Inequality, Wealth and Happiness

In today's NY Times Op-Ed pages, Tyler Cowen dismisses much of the hand-wringing over wealth inequality by noting that

Happiness, possibly the most relevant variable for a study of inequality, is also the hardest to measure. Nonetheless, inequality of happiness is usually less marked than inequality of income, at least in wealthy societies. A man earning $500,000 a year is not usually 10 times as happy as a man earning $50,000 a year. The $50,000 earner still enjoys most of the conveniences of the modern world. Even if more money makes people happier, it appears to do so at a declining rate, which places a natural check on the inequality of happiness.

Studies of personal happiness, based on questionnaires and self-reporting, indicate that the inequality of happiness is not growing over time in the United States. Furthermore, the United States has an inequality of happiness roughly comparable to that of Sweden or Denmark, two nations with strongly egalitarian reputations. (See the symposium in Journal of Happiness Studies, December 2005.) American society offers good opportunities for people to be happy, even if not everyone becomes rich.

Cowen's argument prompts Scott Scheule to wonder why we bother worrying about wealth anyway:

This raises an interesting implication of the happiness research that finds, beyond the subsistence level, wealth doesn’t correlate with happiness. At once, that’s an attack on policies that support economic growth, since—if more wealth doesn’t increase happiness—what good is it? At the same time, it’s an argument against redistribution—if it won’t make people happier, why bother? The only transfer that remains justified is redistribution from those with more wealth to those below the subsistence level.

Perhaps after such a transfer, the utilitarian political goal is for all intents and purposes satisfied. Then we can concentrate on negative liberty and moral desert.

I worry that perhaps there's more going on here than meets the eye. For starters, I'd probably want to know a lot more about the self-reporting and the questionnaires that lead to such startling evidence. I wonder whether the people in question really do understand what it is that "wealth" actually means. I'd be somewhat surprised if most of them do; I spent a whole lot of years conflating "wealth" and "income." It's entirely possible (even probable?) that such questionnaires elicit responses that show that differences in income don't make a really significant difference in terms of happiness. I wonder, though, whether that's really the same thing. Wealth, after all, comes in some terms that resist easy measurement: how, for instance, do I quantify the fact that I live in a society wealthy enough to produce the tens of thousands of films that I can pick through on Netflix? I betcha that while lots of people would consider their computer as part of their wealth, very few of them would include all the websites out there, too. And I'm almost certain that no one thinks about things like public libraries and interstates and free art galleries and basketball courts in city parks when they think about wealth.

I'm going to pretty much leave that to the side, though. I'm not a social scientist, and I haven't read the questionnaires, nor would I know what a good one looked like if it bit me in the ass. So I'll just have to trust that folks like Cowen know what they're talking about. What I do have, though, is a philosophical question. I'm pretty sure that I know what Scott's answer to this would be, but still, it's worth asking: if increasing wealth doesn't really affect happiness all that much, then it would pretty much have to follow that decreasing it won't either. So if that's the case, why do libertarians get their panties in such a knot over wealth redistribution?

Yes, I know, there's that whole "it violates my liberty" thing. But so what? Unless, of course, you want to tell me that violating your liberty makes you unhappy. That I can understand. And it seems relevant. As long as you then admit the relevance of my claim that it makes me feel unhappy to see some people doing better than others. (It doesn't, but bear with me here. I'm making a point.) I mean, really, if wealth is entirely unconnected (beyond a subsistence level) to happiness, then all you've got when you appeal to moral desert and negative liberty and the like is that they give you a warm and fuzzy feeling. And that's the same sort of warmth and fuzziness that I get when I contemplate justice and equality. How are we to weigh those warm and fuzzy feelings against one another?

I have, over the past couple of years, been drawn toward libertarianism because of the solid consequentialist arguments in favor of increasing wealth. But I like those consequentialist arguments because I took for granted that there is a significant link between happiness and increased wealth. If that turn out to be false, then screw libertarianism. It makes me much happier to think of myself as a kind-hearted, Santa Claus type who spends other people's money to make the world a better place than it does to think of myself as the pre-Christmas Eve Scrooge, sending the poor off to die in private. And if it happens to be your money I'm spending, well, that's too bad. It's not like it's really going to make you any less happy.

At least not according to Tyler.