Hedemonics or Humanomics?: A Response to McCloskey’s Critique of Happiness Economics

I recently read an article in the New Republic by University of Illinois Professor Deirdre McCloskey on the so-called “creepy new economics of pleasure” with initial interest. However, as I continued to read her article, my interest turned into disappointment.

As one of the economists involved in this field since early on, I am accustomed to criticism and welcome that which helps us advance an effort in the social sciences— which combines the work of economists, psychologists, philosophers, medical doctors and more— to better understand the determinants and causal properties of well-being. Given the depth and breadth of much of Professor McCloskey’s work, I was looking forward to her insights and constructive criticism. But what began with a potentially illuminating historical review of the field turned into a long line of tirades against a number of talented scientists. Even more disappointing, those tirades were based on fundamental errors in her understanding of the underpinnings of the study of well-being. Let me just list a few, based on the central tenets of her article.

First of all, economists and psychologists in the field do not think of happiness as pleasure alone. Indeed, scholars in the field increasingly avoid the open-ended happiness term and focus on measuring and understanding two distinct and better defined dimensions of well-being. The first is experienced well-being – in the “Benthamite” sense of the article (as well as described in my recent book, The Pursuit of Happiness: An Economy of Well-Being). The study of experienced well-being – work pioneered by Nobel Prize winner Danny Kahneman – seeks to assess people’s emotions and experiences as they go through their daily lives. This line of inquiry ultimately aims to improve the quality of people’s lives. The second dimension, evaluated well-being – call it Aristotelian, as I do in my book – seeks to better understand how people evaluate their lives as a whole and how those evaluations link to longer-term behaviors such as investments in health and education, meaningful work, and performance in the labor market. The concept of eudemonia that Professor McCloskey highlights is nothing new to those of us that have been attempting to measure it for a long time.

Secondly, McCloskey raises the conundrum of a poor person in Sudan who reports to be happy, and how that evaluation cannot be assessed on the same scale as that of a respondent in a much wealthier context. Again, those of us involved in the work have thought a great deal not only about what particular scales mean in particular contexts, but also what dimension of well-being respondents are emphasizing. My own research highlights people’s ability to adapt to adversity and to retain their natural cheerfulness and ability to experience simple, daily pleasures. This is in turn linked to their agency (or lack thereof) in explaining the so-called “happy peasant” conundrum. Thus someone in Sudan who has no choice but to adapt may emphasize the simple, daily experience aspect of their existence as they respond. Give the same person the opportunity to leave – and/or to acquire new agencies and capabilities – and they may then focus on their lives as a whole and then appear as unhappy, “frustrated achievers”, at least during a period of migration or change. The process of acquiring agency is not always a happy one. Thus rather than simply and blindly comparing the responses of farmers without choices and opportunities in Sudan with those of economists or doctors in Finland, we take great care to identify which dimension of well-being we are measuring.

Thirdly, McCloskey makes the point that even if the relationship between income and happiness is non-linear, it’s surely better to have $125 than simply $3, as the former gives you more alternatives. PRECISELY! A recent paper by Danny Kahneman and Angus Deaton in the Proceedings of the National Academy of Sciences shows that income and experienced well-being correlate positively in the U.S., but only up to median income. In contrast, income and evaluated well-being correlate all the way up the income ladder. After a certain point, income cannot make you have more positive emotions or enjoy your day more, but it does give you more choices to do what you want with your life. That, in turn, affects how people evaluate their lives as a whole. Income gives people the agency to focus beyond living in the daily sense (but does not guarantee that they will use it). My work with Eduardo Lora in Latin America shows that the most important variables to the well-being of the poor are friends and family they can rely on in times of need; in contrast, the most important variables for respondents with more means are their work and health. The latter provide those respondents with the agency to make choices in their lives as a whole and to achieve, in McCloskey’s own terms, higher levels of eudemonia.

McCloskey concludes by saying that we need humanomics rather than hedemonics or freakonomics. Those of us involved in the new science of well-being are doing precisely that: trying to better understand the causes and consequences of human well-being, an effort which will, in the end, make economics more human and less dismal.