, took what was to my mind the most precise stab at the underlying epistemological problem. “My life has no purpose, no direction, no aim, no meaning, and yet I’m happy. I can’t figure it out. What am I doing right?”

  Most psychologists and economists who study happiness agree that what they prefer to call “subjective well-being” comprises three parts: satisfaction, meant to capture how people judge their lives measured up against their aspirations; positive feelings like joy; and the absence of negative feelings like anger.

  It does exist. It relates directly to objective measures of people’s quality of life. Countries whose citizens are happier on average report lower levels of hypertension in the population. Happier people are less likely to come down with a cold. And if they get one, they recover more quickly. People who are wounded heal more quickly if they are satisfied with their lives. People who say they are happier smile more often, sleep better, report themselves to be in better health, and have happier relatives. And some research suggests happiness and suicide rates move in opposite directions. Happy people don’t want to die.

  Still, this conceptual mélange can be difficult to measure. Just ask yourself how happy you are, say, on a scale of one to three, as used by the General Social Survey. Then ask yourself what you mean by that. Answers wander when people are confronted with these questions. We entangle gut reactions with thoughtful analysis, and confound sensations of immediate pleasure with evaluations of how life meshes with our long-term aspirations. We might say we know what will make us happy in the future—fame, fortune, or maybe a partner. But when we get to the future, it rarely does. While we do seem to know how to tell the difference between lifelong satisfaction and immediate well-being, the immediate tends to contaminate the ontological.

  During an experiment in the 1980s, people who found a dime on top of a Xerox machine before responding to a happiness survey reported a much higher sense of satisfaction with life than those who didn’t. Another study found that giving people a chocolate bar improved their satisfaction with their lives. One might expect that our satisfaction with the entire span of our existence would be a fairly stable quantity—impervious to day-to-day joys and frustrations. Yet people often give a substantially different answer to the same question about lifetime happiness if it is asked again one month later.

  Sigmund Freud argued that people “strive after happiness; they want to become happy and to remain so.” Translating happiness into the language of economics as “utility,” most economists would agree. This simple proposition gives them a powerful tool to resist Bobby Kennedy’s proposal to measure not income but something else. For if happiness is what people strive for, one needn’t waste time trying to figure out what makes people happy. One must only look at what people do. The fact of the matter is that people mostly choose to work and make money. Under this optic, economic growth is the outcome of our pursuit of well-being. It is what makes us happy.

  This approach has limitations. We often make puzzling choices that do not make us consistently happier. We smoke despite knowing about cancer and emphysema. We gorge on chocolate despite knowing it will make us unhappy ten pounds down the road. Almost two thirds of Americans say they are overweight, according to a recent Gallup poll. But only a quarter say they are seriously trying to lose weight. In the 1980s a new discipline called Prospect Theory—also known as behavioral economics—deployed the tools of psychology to analyze economic behavior. It found all sorts of peculiar behaviors that don’t fit economics’ standard understanding of what makes us happy. For instance, losing something reduces our happiness more than winning the same thing increases it—a quirk known as loss aversion. We are unable to distinguish between choices that have slightly different odds of making us happy. We extrapolate from a few experiences to arrive at broad, mostly wrong conclusions. We herd, imitating successful behaviors around us.

  Still, it remains generally true that we pursue what we think makes us happy—and though some of our choices may not make us happy, some will. Legend has it that Abraham Lincoln was riding in a carriage one rainy evening, telling a friend that he agreed with economists’ theory that people strove to maximize their happiness, when he caught sight of a pig stuck in a muddy riverbank. He ordered the carriage to stop, got out, and pulled the pig out of the muck to safety. When the friend pointed out to a mud-caked Lincoln that he had just disproved his statement by putting himself through great discomfort to save a pig, Lincoln retorted: “What I did was perfectly consistent with my theory. If I hadn’t saved that pig I would have felt terrible.”

  So perhaps the proper response to Bobby Kennedy’s angst is to agree that pursuing economic growth often has negative side effects—carbon emissions, environmental degradation—that are likely to make us unhappy down the road. Still, it remains true that American citizens—and the citizens of much of the world—expend enormous amounts of time and energy pursuing more money and a bigger GDP because they think it will improve their well-being. And that will make them happy.

  HAPPINESS IS A CONCRETE FLOOR

  Happiness doesn’t depend solely on money, of course. People who don’t have sex report being less happy than those who do. People are unhappier in areas with higher unemployment, more crime, higher inflation, and more sulfur-oxide pollution emitted by coal-fired power plants. Happier people are more likely to be married, less likely to divorce, and have more friends. Right-wingers are happier than left-wingers.

  A survey by the Pew Research Center found that even as the Republican candidate John McCain headed for disaster in the presidential election of November 2008, 37 percent of Republicans rated themselves as “very happy,” compared with 25 percent of Democrats. A similar trend has held since 1972, when the General Social Survey started asking the question. This is true around the world. Apparently, it has to do with the left’s guilt. A study by psychologists at New York University found that the right-left happiness gap increases with deepening income inequality. This suggests people on the right are better at rationalizing inequality as a normal feature of life and feel less guilty about it.

  But improve people’s economic outlook and chances are you will make them happier. More than a decade after the fall of the Berlin Wall in November 19
89, former East Germans remained unhappier than their fellow citizens from the western side. They would have been even less satisfied were it not for the income boost following unification. East Germans’ satisfaction with life rose about 20 percent between 1991 and 2001. Much of that jump was due to the freedoms gained with the demise of their police state. But a 60 percent increase in household income also played a part.

  The gross domestic product of the Russian Federation declined by a quarter between 1990 and 1995, as the Soviet Union fell apart. Unsurprisingly, Russians’ reported satisfaction with life dropped 17 percent. Analyzing the surge in male suicides following the dismemberment of the former USSR, researchers concluded that a $100 increase in per capita GDP lowered the suicide rate among Russian males by somewhere between 0.14 percent and 0.20 percent. Similarly, an increase of one percentage point in the share of the population who held a job reduced male suicides by about 3 percent.

  Consider how unhappy you would feel if you had to live with nothing but dirt under your feet. In 2000 the government of the state of Coahuila in northern Mexico launched a program called Piso Firme, or Firm Floor, that offered people living in homes with dirt floors up to fifty square meters of concrete cement flooring, at a cost to the government of about 1,500 Mexican pesos—equivalent to about $150 at the time, one and a half months’ income. Families would be told in advance of the delivery date so they could prepare the rooms to be covered. Large trucks rolled through poor neighborhoods, pouring cement from house to house, leaving each family to smooth it down.