I forgot to add a very important feature. I don’t think income doubling is a helpful conversion in this case. In fact, I think it’s quite misleading.
Increasing growth by one percent for 71 years costs a lot more than doubling one’s income for a year. In the 71st year, the cost is the same, but there are the preceding transfers that were also necessary to increase subjective well-being. In year 70, the cost was nearly a doubling of income.
I estimate there are nearly 32 annual income doublings when you sum them across the 71 years. You get a portion of an income doubling every year, which can be calculated as (1.03/1.02)^n − 1. In the first year (n=1) it costs you 0.01 of an income doubling. In year 70, it costs 0.98 of a doubling. Summing them from n = 1 to n=71 you get 31.9 doublings.
Your estimated impact should then be the coefficient * 71 /32. If we use .002 as the coefficient on growth, that equals .004 - hardly worth it. The same is true for the lager estimated coefficients. Alternatively, you could look at my calculation to see when the costs add up to a the first cumulative annual income doubling. I estimate this happens between year 13 and 14. Let’s say 13.5, then 13.5 years * .002 = .027. You get 0.027 subjective well-being points for a cumulative doubling of annual income in 13.5 years. Again, I think this is not worth it.
Essentially, you need to consider the time involved to double income, for the reasons mentioned in my earlier post, and because it simply costs more. I wouldn’t compare these results with those of interventions of cross-sectional studies.
First off, very interesting. This is my first exposure to the EA community. My friends / colleagues have rightly encouraged me to learn more about your work.
Essentially, my argument is this: you cannot believe that the relations we estimate are consistent with cross-sectional results or experimental results because it takes 71 years for income to double when increasing growth. I further explain this below.
I think we agree that GDP is not a good measure of wellbeing. I also strongly believe it is not a good policy target. We should target wellbeing directly.
For alternative policies that similarly cover a long period of time, see recent work by me and Easterlin, “Explaining happiness trends in Europe” (https://doi.org/10.1073/pnas.2210639119). We show the best predictor of long-run changes in life satisfaction is the generosity of the social safety net – more generous, greater happiness – in ten European countries. At the same time, we argue economic growth does not have a meaningful influence on life satisfaction in the long-run.
For my more substantive comment: increasing growth from two to three percent takes 71 years to double income. This is a very long time in my view. I’m not coming from the EA framework. Perhaps the EA community disagrees with me. It matters a great deal however, for both conceptual and empirical reasons.
Fundamentally, you cannot compare doubling one’s income at a point of time (e.g., due to lottery and investment returns or cash transfers) to doubling one’s income in 71 years. 71 is greater than life expectancy in numerous countries. Empirically, the growth-happiness relation depends upon on the time horizon; it gets smaller as the duration increases. We discuss this in the paper conceptually and in reference to the two data sets we use. The longer period in the WVS/EVS data results in lower growth- subjective well-relations. For further support, see Bartolini S, Sarracino F (2014) Happy for how long? How social capital and economic growth relate to happiness over time. Ecol Econ 108:242–256. https://doi.org/10.1016/j.ecolecon.2014. 10.004.
Your replication / robustness tests are not so surprising. As you point out, our results include larger coefficient estimates using different specifications, yet we still argue they are not economically significant, implying we would argue your alternative results are still too small to prioritize growth. Here’s the quote: “Based on the largest magnitude across all estimations [larger than what you estimate using 2020 or excluding India], it would still take 100 years for a one percentage point increase in the growth rate to raise happiness by one point.”
To your point, however, even a small increase in subjective well-being for a large number of people is meaningful, but we’re talking about a long time to achieve even these small changes. I’m reasonably assured you can find much more effective policies for short-run gains. See Table 1 of P. Frijters, A. E. Clark, C. Krekel, R. Layard, A happy choice: Wellbeing as the goal of government. Behav. Public Policy, 1–40 (2020).
This table inspired a similar one used by the U.K. government in the Green Book. See:
MacLennan, S., Stead, I., 2021a. Wellbeing Guidance for Appraisal: Supplementary Green Book Guidance, His Majesty’s Treasury: Social Impact Task Force.
MacLennan, S., Stead, I., 2021b. Wellbeing discussion paper: monetisation of life satisfaction effect sizes: A review of approaches and proposed approach, His Majesty’s Treasury: Social Impacts Task Force.
Your robustness test results do not overturn our results; they fall within the range we estimate and only apply to one data set, indeed the one that is based on a shorter period, which is less preferred for reasons explained in the text and implied by the Bartolini Sarracino paper referenced above.
We need more research on wellbeing. Increasing consumption does not necessarily increase wellbeing, especially in highly developed countries.
Perhaps you can explain to me how the GiveWell team determined the “Value assigned to increasing ln(consumption) by one unit for one person for one year” and why this is used in determining the value of subjective well-being benefits (cf. the value: https://docs.google.com/spreadsheets/d/1lTX-qNY1cSo-L3yZCNzMbzIM1kqWC1vSEhbyFAYr6E0/edit#gid=1362437801, which is used in this calculation: https://docs.google.com/spreadsheets/d/1aDUPvizGsgT6rLtIf8RkT8LNTmZyXjlXa7Kddc-UeWM/edit#gid=135302151)?
See instead the MacLennan references above to see a derivation of the monetary value of a life satisfaction point per year.
Unfortunately, I have not had time to go through the comments, and will be slow to respond due to family concerns. I’ll do my best to respond and keep up with future posts. Thanks for the lively discussion. I wish we could do it in person.
Lastly, you all probably know the Easterlin Paradox has come under fire for years upon years and in different fields. See his article Easterlin RA (2017) Paradox lost? Rev Behav Econ 4:311–339. https://doi.org/10.1561/105. 00000068. You can also find the working paper version for free on google scholar.