Income and Happiness: A Theory

To my knowledge, there is very little evidence that shows that happiness increases with income. The evidence tends be the following:

1. People in rich countries are not happier than people in poor countries.
2. There are lots of stories of people who have gotten rich and remained/become very troubled.
3. Within countries, there is a little-to-no relationship between income and happiness.
   
4. Economic growth doesn't make people happier in a given country.

Many take this as evidence that there is little to no relationship between income and happiness. Yet this is completely counterintuitive since everyone thinks they'd be better off if they had more money. Daniel Gilbert, in Stumbling on Happiness, explains this inconsistency by arguing that humans are terrible at making predictions. I think Gilbert's story is a subplot to the main story.

As an undergrad, a psychology professor told my class about an experiment in which someone in a bad mood was inserted into a room full of other people. The room was infected very soon afterwards. Even those who didn't interact with this person were adversely affected. The punchline? There are happiness externalities. Further, the negative happiness externalities are more powerful than the positive ones. It's easier to destroy happiness than to create it.

Also, think about the times you've tried to cheer up a friend who was feeling down. More often than not, I'd bet the night ends with you both in a bad mood. Also, think about the last time you walked through a rough area of a city. I bet, like most folks, you kept a solemn expression on your face. Think that didn't affect your mood?

This idea can explain why getting rich doesn't make people that much better off. They still have just as many poor (independently unhappy) folks around bringing their mood down.

This also explains why rich countries aren't happier than poor countries. Or why economic growth doesn't bring happiness. With economic growth comes greater inequality. That is, rich countries still have lots of poor (independently unhappy) people.

Is this idea consistent with the fact that relative income matters? I think so. Just because I want to have a rich happy neighbor doesn't mean that I don't want to be even richer than he is.


Related Links:

• Tyler Cowen discusses a recent debate on America's pursuit of happiness that included himself, Will Wilkinson, Jeffrey Sachs, and Betsey Stevenson. Hopefully it will be posted online soon.
• A 2006 JEP review of the happiness literature Kahneman and Krueger. Sorry, couldn't find one that's ungated.

Update: I didn't realize it at the time, but this post is totally influenced by Malcolm Gladwell's The Tipping Point which I had just barely started reading the night before. Now that I'm further in the book, the influence is obvious.

Bad Bias: Handwriting and Student Evaluation

While I'm not as huge a propononent of overcoming bias as these folks, I think this case deserves wider recognition and some action....

There have been a ton of studies going way back (to at least 1927) that show student handwriting impacts teacher's evaluation of their work. To me, the most obvious explanation for this phenomenon is that good handwriting is a signal of intelligence (or high achievement) which teachers use as a shortcut to evaluate the work.

It is potentially very easy to rule out this explanation. If handwriting is not related to intelligence or school performance as measured by a computerized test, then we can rule out the above explanation. Of course, if it is related to these measures, it doesn't mean we can rule out competing hypotheses that may play a role in the story.

As far as competing hypotheses are concerned, it's possible that good handwriting signals something else (or something more) than intelligence or high achievement. Based on my experience grading plenty of university-level homework and exams, the most likely candidate is gender and, to a lesser degree, race. That is, female and Asian students tend to have the nicest handwriting. So one possible explanation is that teacher's behavior is biased by gender and/or racial attitudes.

Regardless of what exactly is driving the bias, the costs are potentially severe. In addition to the possibility that this bias can affect a child every time he/she turns in a piece of handwritten work is the fact that the single most important test that most students ever take is also subject to the bias. The SAT is supposed to be a great measure of ability because it's standardized and because the scores are objective. But how can these tests (in which cursive essays score higher than printed essays) be truly objective while maintaining a handwritten writing section?

What does all this mean for you? You should put effort into improving your child's handwriting. This is unfortunate because it really seems like a waste of time. (That is, it's unlikely to improve their real productivity as adults.)

What does all this mean for us? Given that this problem has been well known for so long, it's a wonder that no direct efforts have been made to deal with it (that I know of.) Perhaps remedies weren't so easy when a lot of this research was done in the 70s and 80s. In any case, today there are a number of low cost measures that can be taken immediately to mitigate the problem. First, we can spread the word about the bias and commit to not succumbing to it ourselves. Second, student evaluation can be more focused on multiple choice type questions. (Cheer on fellow TAs!) Of course, the extent to which multiple choice questions can test understanding is limited. For this reason, term papers (in which the identity of the students are masked prior to evaluation) are a good option. Fully computerized work by students seems to be the ultimate solution--perhaps this is coming anyways.

As far as research goes, as I said before, much work has been done on this topic. At the same time, based on the limited amount of reading I've done, the quality leaves much to be desired. Here's the experiment I'd run:

1. Have a collection of students write a page of random words.
2. Give students an answer to a question and have them write it in their own handwriting.
3. Randomly assign samples from #2 to teachers to evaluate.
4. Randomly assign samples from #1 to teachers. Have them evaluate the quality of handwriting on a 1-10 scale. Also have them evaluate how confident they are that the sample is from a boy/girl on a 1-10 scale.
5. Make sure to collect demographic data on students and teachers.

There are two main innovations of this experimental design. First, the evaluation of the handwriting quality is separated from the evaluation of the "work." Second, and more importantly, is obtaining data on the teachers impression of the child's sex. With this data we could to separate the sex signal from the handwriting signal. And we could also test the initial hypothesis I posed above (by collecting data on the kids prior academic achievement.)

Too bad this would probably be a lot of work. Anyone want want to do the heavy lifting?

More discrimination in sports

This time in baseball. Very much looking forward to reading the whole paper. The Sports Economist tips us to the main results from the paper's FAQs.

1. What are the main results of the study?
There are three. First, umpires are more likely to call strikes for pitchers who share their race/ethnicity. The second result is an extension of the first: Umpires are more likely to express a preference for their own race/ethnicity only when their behavior is less closely scrutinized: 1) in parks where QuesTec (a computerized system set up to monitor and review an umpire’s ball and strike calls) is not installed, 2) in poorly attended games, and 3) on pitches where the umpire’s call cannot determine the outcome of the at-bat. Finally, game outcomes are influenced by the race/ethnicity match between starting pitchers and home-plate umpires. Home teams are more (less) likely to win a game when their starting pitcher and home plate umpire have the same (a different) race/ethnicity.

I don't doubt that there may be discrimination in MLB. At the same time, I worry about publication bias. I mean, with this study and the NBA study, it really leads you to believe that racism probably pervades all of sports officiating. That's two out of two, right? (Actually, neither are published in a journal yet but both have received considerable attention--you know what I mean.) I'm sure there are more studies on the way, for the NFL at the very least. Someone should do a comprehensive study of soccer leagues as well since so many countries have leagues--it would be interesting to see how the results differ across countries and continents. In any case, hopefully we'll hear about such papers regardless of the result.