The market and the pursuit of happiness

Abstract

r l • h e market doesn't make us happy--or at least not appy enough. That, at any rate, is the complaint of the British economist Lord Richard Layard, whose Happiness: Lessons from a New Science, is only one of a number of recent contributions to the burgeoning field of "happiness economics." Taking as their point of departure the observation that self-reported happiness or "subjective well being" seems not to have appreciated markedly in the principal Western countries over the past fifty years, despite steady gains in income, Layard and company advocate infusing classical economics with a strong dose of contemporary psychology to produce happier marginal returns. "Smithian laissez-faire is not sufficient to achieve [the greatest happinessl," Layard observes, adding that "we need a fundamental reform: we have to implant the substantive findings of psychology into the framework of economics." From the new science of positive (or hedonic) psychology--the study of what makes human beings happy, not sad--Layard and others believe they can draw a relatively precise picture of what the Nobel Laureate in economics Daniel Kahneman calls "objective happiness," isolating the basic sources and indicators of positive affect or mood. With this information in hand, the task of the policymaker is apparently clear. "Happiness should become the goal of policy," Layard writes, "and the progress of national happiness should be measured and analysed as closely as the growth of GNP." What the tiny mountain kingdom of Bhutan has already adopted as its basic social indicator----GNH (Gross National Happiness), as opposed to GNP--should now be embraced by the West. The claim that happiness can be managed scientifically, of course, is hardly new. It dates back at least as far as the early eighteenth century, when the Scottish moralist Frances Hutcheson ventured an "attempt to introduce a mathematical calculation in subjects of morality." The ridicule that followed his preliminary efforts did nothing to prevent Jeremy Bentham, decades later, from speaking similarly of "applying arithmetical calculation to the elements of happiness," while proposing his infamous "felicific calculus" to crunch the numbers of social welfare. Despite his failure to solve the happiness equation--and that of many others ever since--the quest continues unabated. Layard, who, in fact, presents himself as a Neo-Benthamite, is merely the most recent in a long line of social scientists who have dreamed of legislating happincss. This long search for the philosopher's stone of objective happiness should give us pause in accepting too hastily the findings of the new economics of felicity. But at the same time, the long history of criticism of the market on the grounds of its failure to promote happiness should also make us sensitive to l,ayard's critique. For his reservations, like his quest itself, are hardly without precedent. Well before the birth of modern commercial societies in the late seventeenth and eighteenth centuries, skeptics were already decrying the unhappy consequences of market activity. Whereas Christians and neo-classicists worried about the corrupting influence of lucre and trade, classical republicans argued that luxury and commerce sapped moral virtue--with similarly destructive results. For his part, Jean-Jacques Rousseau brought together elements of both these traditions in the mid-eighteenth century to mount an innovative critique of the unhappy consequences of commercial society. "In the midst of so much industry, arts, luxury, and magnificence," he observed in the Second Discourse, the Discourse on the Origin and Foundations of Inequality Among Men (1754), "we daily deplore human miseries, and we find the burden of our existence rather hard to bear with all the ills that weigh it down." A principal source of this predicament, Rousseau argued, was the social pressure imposed on individuals in commercial society to yearn for ever more. Continually comparing ourselves to others--and striving always to outdo them--we yearned inauthentically, developing needs and desires that ranged far beyond our true sources of satisfaction. Once a society had reached that stage of development, Rousseau explained in an early draft of the Social Contract, the choice was