… and the Pursuit of Happiness - Institute of Economic Affairs

… and the pursuit of happiness
are more equal countries happier?
When members of our reference group earn more and acquire
new possessions, they show us that the standard of living we once
thought was reserved for the rich is now within reach of people
like ourselves.
That is part of it. The other part is straightforward ‘status
anxiety’. Perhaps the most famous behavioural experiment in this
field involved students at the Harvard School of Public Health
answering questions about relative and absolute income. Asked
whether they would prefer to earn $50,000 when others earned
half as much, or $100,000 when others earned twice as much,
around half of them said they would take the lower wage over the
lower status (Solnick and Hemenway, 1998).
This striking finding has been widely cited as proof of the
overwhelming importance of relative income in modern society.
It features prominently in Robert H. Frank’s Luxury Fever as well
as in Happiness and The Spirit Level. In the latter, it is cited as proof
that ‘people’s desire for more income is really a desire for higher
status’ (Wilkinson and Pickett, 2009: 225).
This is a far-reaching conclusion to draw from such slim
evidence. Since most of the respondents were students, few would
have earned even $50,000 in real life and the questionnaire might
have seemed a hypothetical test of morals. Those opting for the
lower figure may have been expressing a distaste for materialism.
Tellingly, members of staff were less likely to express a preference
for sacrificing money for status.
A subsequent study by the same researchers produced some
interesting results. When the survey turned to non-financial
concerns, 18 per cent of students claimed to be in favour of having
two ‘unpleasant dental procedures’ rather than just one, so long
as other people had to endure four visits to the dentist instead of
none. Thirteen per cent said they would accept a higher infant
mortality rate rather than see other countries have fewer babies
die: these, I repeat, were students of public health. When given
the option of being ill for six days while others were sick for two
days, 11 per cent of respondents claimed a preference for being
ill for nine days so long as others were sick for twelve days. The
same percentage said they would rather have their cars broken
into more often and suffer worse air pollution so long as crime
and pollution were even worse for other people (Solnick and
Hemenway, 2005).
A worldly interpretation of these results would be that a significant
minority of respondents were not taking the experiment
altogether seriously, or did not understand the questions, or else
had a profoundly strange outlook on life. Whatever the truth, it is
clear that the battle for status involves much more than income.
If people are prepared to undergo avoidable root canal surgery
to move up a perceived pecking order, it is reasonable to assume
they will compete over almost anything. While relative income
does matter, all sorts of other relative values matter just as much.
By focusing so relentlessly on money, the self-proclaimed egalitarians
ignore the innate human desire for respect and status that
would be no less powerful if material pleasures did not exist.
Can we deal with ‘income envy’ anyway?
Even if we make the false assumption that income envy is one of
the main determinants of unhappiness in modern society, what
is to be done? The significant thing about relative income, as the
theorists never fail to mention, is not the possessions it affords,
but the status it confers. It is not the size of the differential which
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