The Myth of Californian Happiness
By Bryan Caplan
Last week, Jeff Ely remarked:
The underlying problem here is that California is simply a beautiful
place to live. It’s not just the climate, or the people, or the
geography. It’s that something floating around in the air that just
makes you happy all the time you are there.
This inspired me to track down and finally read David Schkade and Daniel Kahneman’s classic paper, “Does Living in California Make People Happy?” (Psychological Science 1998). Key findings:
- Surveyed students from California and the Midwest had virtually identical overall happiness.
- Both groups believed that people like them would be happier living in California.
- Californians were much happier with their weather, but both groups vastly overestimated the effect of weather on overall happiness.
Schkade and Kahneman argue that their paper captures a more general mistake – “focusing illusion”:
[I]t is difficult or impossible to simultaneously allocate appropriate weights to considerations that are at the focus of attention and to considerations that are currently in the background.
In this instance:
[R]elative advantages of California (or disadvantages of the Midwest) loom large when a resident of one region considers the possibility of life in the other. When people answer a question about their own life satisfaction, however, their attention is focused on more central aspects of life. An observer’s failure to anticipate this shift of attention in the person experiencing the event is a focusing illusion. We predict similar effects for any determinant of life satisfaction, which depends on so many factors that focusing attention on any one of them will inevitably cause an exaggeration of its impact.
Schkade and Kahneman don’t mention that standard econ has a much simpler explanation for their findings: Compensating differentials. The more pleasant the location, the higher the cost of living; in equilibrium, real estate prices have to make the marginal resident indifferent between California and Ohio. Of course, econ’s simpler answer might be wrong, but I wish they’d addressed it.