On leisure, income and happiness

In a recent paper titled “Well-Being in America” in the Review of Economics and Statistics, Andrew Oswald and Stephen Wu point out that when they “control for incomes (of states), satisfaction with life is lower in richer states”.

I am not surprised, but I don’t believe that we should derive much about inequality and wealth. I know, I just jumped to the guns because I expect people to tell me that this is proof that income distribution is important for happiness. While it is true, as Gore Vidal said, that a part of me dies when my neighbour gets a better car (all though my neighbour gets an ipad and that really really really irks me!), we should be careful in extrapolating conclusions from this study.

This is because happiness is not linked with income; it is linked with getting the income we desire to experience life the way we want. As I pointed out in an earlier post, I really like to get home early and read while my better half works until late in the evening. Yet, we are both happy.

Once I get the revenues I need to buy the books I want and to get the quality leisure time that I desire, I won’t work one more minute! My girlfriend’s happiness is closely linked with her work. In fact, her work is closely linked with what makes her happy because of self-accomplishment.

If we are really interested in “well-being”, should we not use databases to look at changes in hours worked per week and the income derived out of each hour worked relative to changes in expenditures linked to leisure and time spent at home? Not only these expenditures, but how much those expenditures buy (a trip to the cinema is more expensive in San Francisco than in Baton Rouge).

For example, Oswald and Wu point out that Louisiana – a pretty poor state – is happier than California – a much richer state. Considering that Americans move a lot around their country, could it be that those who wanted adrenaline-pumped jobs went to California while those who enjoy free time decided to stick around in Louisiana? Could these geographic differences the result not only of factor allocations but also preference allocations of workers linked with the relative rewards of labour (relative to leisure).

Maybe another idea for a research paper…no idea on how to operationalize though.

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