Freedom for Happiness
Mr. Powdthavee deserves credit for concluding his book with some of
the big questions: “Is happiness overrated?” “Should government force
people to be happy?” But he neglects the many ways in which government
could sharply increase happiness by intervening less.
For instance, happiness research makes a powerful case against
European-style labor-market regulation. For most economists, the effect
on worker well-being is unclear. On the one hand, regulation boosts
wages; on the other, it increases the probability that you will have no
wages at all. From the standpoint of a happiness researcher, however,
this is a no-brainer. A small increase in wages has but a small and
ephemeral effect on happiness. A small increase in unemployment, by
contrast, has a massive and–unlike most other factors–durable effect on
happiness. Supposedly “humane” regulations to boost workers’ incomes
have a dire cost in terms of human happiness.
At the other end of the political spectrum, consider immigration.
The most pessimistic researchers find that decades of immigration have
depressed native wages by about 5%, total. The effect of immigration on
Third World migrants’ wages, by contrast, is massive: One recent paper
finds that allowing a Haitian to take a low-skill job in the U.S.
increases his earnings 10 times. If you care about happiness, the
implication is clear: Government should get out of the way.
The final factoid comes, of course, from Clemens, Montenegro, and Pritchett’s “The Place Premium.” Unfortunate my full-length shout-out didn’t make the final cut.