We researchers are always trying to measure happiness. Actually we prefer to call it satisfaction. Are our customers satisfied? How satisfied are they? What makes them satisfied? What makes them loyal?
So it is in business. Once you have satisfied your customer and a achieved a satisfaction score of 8 to 9 out of 10, you can throw a lot more things at them to make them happier but it will be a hard task. They are about as happy as you can make them. In fact, the more you do, the more they will expect beyond a certain point. The name of the game then becomes keeping them happy and keeping them loyal; locking them in to your way of doing business if you can.
There is lots to think about in this article and lots of links to the customer satisfaction work we researchers carry out.
Why progressive taxation is not the route to happiness
By Martin Wolf
Financial Times: June 6 2007
Happiness is fashionable these days. Yet should we accept the common view that the new “science” of happiness has cemented the superiority of Scandinavian social democracy over Anglo-Saxon liberalism? The answer is: No. The results are just as destructive to the pious certainties of “progressives” as to those of their opponents.
Richard Layard of the London School of Economics and the House of Lords produced an elegant, brief and influential exposition of the new doctrine two years ago. That doctrine itself, as he explains, is a modern reincarnation of Jeremy Bentham’s utilitarianism*.
What is Professor Layard arguing? First, happiness is the sole goal of human activity. Second, happiness is measurable. Third, we know what makes people happy and unhappy. Finally, policy should aim at achieving the greatest happiness. We will then realise that “there is more to life than prosperity and freedom”.
Happiness is the right goal, he argues, “because it is our overall motivational device”. Moreover, “unlike all other goods, it is self-evidently good”. Yet if aggregate happiness could be maximised at the expense of a minority, should we do it? If machine or drug-induced illusions could make people happy, should we force people to consume them? If we could genetically engineer human beings to be happier, should we do so? The new utilitarianism cannot dispose of such questions.
Yet whatever one’s views on utilitarianism as a philosophy or happiness as an exact science, one can still address the broad conclusions of this analysis.
Its most important negative conclusion is that, beyond a certain threshold, extra wealth does not make us any happier. In any society, richer people tend to be happier than poorer ones, but the proportion of people saying they are very happy does not seem to rise over time. The explanation for this is partly that relative position matters and partly that we become used to prosperity.
The positive conclusion is that we know what does make us happy: good family relationships; a sound financial situation, work, a trustworthy community, freedom from chronic pain and mental illness, and personal liberty. Correspondingly, just six factors explain 80 per cent of the variation in reported happiness: divorce, unemployment, the level of trust in other members of society, membership of non-religious organisations, the quality of government, and belief in God.
Consider these points more closely. First, the results do not show that generous welfare states do better than less generous ones: Swedes and Americans seem to be equally happy; the Irish and British are happier than the French, Germans, Italians, Spanish and Japanese. The only reasonable conclusion from the evidence is that prosperous liberal democracies tend to be happier than other societies.
Second, the results do not merely show that a rising gross national product may fail to raise happiness. They also show that increases in the size of the welfare state, improvements in life expectancy and other measures of health, and the liberation of women from household drudgery and couples from the prisons of unhappy marriage have also failed to increase reported happiness.
What is under challenge, then, is modernity itself, not a competitive market economy alone. Prof Layard makes that clear in his comments on the decline of community and the family and the rise of individualism, crime and television. A conservative could read this book, agree with the analysis and reach policy conclusions that are almost the polar opposite of those stressed by a good social democrat, such as Prof Layard.
Prof Layard’s conclusions are, however, rather different from those of such a putative conservative: tame the rat race by taxing excessive effort; increase economic security; and promote mental health through cognitive therapy and modern drugs.
If cognitive therapy and drugs can treat severe mental illness effectively, they seem worth promoting. For the economist, then, it is the economic policies that are most questionable. Prof Layard argues that higher income is a route to higher status. But higher status for some is always lower status for others. So this is what economists call an “externality”. The externality should be taxed, just like any other form of “pollution”.
One answer to that is that effort is already taxed quite heavily in western societies. Another is that if monetary status is discouraged, people will seek status on other and often more damaging dimensions, power being a particularly dangerous example. Yet another answer is that it is far from obvious why differences in status become increasingly disturbing as income differentials increase. The fact that someone is one’s boss or has a more prestigious position in society is a big enough difference on its own.
Furthermore, how far should we pursue this opposition to status? Why not abolish all indications of superior performance, from classed degrees to Nobel prizes? Finally, is it not evident that the search for status also has positive externalities - innovations of all kinds, for example?
In all, these arguments for more progressive taxation seem weak. This is less true of what Prof Layard says on economic security. While policies that raise unemployment are harmful to happiness under any plausible assumptions, there is no reason to abandon the welfare state’s most important achievements: universal health insurance, state-funded education and security in old age.
Where, then, does this new line of analysis take us? Personally, I find its philosophical and scientific underpinnings far from persuasive. But even if one goes along with it, the implications for policy seem far more ambiguous than social democrats believe. The findings are an assault on modernity itself, not just the forms of modernity the left dislikes.
I also see little here to undermine core principles of classical liberalism: people should be largely free to make their own choices, mindful of their obligations to others, except where those choices are harmful; gross domestic product should not be the overriding objective of policy; a big effort should be made to eliminate extreme poverty from the world; and the state should focus on remedying harms, while avoiding adding to them. But governments cannot make us happy. Happiness is something we have to pursue - and perhaps never find - for ourselves.
Happiness: Lessons from a New Science, Penguin, 2005
