Why So Sad, Cobber?

David Blanchflower (Dartmouth) and Andrew Oswald (Warwick) have a new NBER working paper out on happiness. It’s entitled "Happiness and the Human Development Index: The Paradox of Australia", and the abstract reads:

According to the well-being measure known as the U.N. Human Development Index, Australia now ranks 3rd in the world and higher than all other English-speaking nations. This paper questions that assessment. It reviews work on the economics of happiness, considers implications for policymakers, and explores where Australia lies in international subjective well-being rankings. Using new data on approximately 50,000 randomly sampled individuals from 35 nations, the paper shows that Australians have some of the lowest levels of job satisfaction in the world. Moreover, among the sub-sample of English-speaking nations, where a common language should help subjective measures to be reliable, Australia performs poorly on a range of happiness indicators. The paper discusses this paradox. Our purpose is not to reject HDI methods, but rather to argue that much remains to be understood in this area.

Unfortunately, the authors don’t really discuss the paradox in the paper – they just lay out the bare facts. Since they equate happiness with wellbeing (what economists call "utility"), they don’t touch on one possible explanation – that for Australians, happiness may simply not be a very good measure of wellbeing.

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3 Responses to Why So Sad, Cobber?

  1. Christine says:

    Definitely right that the paper is almost purely descriptive and does little to explain why we should even care about the ‘paradox’. They do, however, highlight job dissatisfaction as the main problem for Australians. Assuming they’ve managed to control for job characteristics effectively (which they tried to do – not sure whether they really should have or not), that means that if you put a person in Canada and a person into Australia into much the same job, the Australian would report themselves as being less satisfied with their job.

    Generally, my attitude to this would be who cares? But let’s suppose that it actually means something important. Here’s a ‘theory’ – job satisfaction probably has a lot to do with opportunity costs. The average Canadian looks out their office window and thinks “No way do I want to be out there”, while the average Australian thinks “I wish I was at the beach, I hate having to be here”. Though perhaps the position may be somewhat reversed for construction workers during respective wintertimes ….

  2. Andrew Leigh says:

    Christine, that’s a very cool theory. Much of what I’ve seen about happiness indicates that people’s expectations adjust to their environment. But perhaps with a difference this stark, that isn’t true.

    Another factor is that according to the OECD, our workers work more hours per year than any other rich country.

  3. gringo says:

    I think that you are right on the happiness not equating to wellbeing. To me it looks like they are not comparing the same things. Blanchflower and Oswald say that the HDI is “a score that amalgamates three indicators: lifespan, educational attainment and adjusted real income”. They then compare this arbitrarily weighted index of these values (the HDI) with a series of logits that have happiness, family satisfaction and job satisfaction respectively, as dependent variables (or that’s what it looks like, anyway).

    So … we might be living longer, have reasonable income levels and and be relatively well educated (according to the HDI) and at the same time have relatively low levels of job satisfaction, family satisfaction and general happiness at teh same time. It doesn’t appear that there is really any paradox.

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