(I deleted a previous comment of the same content that was posted using another account. I reposted the same comment using this account to clarify that I am a researcher with the Happier Lives Institute.)
Hello and thank you for your post! I know this is just a book review, but I have some quibbles with your comments on measuring SWB / happiness.
First quote to comment on:
However, it is very difficult to measure utility. Our best studies produce counterintuitive results, such as that income only increases life satisfaction to the extent that you are richer than people around you.
Broadly, I disagree that the best studies using SWB produce counterintuitive results. Engaging pretty broadly with the literature, I’ve been pleasantly surprised by how often subjective well-being (measuring well being by asking people how they feel about their life), conforms with intuitions.
Specifically, I don’t think the book you linked (or the SWB literature more broadly), implies that “income only increases life satisfaction to the extent that you are richer than people around you.” This would mean that 100% of the benefit of an increase in income is due to comparison / relative income effects. I think that claim is stronger than what the evidence supports. And even if there was evidence that a large share of the benefit to income gains came from favorable comparisons—I’m not sure that’s too counterintuitive for high income countries (LMICs would be another story!).
Some papers find that when the authors include a measure of relative income this diminishes the magnitude or significance of the absolute income coefficient (normally log(income) , e.g, Boyce et al., 2010). But other papers find that a large absolute-income effect remains when adding a measure of relative position (income relative to average area income e.g., Tsui et al., 2014).
Aside: Most of the evidence about the importance of relative versus absolute income is from high income countries. We don’t know much about the relative versus absolute income question in low and middle income countries.
(I deleted a previous comment of the same content that was posted using another account. I reposted the same comment using this account to clarify that I am a researcher with the Happier Lives Institute.)
Hello and thank you for your post! I know this is just a book review, but I have some quibbles with your comments on measuring SWB / happiness.
First quote to comment on:
Broadly, I disagree that the best studies using SWB produce counterintuitive results. Engaging pretty broadly with the literature, I’ve been pleasantly surprised by how often subjective well-being (measuring well being by asking people how they feel about their life), conforms with intuitions.
Specifically, I don’t think the book you linked (or the SWB literature more broadly), implies that “income only increases life satisfaction to the extent that you are richer than people around you.” This would mean that 100% of the benefit of an increase in income is due to comparison / relative income effects. I think that claim is stronger than what the evidence supports. And even if there was evidence that a large share of the benefit to income gains came from favorable comparisons—I’m not sure that’s too counterintuitive for high income countries (LMICs would be another story!).
Some papers find that when the authors include a measure of relative income this diminishes the magnitude or significance of the absolute income coefficient (normally log(income) , e.g, Boyce et al., 2010). But other papers find that a large absolute-income effect remains when adding a measure of relative position (income relative to average area income e.g., Tsui et al., 2014).
Aside: Most of the evidence about the importance of relative versus absolute income is from high income countries. We don’t know much about the relative versus absolute income question in low and middle income countries.