The factors being only caused by GDP is not at all central to my argument against your analysis, nor is it a claim I would make. The key point is that any causal effect of GDP on happiness must necessarily run through other factors like shelter, clean water, health, etc. Nobody (except economists like me) feels more satisfied with their life as a result of hearing that GDP/cap has gone up by 3% this year.
As such, if you control for all of those mediating factors, it will be literally impossible to find a significant effect of GDP/cap on happiness whether or not such an effect actually exists. If the effect is real, such an analysis would necessarily find a false negative.
Similarly, your counterexample would be valid, if I were claiming that GDP is the only factor in happiness. Again, I do not claim that, nor does anyone I know of. There are plenty of factors which account for national average life satisfaction, one of which is GDP. It is perfectly possible for Costa Rica to be higher in other factors and therefore be happier than the US despite a lower GDP.
There are some economists who oppose GDP as a measure of value, and some who support it. If you’re appealing to expertise, there’s a huge difference between consensus view and “some experts agree with me”.
I think “some experts” is fairly misleading when the experts I’m referring to have multiple econ Nobels, led an international working group on the subject in question, for a study commissioned by the president of a G7 country, and the EU is now continuing that path to construct entirely new national indicator systems based on satisfaction. I’m comfortable saying that’s a pretty substantial consensus on the need for alternatives to GDP.
I think your point that a correctly-specified model would have no effect for GDP makes a good deal of sense—or at best, that GDP could be seen as a sort of residual category for all of the consumption not accounted for by explicit variables. This is also an approach that would unambiguously favor my model over the WHR’s, which reports an enormous effect for GDP. Do you see this as just an error term in their model?
But this idea also seems to conflict pretty directly with your assertion that the model “says nothing at all about the effect of GDP per capita on life satisfaction or happiness.” If I’ve succeed in driving that term to almost zero, then you seem to be suggesting I’ve captured all the relevant effects, and the WHR hasn’t come close.
If you’re saying that GDP only matters to satisfaction via consumption, then there’s still the absolutely enormous question of: consumption of *what*? GDP is about as precise as staying “economic stuff,” so it’s barely a coherent question to even ask how “GDP” affects satisfaction. At the barest minimum, I would say this model clarifies what *parts* of all of the things that are together rolled into the GDP fruitcake are actually counting towards GDP. And this is critical. You shouldn’t be able to build a building, burn it down, and claim you’re helping, because construction counts towards GDP and GDP causes happiness. That’s just a semantic shell game.
But even if you are trying to formulate the model as satisfaction ⇐ consumption ⇐ GDP … you have to deal with the fact that the biggest effect in the model is on social support! That’s just not “economic!” You can look at the chosen variables, and see how much of GDP they actually account for, and see that GDP is outright missing several of the largest measured effects, by its inherent definition. So even if it’s only in the negative, or estimating an upper bound, or pushing the question towards clarifying the relationship between water and GDP, I have a pretty hard time seeing how that says “nothing at all” about the relationship between GDP and satisfaction.
The factors being only caused by GDP is not at all central to my argument against your analysis, nor is it a claim I would make. The key point is that any causal effect of GDP on happiness must necessarily run through other factors like shelter, clean water, health, etc. Nobody (except economists like me) feels more satisfied with their life as a result of hearing that GDP/cap has gone up by 3% this year.
As such, if you control for all of those mediating factors, it will be literally impossible to find a significant effect of GDP/cap on happiness whether or not such an effect actually exists. If the effect is real, such an analysis would necessarily find a false negative.
Similarly, your counterexample would be valid, if I were claiming that GDP is the only factor in happiness. Again, I do not claim that, nor does anyone I know of. There are plenty of factors which account for national average life satisfaction, one of which is GDP. It is perfectly possible for Costa Rica to be higher in other factors and therefore be happier than the US despite a lower GDP.
There are some economists who oppose GDP as a measure of value, and some who support it. If you’re appealing to expertise, there’s a huge difference between consensus view and “some experts agree with me”.
I think “some experts” is fairly misleading when the experts I’m referring to have multiple econ Nobels, led an international working group on the subject in question, for a study commissioned by the president of a G7 country, and the EU is now continuing that path to construct entirely new national indicator systems based on satisfaction. I’m comfortable saying that’s a pretty substantial consensus on the need for alternatives to GDP.
I think your point that a correctly-specified model would have no effect for GDP makes a good deal of sense—or at best, that GDP could be seen as a sort of residual category for all of the consumption not accounted for by explicit variables. This is also an approach that would unambiguously favor my model over the WHR’s, which reports an enormous effect for GDP. Do you see this as just an error term in their model?
But this idea also seems to conflict pretty directly with your assertion that the model “says nothing at all about the effect of GDP per capita on life satisfaction or happiness.” If I’ve succeed in driving that term to almost zero, then you seem to be suggesting I’ve captured all the relevant effects, and the WHR hasn’t come close.
If you’re saying that GDP only matters to satisfaction via consumption, then there’s still the absolutely enormous question of: consumption of *what*? GDP is about as precise as staying “economic stuff,” so it’s barely a coherent question to even ask how “GDP” affects satisfaction. At the barest minimum, I would say this model clarifies what *parts* of all of the things that are together rolled into the GDP fruitcake are actually counting towards GDP. And this is critical. You shouldn’t be able to build a building, burn it down, and claim you’re helping, because construction counts towards GDP and GDP causes happiness. That’s just a semantic shell game.
But even if you are trying to formulate the model as satisfaction ⇐ consumption ⇐ GDP … you have to deal with the fact that the biggest effect in the model is on social support! That’s just not “economic!” You can look at the chosen variables, and see how much of GDP they actually account for, and see that GDP is outright missing several of the largest measured effects, by its inherent definition. So even if it’s only in the negative, or estimating an upper bound, or pushing the question towards clarifying the relationship between water and GDP, I have a pretty hard time seeing how that says “nothing at all” about the relationship between GDP and satisfaction.