Sunday, February 25, 2007

Too Busy Not to Play: How Children Affect People’s Happiness

Last week I commented on the recent Unicef report regarding the well-being of children in 21 rich countries. As I did more research on the topic of children’s well-being I found two Blogs that provide insight on the effect of having children and of child-like behavior on adults’ well-being. In her Blog titled the Happiness Project, Gretchen Rubin discusses the impact of having children on people’s happiness. She insists that having children increases happiness although studies done by psychologist Daniel Gilbert prove otherwise. Alexander Kjerulf presents in his Blog the Chief Happiness Officer an interview with Bernie DeKoven, the author of the Well-Played Game. DeKoven suggests that adopting a playful, child-like attitude in the workplace makes people happier. My comments on these entries can be found below.

Surveys of subjective well-being ask people to rate their happiness on a scale. Thus happiness is usually measured only by the first two elements in Ms. Rubin’s formula--“feeling good” and “feeling bad”-- as ongoing states of general well-being. Ms. Rubin, however, treats the two as transient emotions and suggests that there is a third component—“feeling right”—which influences people’s happiness. As an example she states, “You might choose to have a bad commute in order to live in a neighborhood with good schools […] but it’s worth it, because you feel right about your trade-off.” Feeling right seems to improve the parent’s well-being. But if one analyzes the parent’s behavior using utility theory, the effect of “feeling right” on happiness is no longer a unique force; instead it is included in the effect of “feeling good” about the decision. When the parent must choose between the good school and the good commute, he evaluates, though perhaps unconsciously, the amount of satisfaction he will derive from each option. His decision implies that the chosen option offers more utility or happiness. So Ms. Rubin’s conclusions differ from those of earlier studies only because she uses different definitions of “feeling good” and “feeling bad.”

Throughout the interview Mr. DeKoven stresses that “play” and “fun” are important in the workplace. He establishes a positive relationship between playing and happiness in stating that playing “makes us happier because it allows us to have fun together” and “because we are most thoroughly ourselves when we are playing, because we experience our health, emotionally, physically, socially.” These explanations seem logical, but Mr. DeKoven does not provide any statistical evidence in his interview to support his theory. Regression results showing the relationship between the amounts of time spent playing in the workplace and the workers’ job satisfaction, for instance, would perhaps make his argument clearer and more convincing. In addition, Mr. DeKoven only presents the advantages of playing and having fun at work from the employees’ point of view. It is not clear if the workers’ job satisfaction and their productivity are positively-related. Are happy workers indeed better workers? If there is empirical evidence showing that they are, then employers have an incentive to support “play” and “fun.”

Tuesday, February 20, 2007

Beyond the Number of Toys: Measuring Children's Welfare

In the past few decades the American youth have been setting the trends in the world, and young people in other countries try to imitate their American counterparts in every way. They listen to American music, wear American clothing, and eat American fast food. It is widely accepted that the American way of life is “cool.” But behind the glamorous billboards, are Americans actually happier than everyone else? Not really, according to a report published by Unicef last week. An article in the Economist titled “Suffer the Children” states that the report compares the well-being of young people in 21 rich countries, and concluded that British and American youths endure the worst quality of life of any. In contrast, North European children, especially the Nordics, apparently have a lovely time.” Such information is shocking and deserves attention from the government and the American people. However the measures used as indicators of the children’s welfare should be examined in depth to ensure that the conclusions of the report are well-founded.

The chart on the right shows that the Unicef report uses both objective and subjective measures as indicators of children’s wellbeing. These cross-sectional results are determined by life circumstances, such as education and family income, and the children’s self-reported levels of happiness. Some doubt the validity of the report and argue that the subjective measures are prone to cultural bias and the objective measures present an incomplete picture of the children’s quality of life. Further study of empirical data is needed in order to test the merit of these measures.

The effect of the objective measures can be determined by studying the change in children’s subjective wellbeing by allowing only one factor to vary at a time while holding all other circumstances constant. The measures that do not make statistically significant differences in children’s happiness should be eliminated. And as time progresses, relevant new measures should be added to reflect changes in children’s lives.

The validity and consistency of subjective measures can also be tested in different ways. Psychologist Ed Diener concludes from his studies that “self-reports of subjective well-being have substantial validity, as demonstrated by their convergence with other types of measures such as informant reports and biological measures of well-being.” For instance, by measuring a child’s brain waves, one can compare his neural activity to those corresponding to positive and negative emotions; and by asking the child’s parents, teachers, and friends to rate his happiness, one can observe if the child’s appeared well-being is consistent with his self-reported results. Regarding the consistency of the survey results with respect to time change, Diener states, “although certain response artifacts such as a respondent’s current mood can bias the reports, we have found that these usually pose little threat to validity.” To test this claim, the same survey should be given to a child multiple times to see whether his answers depend on transient emotions. If Unicef includes a section that presents the empirical evidence which reflect the validity of the measurements used to evaluate happiness in the report, the conclusions would be more clear and convincing.

The Economist suggests that “the report could cast more light […] on how child welfare is changing over time.” Collecting and analyzing time series data is very important in the study of well-being because it is hard to compare the survey results gathered at one point in time from different countries. Self-reported level of happiness can be affected by social and cultural expectations. In some countries, for example, the people are encouraged to be modest, and their welfare may contain a downward bias as a result. Making accurate generalized conclusions from cross-sectional data thus becomes especially difficult. On the other hand, a panel study that follows the same group of survey participants or at least a synthetic panel study featuring the same birth cohort in a country would demonstrate how subjective wellbeing changes as the group ages. This causes some objective circumstances such as cultural background to be controlled, which isolates the effect of time-variant variables, such as employment rate and family income. As the Unicef report indicates, the children’s wellbeing and government spending are positively related. Perhaps the American government should offer more funding to support the study of children’s welfare over an extended period of time and the search for ways to improve their wellbeing.

Sunday, February 11, 2007

Seeking the True Promise: the Difficulty of Forming Cartels

My last two posts were inspired by recent news articles in the field of economics. While newspapers and magazines are important sources of reports on current events, blogs also provide interesting and valuable information that enhances our understanding of the world around us. For the general public who are uninterested in studying data and figures, reading economic news can be boring or overwhelming. Some authorities in the field, however, make enlightening, witty, and engaging comments in their blogs, which encourage people to examine some of the major issues. In my time of research this week I explored blogs written by university professors and economists and found two posts to be especially informative and humorous. One of the posts discusses the difficulties of establishing collusion in the classroom; the other mentions that the reluctance to cooperate in the international community hinders efforts to prevent global warming. The permanent links to the posts as well as my own comments can be found below.

As a student of economics I have witnessed many attempts made by my classmates to collectively cut back studying. Unfortunately all of the collusion efforts, as predicted by Professor Caplan, ended in failure. When my high school economics teacher encouraged the class to organize a boycott against his final, no one believed that he was serious, for we all thought forming a cartel would be easy—at least easier than studying for a cumulative exam. Had we understood the four big reasons, we would not haven been so optimistic. I must admit that I am a “hold-out,” always reluctant to participate in the collusion because I love studying economics. I act as a consumer deriving satisfaction from my education rather than as a firm trying to maintain high price, or high grade in this case. My level of utility does not depend solely on my grade in a positive and linear relationship; instead I have indifference curves mapped on two axes—“economic wisdom accumulated” and “points received on the exam.” I would enjoy the same level of utility if I learn the material but fail the exam or if I learn nothing but receive an A. If I study and earn an A as a result, however, my indifference curve and thus my level of happiness would be much higher than under the two previous conditions. Of course not all of my classmates share my interest. So I agree that heterogeneity is an important cause of the failure of collusion in the classroom.

Permanent Link: EconLog

Dr. Roberts’s argument treats China and the U.S. as two firms in a cartel trying to maintain low level of pollution. If both countries honor the Kyoto treaty, they benefit from the slowing down of global warming. Because reducing greenhouse gas emission leads to a decrease of output, however, if one country keeps its promise while the other continues to pollute, the GDP of the latter would increase at the cost of that of the former. Dr. Roberts predicts that China will not reduce gas emission and suggests that the U.S. should not do so either. But according to Qin Dahe, who co-chairs the Chinese intergovernmental panel on climate change (IPCC) working group, China has set “the goal of cutting its energy consumption by 20 percent per unit of GDP in the period from 2006 to 2010” and has already “reduced emissions by some 800 million tons of coal equivalent from 1991 to 2005.” Qin also states that China’s “forests, grasslands and natural reserves have helped absorb another 3.06 billion tons.” If these data are accurate, the U.S. should, perhaps, make an effort to cut back emission as well. After all, assuming the worst from the partner firm is not the best attitude with which to start collusion.

Permanent Link: Cafe Hayek

Sunday, February 4, 2007

More Is Not Always Better: Examining Materialism Among the Young

Over the past few decades the United States has enjoyed an annual national income growth rate of more than two percent. As a result young people today generally enjoy a much more comfortable lifestyle than their parents did twenty years ago. Televisions, cell phones, personal computers, iPods (pictured below)—products that were once luxurious or even nonexistent—have become easily accessible. And with the blessing of affluence came confusion, anxiety, even frustration. Responses to the Roper surveys show that cohorts born later consider more goods to be “necessary parts of a good life” than those born earlier. This explains why high school and college students have become more and more materialistic, setting financial security as their primary goal in life. According to CNN news,UCLA's annual survey of college freshman […] found that nearly three-quarters of those surveyed in 2006 thought it was essential or very important to be ‘very well-off financially.’” The number, “compare[d] with 62.5 percent who said the same in 1980 and 42 percent in 1966, the first year the survey was done,” is astonishing. This obsession with wealth leads to the expectation and the pressure to earn high income, as well as the burden of more college loans. “No wonder we hear so many 20somethings talking about the ‘quarter-life crisis,’” says psychologist Jean Twenge.

It is natural to assume that accumulating more possessions will lead to a better, happier life; but the results of studies done by economists prove otherwise. Robert Frank, a professor of economics at Cornell University , argues, “We need ways to evaluate how we’re doing and make judgments about how best to adapt to changing environments. Such judgments almost always depend heavily on how we’re doing relative to others in the same local environment” (1). Therefore satisfaction with life is influenced by social comparison, a process in which the person compares his or her own situation to that of other people. For example, a student who does not own an iPod may not feel any desire to buy one until all his friends own an iPod; then he suddenly feels miserable because compared to his friends he is “worse-off.” On the other hand, Anke Zimmermann (pictured to the right) concludes after examining time series data from the Roper surveys, “On average, an individual’s wellbeing does not improve despite increases in income, because rising goods aspirations offset the effect of rising.” Thus hedonic adaptation, or getting used to one’s experience, is yet another force affecting people’s happiness. For instance, the excitement of having a new cell phone or a new car wears off after a while, leaving the once- proud owner bored and in search of a better product.

Materialism among the youth is especially alarming and deserving of public attention because attitude toward wealth affects decisions regarding education, career, and family life. The American Freshman National Norms for Fall 2006 how that students attending their second choice institutions listed “being offered financial aid” and “the cost of the college” as two of the top five important reasons influencing their college choice (8). Even before entering the work force, many students are already concerned about or even burdened by the cost of their education. The importance of financial concern in the process of decision-making is also likely to be reflected in the students’ choice of jobs after college. Since earning high income and buying luxury goods do not guarantee long-term high life satisfaction, selecting a job solely based on the amount written on the paycheck would be unwise. Instead one should consider the intrinsic elements of the job, such as the freedom to use creativity and to work independently. While the media are presenting wealth as the key to happiness, educators have the responsibility to inform young people of the limited effects of income on life satisfaction. Happiness and its sources should be introduced in high school or even in middle school, before students start making decisions about higher education or work. Like civics and economics, subjective wellbeing deserves to be a required course. Outside the classroom the spread of information can be promoted through providing welfare study data and results in school career planning centers and academic advisors’ offices. Even basic understanding of the topic can shape our youth into more responsible consumers and better policy makers in the future.