Wolfer:
1. Satisfaction and Family income are positively related (no matter the marginal income matters your life or not).
l How to against Easterlin paradox( who claims: “give up on economic growth, it’s a zero-sum game”):
i. In a society richer people are happier than poorer people.
ii. Richer societies are not happier than poorer societies. (Another graph then shows that richer countries are happier than poorer countries, with a robust correlation 0.8)
iii. As a society gets richer its people don’t get happier.
*Japan: in spite of the decreasing number which seems show that people are not happier, the problem is Japanese government kept changing the question they ask. Happiness had grown, they changed the question. Happiness grew, they changed the question. Happiness grew, they changed the question.
*Europe: Eight out of nine countries get richer while getting happier
*U.S.A.: the U.S. got richer, happiness has been basically flat: 1> our surveys just aren’t capturing as many of the rich people through time.2> we should be looking at the average of your log income not the log of your average income. Economic growth in the U.S. over the past 40 years hasn’t gone equally to everyone.
2. Positional concerns (fight with Bob)
* U.S. Mexican border. If you go south across the border, you get from being middle income in a rich country to being unimaginably rich in a middle or low-income country. But in fact almost nobody do it.
i. *Research should be boring& alternative to looking at happiness: whether you experience smile, love, etc. yesterday？
ii. The caricature that economists are obsessed with GDP. There is no one who ever said we should do the following because it will raise GDP even though it will make people’s worth—lives worse off.
iii. It [happiness data] says really conventional things.
*Progress of African-American in the U.S., you see incredible progress from the 60s through to the mid-80s and then it stops. But if you look at subjective well-being data though they say that things actually kept getting better for African-Americans and there has been a dramatic narrowing in the happiness gap there, right. It’s real but it’s picking up things like discrimination and animus and those feeling that economics, standard economic statistics can’t pick up very well.
3. Economists often like to defend the economic statistics. The Difference between objective and subjective is much fuzzier that most people were led on. So this is just continuation of economic measure.
4. Happiness, it’s not a new agenda, it’s not a radical agenda because it’s what politicians do anyway.
Mr. Frank:
*Money does buy happiness but we don’t buy nearly as much of it as we could because we don’t spend it in the way that would purchase maximum satisfaction and life benefit.
*Human beings don’t fit the standard assumptions of the Adam Smith model, the rational full-informed actor, they make mistakes, they’re cognitively imperfect, they have all sorts of self-control difficulties and other problems.
*Behavioral economics (Amos Tversky and Daniel Kahaneman)
*Darwinism VS Adam Smith
It’s not just our goal to be happy, that’s not what the brain’s purpose is in an evolutionary framework, it’s to get you to do the things that help get your stuff into the next round. And in most cases, brain makes you unhappy (hungry, thirsty,…)
*Hockey player: always skate without helmet, but if you allow them to vote, they agree to wear. If you take off helmet you get a competitive edge. Then everybody take off helmet, nobody has competitive edge.
*You’ve got to keep pace with what other spent just to achieve basic goals. It’s not envy, but the increase of bar. This is a basis for taxing the hell out of the rich.
Absolute Income vs. Relative Income
*Frank: Whether you can go to a better school depends on not your absolute income but your relative income.
Wolfers: Beauty of Aspen is more than enough to offset the pollution of all thses massive mansions on the hill that make me feel like the small poor guy in town.
Frank: dynamics. Although it seems terrible to move from Mexico to U.S., I’m going on a trajectory that’s going to lead me out of that low income.
Gilbert: local distribution rather than national distribution matters in happiness research.
Economic concept: Basically I don’t think this video talked about so much economic concepts. It’s primarily focusing on the relationship between income and happiness. Although they argued about relative income and absolute income, in the end they come to consensus.
Rhetorical questions:
1. If money doesn’t buy happiness, why do people bother to earn it?
2. Is the Egypt really an exception of Wolfers’ theory?
3. We are now living in a world where we can gather information from all over the globe. How could this development affect our concept of “relative” income?
My opinion:
I do agree with Wolfer about his argument against the Easterlin paradox. But the way Frank solve the problem as he mentioned, hamper the uplift of bar by taxing, really confuses me. He argued it’s good for the rich, since they don’t have to pay for the massive mansions or luxurious birthday parties, hence investing the money saved to new business. How can the rich feel good about this change? No body became rich just because they want money. Money doesn’t matters; it’s the products and service that money can provide matters. It is just that they WANT the massive mansions and luxurious parties encourages them to make money. If they don’t want to spend it, why will the billionaires bother to earn it? The second question is his suggestion that billionaires don’t become happier by getting rich. Yes, it is true the billionaire don’t get happier when he earned 1 buck but what if it’s 100 billion? They definitely become happier. Thus, what is true here is the richer you are, the higher you threshold value of happier is. Rich people need more money to gain marginal happiness than the poor.
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