Category Archives: Happiness

Discounting and Self-Control

I’m posting up an essay on “Discounting and Self-Control” (pdf). The essay, which I haven’t really touched for over a year, is still in its early stages but having lacked the time to do much on it over the last year, and going on the motto of “release early, release often”, I’m posting it up as a form of alpha version.

… then must you speak
Of one that loved not wisely, but too well;
Of one not easily jealous, but, being wrought,
Perplex’d in the extreme; of one whose hand,
Like the base Judean, threw a pearl away
Richer than all his tribe; …

Othello, The Moor of Venice


An agent’s intertemporal choices depend on a variety of factors, most prominently, their valuation of future payoffs as encapsulated in a discount function. However, it is also clear that factors such as self-control may also play an important role, and given the similarity of impact, a confouding one. We explore the literature on this issue as well as examining what occurs when those with higher time-preference (whether arising from discounting or self-control) also enjoy their consumption more.


The exercise of will, especially in the form of self-control, has long been recognized as central to human existence, experience, and morality. Over the last few decades there has been increasing interest in the issue from a scientific perspective. At the same time, it has also long been appreciated that humans (and other animals) make trade-offs between the present and the future — as well as between different points in the future, and that events taking place closer to the present are given greater weight than those which are more distant. Traditionally, at least in economics, this type of behaviour has been subsumed under the heading of discounting.

Both of these factors, self-control and discounting, affect behaviour, and choices, in relation to outcomes which do not (all) take place in the present. However they are distinct. Specifically, consider a very simple case of two outcomes A and B where B occurs after A (for example, A might be one ice cream today and B an ice cream and a doughnut tomorrow). Self-control issues arise where one prefers B over A but is unable to execute on this preference and therefore actually takes (‘chooses’) A. By contrast, in the discounting case A is actually preferred over B and therefore is chosen (freely) by the decision maker.

It would seem important to keep these two aspects of decision making clearly separated. While lack of ‘self-control’ is usually seen as disadvantageous and a reason for adopting various ‘commitment strategies’ — for example, by opting to remove various items from the choice set (having no cigarettes in the house) — the simple preference for the present over the future incorporated in the discounting model would seem to generate no such difficulties.

However, empirically it may prove rather difficult to do so. As shown by the simple example above the same observed ‘choice’ for A (one ice cream today) over B (ice cream plus doughnut tomorrow) can be the result of two very different processes. Thus if we only observe choices, and not the underlying preferences and/or the process by which the choice is arrived at, it may be impossible to distinguish the two.

It is perhaps for this reason that these distinct aspects are sometimes conflated. Consider, for example, Mischel et al 1989 which is entitled “Delay of Gratification in Children” and summarizes much of Mischel of pioneering work on this area. Mischel’s approach is clearly more oriented along the self-control aspect, and this is borne out in the types of experiments conducted (more on this below). Nevertheless they state (p.934) “The obtained concurrent associations [between treatments and delay] are extensive, indicating that such preferences reflect a meaningful dimension of individual differences, and point to some of the many determinants and correlates of decisions to delay (18).” Here the orientation towards self-control has become a general “decision to delay” and this is borne out by the associated footnote (18) which references related literature in other disciplines and is worth quoting in its entirety:

[… see full essay for more]

Theories of Contextual Judgement in Relation to Well-Being and Other Outcomes

I’ve just posted online a new paper on “Theories of Contextual Judgement in Relation to Well-Being and Other Outcomes”. This is a more a review-type effort and summarizes my thoughts (and reading of the existing literature) from the last year or so in relation to “relative” utility, status races and general contextual judgement/utility.


The paper presents an overview of existing theories on contextual judgement/utility situating them within a general framework. We consider the extent to which these theories are empirically distinguishable and apply them to some well-known economic questions such as the relation of happiness and the income distribution, status races and quitting.

Mindfulness-based Cognitive Therapy Can Help With Depression

A new paper has just come out in the Journal of Consulting and Clinical Psychology. Vol 76(6), Dec 2008, 966-978 entitled: Mindfulness-based cognitive therapy to prevent relapse in recurrent depression.

According to the abstract (hope to say more once I can actually get access to the pdf):

… This study asked if, among patients with recurrent depression who are treated with antidepressant medication (ADM), MBCT is comparable to treatment with maintenance ADM (m-ADM) in (a) depressive relapse prevention, (b) key secondary outcomes, and (c) cost effectiveness. The study design was a parallel 2-group randomized controlled trial comparing those on m-ADM (N = 62) with those receiving MBCT plus support to taper/discontinue antidepressants (N = 61). Relapse/recurrence rates over 15-month follow-ups in MBCT were 47%, compared with 60% in the m-ADM group … MBCT was more effective than m-ADM in reducing residual depressive symptoms and psychiatric comorbidity and in improving quality of life in the physical and psychological domains. … For patients treated with ADM, MBCT may provide an alternative approach for relapse prevention.

Buddhist Economics

The human problem of ‘scarce resources and unlimited wants’ is oft-posited as a primary motivation for studying economics. As this phrase makes clear, ‘wants’ (‘preferences’ to use the more usual terminology) are a central part of what we study, and the existence, and stability, of those ‘wants/preferences’ therefore merit serious consideration.1

Few of us have difficulty accepting the fundamental nature of our desire for food and shelter. However, many of us might have greater difficulties assigning the same fundamentality to the desire for a particular brand of designer perfume or a digital music player. In fact, it is unclear to what extent one can want what one has never known (or conceived of), and thus, while it is not difficult to imagine any human desiring food and shelter — especially when they are absent, it is hard to imagine a stone-age nomad, say, even being able to conceive of designer perfume or iPods (let alone feel their lack).

It is also telling that so many of the consumer goods, especially those away from the necessity end of the spectrum, appear to require active promotion to the public. Of course it is true, as economists are particularly fond of pointing out, that advertising has an informational component — simply letting you know about the existence and attributes of products. However, it is also hard to deny that advertising also has a substantial ‘persuasive’ component, operating either to create preferences or alter existing ones.

If so this has important implications. In particular, it strongly suggests that our wants aren’t simply given but are, at least to some extent, formed by our experience and choices.2 This raises some deep and important questions for economists to answer — questions with a major bearing on the state and direction of many modern societies. It also has some direct connections with one of the oldest, and most philosophical, of the world’s religious traditions: Buddhism. Central to Buddhist teaching are the Four Noble Truths. Succintly put these are, in order:3

  1. (Dukka — The Nature of Suffering) “Birth is suffering, aging is suffering, sickness is suffering, death is suffering, association with the unpleasant is suffering, dissociation from the pleasant is suffering, not to receive what one desires is suffering – in brief the five aggregates subject to grasping are suffering.”
  2. (Samudaya — The Origin of Suffering) “It is this craving (thirst) which produces re-becoming (rebirth) accompanied by passionate greed, and finding fresh delight now here, and now there, namely craving for sense pleasure, craving for existence and craving for non-existence (self-annihilation).”
  3. (Nirodha — The Cessation of Suffering) “It is the complete cessation of that very craving, giving it up, relinquishing it, liberating oneself from it, and detaching oneself from it.'”
  4. (Marga — The Path to Cessation of Suffering) “It is the Noble Eightfold Path, and nothing else, namely: right understanding, right thought, right speech, right action, right livelihood, right effort, right mindfulness and right concentration.”

Why is this teaching relevant here? First, observe a commonality: both economics and Buddhism takes unsatisfied ‘wants’ (or ‘cravings’) as a source of unhappiness. But how do go about solving this problem? Here economics and Buddhism part ways, and rather dramatically, with the Four Noble Truths presenting a path to the achievement of well-being which is almost diametrically opposite to that advocated by economics.

Specifically, the ‘economics’ approach, is based on taking preferences as given and focusing on generating the goods to satisfy them. By contrast, Buddhism sees ‘wants’ as ultimately unsatisfiable, and instead proposes that the way to well-being is not to satisfy them but to relinquish them — while some ‘cravings’ can be temporarily satisfied more will always be generated, moreover there some fundamental desires, such as the wish not to die, cannot be addressed in the material world.4

Put starkly: economic thought directs our energy and efforts to satisfying our wants / cravings, taking them as given, while Buddhism directs those self-same energies to altering our wants, and views most attempts to satisfy them by obtaining ever more ‘things’ as inevitably doomed to failure — in fact, actively counter-productive as more ‘cravings’ are generated by the very process of satisfaction (and attempting to satisfy them takes up our time and energy).

  1. It is interesting how the term ‘preference’ is studiously neutral, and almost anodyne in comparison with a term such as ‘want’, ‘desire’ or even ‘need’, each of which is a potential synonym. One might imagine, and this is simply conjecture, that the term was intentionally adopted in order to remove any overtone of judgement. After all, across most culture and over much of human history, the formation and satisfaction of ‘preferences’ has been a process laden with ethical, and religious, significance. 

  2. In economics jargon: preference are endogenous (i.e. determined within the system) rather than exogenous (fixed externally — e.g. by ‘nature’). The study of endogenous preferences is certainly not new. See for example the review of Bowles (1998) or the early incorporation of changeable preferences into the ‘traditional’ framework by Becker and Stigler (1977). 

  3. These translations of the Dhammacakkappavattana Sutta are taken from 

  4. At least, one might argue, not yet: one day, perhaps technology will even give us the ability to live forever either directly or via upload in silico. However, one senses that even then we will find new cravings and, even, to find our so long desired eternal life itself insufferable. 

ESRC Well-Being Research Workshop at the LSE

Last Friday I attended an ESRC Research Workshop on Well-Being held at the LSE. According to the blurb:

The time is ripe for a major expansion of well-being research in Britain – in conjunction with leading overseas colleagues. Among public policy-makers, there is an increasing desire to promote well-being and a need for evidence on what works to promote it. And among social scientists there is a new capacity to throw light on well-being: its causes and its effects. Worldwide, research on these topics has already demonstrated the scope for rapid and important advances in knowledge. But the scale of such research in Britain is far too small. This one-day workshop has been organised to explore the possible intellectual content of such a cooperative endeavour.

Some of the most prominent researchers in this area were in attendance to give an overview of current work and I took some ‘impressionistic’ notes which can be found below.

Well-being Research: the Way Forward by Daniel Kahnemann

  • Living and thinking about it
  • Attention
  • There are 2 selves
    • Experiencing self
    • Remembering/Score-keeping self
  • Used to think that experiencing self was what was important (Edgeworth)
  • Remembering self not very accurate — cites own research on pain for medical procedures
  • But now thinks remembering self is more important
    • Implicit in this is an acceptance that there are at least 2 distinct dimensions
  • Current well-being/happiness questions are problematic because they are mixed containing some experiencing self and some evaluative/remembering self
  • New, huge, dataset from Gallup is making a big difference
    • 1000 people polled a day with 40 questions on well-being
  • Ladder of Life question in Gallup measures ‘Life Evaluation’
  • Despite having different questions replicates existing results from DRM etc
  • Attention and ‘Focusing Illusion’
    • Norbert Schwarz study: how much pleasure do you get from your car
      • Reasonable correlation with car monetary value
    • Also asked: how much pleasure did you have in your commute this morning
      • Zero correlation with monetary value
    • How many dates did you have last month and how happy are you these days
      • Happy first, dating second no correlation in response
      • Reverse order: large correlation
    • Leads to errors in prediction since we know attention alters valuation
      • e.g. to predict pleasure/utility from car need to ask: how much enjoyment do I get from car when I do not think about it
      • How happy would you be if you moved to be the california
      • But this is mistaken [ed: is this not often taken into account as evidenced by phrase ‘always think the grass is greener’]
  • Gallup data: huge correlation with money
    • Remembered happiness: Money worries, health coverage, general health are main predictors
    • Experienced happiness: pain + social activities
    • Children: negative impact on general impact but when asked about children people are very positive — both views are correct
  • Easterlin hypothesis:
    • Some questioned this (Stevenson and Wolfers)
    • But focus on ladder of life question
    • Looking at positive/negative affect still find that within-group slope with income is steeper than across group/time effect (i.e. Easterlin hypothesis)

Income and happiness in developed countries by Steve Nickell

  • No obvious relationship on the ladder of life question
    • But cross-country regressions are pretty dubious (too many variables)
  • Time-series data
    • Happiness regressed on log and quadratic in log income plus controls — pretty good fit
    • Curvature for classic CES: y^{1-rho} get rho ~ 1.2 across a whole variety of countries (1.1 – 1.4)
    • Time series: happiness is pretty horizontal (in the US) though income risen lot (even taking account of dispersion)
    • Some reasonable support for relative income hypothesis
  • But really want panel data (deals with endogeneity)
    • Only one such panel: GSOEP (West Germany)
    • Regress happiness on log income, log reference income, controls (state,year,individual dummies etc)
    • Income alone: large +ve coefficient
    • Include relative income: income coefficient disappears

Income and the Evaluation of Life by Angus Deaton

  • Gallup’s World Poll
    • Why it’s great [ed: the value of having early access to proprietary data!]
  • Gallup result is very similar to the World Values Survey (His paper from last year — [ed] see my comments last year)
  • Could argue that steep and then flat but log sems to fit better
    • Difference here with Steve Nickell
  • Within country analysis
    • Collecting income data within country is hard particularly in poorer countries
    • Get figure of about 0.6 (effect of increase of 1 in log income on ladder)
  • What about Easterlin?
    • Does some analysis in the US and does not get relative income affects at all (with ladder question)
  • Suppose people do care about relative income. There are serious (‘ethical’) problems with a consumption tax or not worrying about GDP growth: you hurt the non-envious and help the envious

Questions on Preceding

  • My question:
    1. If focusing illusion is common across goods does it actually end up leading to bias in/incorrect choices
    2. Once we accept that attention has such large effects it poses difficult questions since it suggests that people’s preferences/enjoyment has a significant endogenous component.
  • Several on relative income
  • Replication across countries

Workshop on happiness research by Michael Marmot, Andrew Steptoe, and Jane Wardle

Michael Marmot

  • Health as a measure of well-being
  • 28 year gap in life-expectancy between poorest part of Glasgow (Galton – 54) and richest (Lenzie – 82)
  • Major wealth effects on health outcomes even though (e.g. in the UK) people have all got enough to have pretty good healthcare
    • Relative effects of income (status?) has a major impact on health
    • Relative position not relative income (income != status — at least not always)
  • Control for environment
    • Whitehall II study: look at poor physical health by deprived living area and grade level in civil service. Deprivation really matters when you are in the lower grades. [ed]: Suggests a) interaction effect b) that status matters more than area you live in
  • Work stress: Coronary heart disease strongly linked to work stress
  • Social relationships: mainly important on negative side (bad interactions are bad for you …)
  • [ed: general murmurings from room throughout data presentation about what these correlations imply. Significant issues of causality and selection bias …]

Andrew Steptoe

  • Meta analysis of positive affect and health
    • 18% reduction in prob. of mortality (even when controlling for other variables: smoking, BMI, social position etc)
  • Issues:
    • Confounding: even though have controls direction of causation goes the other way (health to positive affect)
    • Genetics: simple correlation
    • Lifestyle: happier people lead healthier lives (or vice-versa)
    • Biology: positive affect associated with
      • Lower cortisol over working and non-working days
      • Lower heart rate over day
      • Lower systolic BP over the day
      • Reduced inflammatory responses
      • Independent of socio-demographic factors
  • Happiness measure matters (a lot)
    • Using retrospective questionnaire measures find no relationship of positive affect with other stuff
    • But using EMA or DRM (i.e. more instantaneous stuff) find relationships
  • Cross-cultural comparisons: Japan vs. the UK
    • Japan reports less +ve affect then UK (e.g. Gallup)
    • Find this in DRM studies of university women
    • And, importantly, find impact on cortisol levels (UK women lower than Japan)

Mapping Pain and Well-Being in Real Time and Yesterday by Alan Krueger

  • Study in the Lancet (w/ Arthur Stone) on pain in general population (using diary study)
    • Data came from PATS, ~3900 people (by Gallup)
    • Pain rises with age but very flat 45 – 65 (for men and women)
    • Correlated with SES: poorer people in more pain (~20% of people with income under $30k in reasonable to severe pain compared to 7% for > $100k)
    • People in pain work less and watch more television
  • Now doing EMA-PATS study + biological info (Krueger and Stone)
    • Check EMA and PATS are related (strongly correlated ~ 0.94 corrected for pain, and 0.92 corrected for happiness)
    • Not a representative sample (v. hard to get participants)
  • A world of pain — use Gallup survey to look at pain across countries
    • Strong connection of GDP per capita and pain (~ -0.42 correlation)
  • Questions:
    • Why SES-Pain gradient and Age-Pain gradient? Many possible explanations
    • Source/duration of pain
    • Biomarkers

Knott and Scott

  • Examples of kids with cerebral palsy and some other bad thing: expectations matter (despite having serious disabilities kids evaluated their life as as good as others)
  • Support only: no effect
    • Homestart: no effect or negative!
    • Surestart: also been shown not to work
  • Skills and support: slightly better
  • Child Antisocial behaviour: benefits
  • Quality of mental health professionals: matters a lot
  • Very little long-term follow-up data
    • Perry pre-school: good effects at age 27
    • 10 years follow-up of Scott et al (2001) finds some long-term effects
  • More evidence based psychiatry
    • Quite a lot we can do if we do it in a skillful way

Well-being and Aging by Felicia Huppert

  • Negative stereotyping has large impact
    • Older people exposed to -ve stereotypes do worse on stress, cognitive performance etc
  • Causes of well-being
    • Separate +ve and -ve in GHQ (found a big difference in impact of e.g. unemployment on +ve vs -ve affect)
    • Magnitudes (as opposed to pure significant)
    • What are important drivers
  • Environmental affects likely to be large (much larger than genetic affects)
  • Study in US IT company: RCT of mindfulness meditation found substantial impact
  • How much is society losing from people not flourishing [ed: losing seems to mean losing money/GDP here]

Work, Stress and Well-being by Richard Freeman

  • Questions
    1. Does working environment affect worker well-being
    2. Can we specify workplace policies/practices make work lives better
    3. Do measures of job satisfaction and well-being provide different information
    4. Moving beyond survey measures
  • Job satisfaction – one of most widely studied variables
    • Correlated with health and turnover (people leaving associated with dissatisfaction)
    • Two-factor model needed to explain some patterns
      • Puzzle: unionized workers quit less but also less satisfied (expectations?)
    • Job satisfaction and well-being
    • When people quit and go to a new job their satisfaction goes up
  • Results from various datasets they used (WERS – several people per workplace + a lot of detail)
    1. Working environment matters a lot (could be workplace policy, culture, or selectivity)
    • Workplaces bad (good) in one dimension often bad (good) in others
    • [ed: so not some simple trade-off/optimization]
    • Large changes in well-being after quitting and moving elsewhere (bigger than money impact)
      1. Policy/practices matter but causality unclear
    • Major endogeneity problems (if i have a job satisfaction policy is that because people are miserable)
    • Well-being related with job attributes (hazardous, stress etc) in normal way
      1. Job satisfaction and worker well-being
    • Not that correlated
    • Job-satisfaction important for well-being but less important that health and various other variables
  • 3 things to do
    1. Biomarkers at high/low satisfaction workplaces
    2. Impact of change of jobs
    3. Harvard network on work, family and health
    • Check company work policy carefully
    • Look at health outcomes, stress, sleep
    • Found big correlation of manager’s attitudes and practices correlated with cardiovascular outcomes

Co-operation and well-being by Armin Falk and David Skuse

David Skuse (development neuro-psychiatrist)

  • Individual differences in happiness
  • Role of genes and brain on behaviour
  • Mechanisms of mental functioning underlying mental health
  • Compensation for deficiencies …

Armin Falk

  • [ed: computer battery ran out so this is very partial]
  • Relative pay and fMRI results. Big impact of relative pay (Science 2007)
  • Unfairness in principal agent setup (dull task and unfair division of revenue. impact on heart rate variability)
  • Oxytocin study: look at genetic variations affecting oxytocin and see how they impact on trust in trust game (amount sent at stage 1)
  • Mentioned current/future research on cultural formation on preferences

Money Has Grown in Importance to US Freshmen Since the 60s

June 2008, JEL, p. 426, in review of Robert Frank’s Falling Behind: How Rising Inequality Harms the Middle Class by Frank Levy:

… By that time [mid 1980s] many of the trends noted by Frank were already underway. Since the late 1960s, the American Council of Education has been measuring the attitudes of college freshmen. Between 1968 and 1972, about 40 percent of freshman felt that “being very well off financially” was important or very important. In the fall of 1973, this proportion jumped to 62 percent and continued to rise steadily after that leveling off at 75 percent in the late 1980s (American Council of Education [The American Freshman report]). It was also in the early and mid-1970s that majoring in business administration took off while majoring in sociology shrank.

Of course one might wonder if the late 1960s were just an unrepresentative period in which the importance of money was less than it usually had been. In that case the later trend would be a simple reversion to the mean.

Workshop on Well-Being VI

Yesterday I attended the sixth and final of the series of “Workshops on Well-being” taking place at the LSE (I missed the fifth workshop as I was away and so the last one I attended was the fourth workshop back in April). This time the presentations were given by David Clark of KCL and Martin Knapp of LSE and KCL. Below are some heavily impressionistic notes.

Presentation by David Clark (KCL): Developing Effective Psychological Treatments for Common Mental Health Problems

  1. Anxiety disorders

    • ~ 1/2 of mental health problems
    • overly pessimistic view on outcomes etc
    • can become obsessional (+ fear that thoughts are self-realizing)
    • If beliefs are inconsistent why do they persist
    • panic attacks (~ 30% have them once/v. occasionally but realize that they are not dying). But in the disorder people might have had them 5000 times — how can they still think they are dying when it happens again?
  2. Research Strategy:

    • identify core cog. abnormality
  3. Example: social phobia

    • most common anxiety disorder (lifetime prevalence: 12%)
    • persistent: natural recovery rate is 37% over 12 years
    • marked underachievement
    • persists because:
    • shift to internal focus (which means ignore external)
    • use of internal information to infer how one appears to others (and as they are anxious this unreliable)
    • safety behaviour
    • test some of this
    • Do high socially anxious individuals have an internal attentional bias (Mansell, Clark, Ehlers 2003)
    • Evidence that socially anxious individuals have a distorted external perspective (Hackmann, Surawy and Clark 1999)
    • Evidence that onset of phobia correlated some stressful (bad) social event
    • Does negative self-image affect relation with others. Yes, to some extent (another Clark paper)
    • treatment (Cognitive Therapy)
    • attention training
    • drop safety behaviours (to test no adverse consequences)
    • video feedback
    • rescripting early memories
    • does CT pass the randomized controlled trial: YES
    • compare against no treatment
    • placebo
    • at least as effective as medication
  4. Common disorders where CBT is effective as a sole treatment (recovery rate, controlled effect size):

    • Major depressive disorder: 50%, –
    • Panic disorder 75%, 2.8
    • PTSD: 80%, 2.3/1.2
    • Social phobia: 75% 2.6
    • Generalized anxiety disorder: 50% (77%)
    • OCD: 45%, 1.5
    • Also show that effects of CBT persist for anxiety (unlike psychotropic interventions where there is a high relapse rate)
    • depression slightly different as naturally recurrent — though CBT still effective (and complementary to medication). Hollon et al (2005) (Arch Gen Psychiat) compare medication vs CBT over long-term and shows CBT better.
  5. Evidence that benefits of CBT extend outside of targeted syndrome. Beneficial effects for:

    • other mental health problems
    • work, family, social adjustment
    • employment (less sick days, moving to work)
    • but these effect sizes are lower bound (overall want SWB scores …)
  6. Developing more effective (shorter) treatments

    • Traditional approach is 1h/w for 3-4 months
    • but 1-2h of ‘homework’ per day between visits
    • Now trying intensive 1w course (~ as effective at least for PTSD)
    • Also treatments with extra-focus (e.g. social phobia + work: found big impact on time to get back to work)
    • CBT with well-being emphasis. Fava et al (2005) (Psychotherapy and Psychomatics). Find CBT-WB > CBT but tiny sample, no blind assessment etc.
  7. Major policy changes underway to increase access to CBT

Martin Knapp (LSE + KCL): Economics of Mental Health: Some Open Research Questions

  1. Why mental health is different

    • breadth/multiplicity of need
    • association with crime + violence
    • associated with suicide
    • compulsion, stigma, complex links with ethnicity
  2. Leading policy/practice themes

    1. stigma/rights/social exclusion
    2. funding
    3. Balance of Care
    4. Treatments
    5. Prevention
  3. Social exclusion, stigma, etc

    • Participation-based approach
    • opportunities, socio-economics roles
    • Rights-based approach
    • stigma, discrimination, compulsory treatment
    • If i were suffering from mental health problems I don’t want anyone to know (Scotland): 50% in 2002 to 41% in 2006 (following a big campaign)
    • evidence in UK actually may be getting worse (16% 2000 to 22% in 2007 on similar question)
    • Equity: great variations (inequality greater for mental health than for income), esp by ethnicity.
    • Costs:
    • total cost of depression £9 billion (Thomas and Morris, Brit J Psychiatry 2003)
      • mostly productivity effects (not service or morbidity)
      • prob. underestimate as also have staff turnover, presenteeism
    • major impact of psychosis on life-time development [ed: not exactly surprising …]
    • homicide: Taylor and Gunn (Brit J Psychiatry) show that across various European countries between 5 and 20% or homicides committed by those who are mentally ill
  4. Funding

    • Mental health spend as %tage of total public spend: England is highest in EU [ed: is this good or just that England has a lot of mental health issues]
    • Good efficiency arguments for intervening (cost-effective)
    • Schizophrenia: total cost ~ £54k per person per year (only a 1/3 hits the health system)
  5. Balance of Care

    • Massive reduction in number psychiatric beds (personal preferences, social preferences etc)
  6. Treatments

    • Does it work?
    • Is it cost-effective? etc
    • In 2000 only 53% of people with depression received treatment compatible with NICE guidelines
    • More attention to non-health interventions
    • particularly risk factors such as bullying, family violence, uncontrolled debt
  7. Prevention

    • Inner London Longitudinal Study (ILLS)
    • Study of all 10y old in part of London in 1970
    • Categorise into groups from: “no problems at school” to “conduct disorder”
    • Estimate costs to society per child from 10 to 28 (education, criminal justice, social services etc)
      • no problems: ~ 7k, conduct: ~ 24k, conduct disorder: ~70k (mostly criminal justice)
    • 1970 British Cohort Study
    • earnings at age 30 by childhood need at age 10
    • no probs: ~24k, behavioural (lowest quartile): same, Cognitive (lowest quartile): 15k, emotional (not a great effect but interacts in a minor way with cognitive). Another study finds same effects for behavioural at age 32 but extended to 48 finds same -ve effect of cognitive issues.

Notes on Theories of Contextual Judgement

Over the last couple of months for the purpose of my research on happiness/subjective-well-being I’ve been putting together some notes on theories of contextual judgement. The first part of these is now in a form suitable for public consumption and I’ve posted them at:

Workshop on Well-Being IV

Following on from the third workshop a month ago, yesterday saw the third in the series of “Workshops on Well-being” take place at the LSE. This time the presentations were given by Mat White of Plymouth University and Andrew Steptoe of UCL. Below are some (very) impressionistic notes.

Presentation by Mat White (+ Paul Dolan): Accounting for the richness of our daily activities

  1. Social psychologist: started out on risk perception, trust etc. (Fear of crime)

  2. General problems with life satisfaction data

    • lots of it deals with attributes which are beyond realm of govt intervention (e.g. race, gender)
    • Response/cross person comparisons issue: same externals result in different reported happiness levels across individuals (e.g. old, poor people are happiest in Dolan’s Welsh data, perhaps because of a “Don’t grumble” attitude). [ed: essence is the qualia problem: can we compare different people’s report of their internal states, both across people and across time. Or more pithily: is my ‘Good’ or ‘OK’ the same as your ‘Good’ or ‘OK’?]
    • Subjective well-being isn’t one thing but a composite: SWB = Feelings + Thoughts + Time
  3. Solutions

    • Experience Sampling Method: ask people during day
    • Problems: costly, only points in time, no duration etc
    • Day Reconstruction Method (DRM): solve duration issues
    • Can now base utility as integral of well-being function over time (ed: what utility always was but we just didn’t have the moment by data)
    • Find what one might expect re. what activities are nice
    • However no/v. weak correlation with e.g. income
      • But maybe because those payoffs are in the future
      • Or maybe because there are rewards in terms of thoughts, feelings about themselves etc (Eudamonia)
  4. This project: add thoughts (about activities) to DRM

    • 625 Germans
    • 5815 Episodes (3057 single activities)
    • Online panel
    • Have 12 adjectives they can use which break down into ‘pleasurable’ and ‘rewarding’
  5. Adding in Eudamonia makes a big difference!

    • Nice graph contrasting the DRM with ‘pleasure’ vs. ‘rewarding’ (at least partially inversely correlated).
    • Argue that we should sum both ‘eudaimonic’ and ‘hedonic’ evaluations over whole day.
    • Can now plot activities on x-y graph with x=hedonia, y=eudamonia (normalized about the mean values)
    • Get a slight -ve correlation
    • ed: this makes sense due to selection effects. Let w be total well-being and h hedonia score, e is eudamonia score. Suppose w is a linear combination of these underlying factors: w = h + k e. Now we would generally choose only to do activites with w > w0 (some outside option) => h+ke > w0 which gives the -ve correlation.
    • If reweight with duration [ed: equivalent to doing integral] then get a slight +ve correlation
    • ed: this reweighting by duration causes major changes to the form of the data. In particular all longer activities receive a positive shift while short ones receives a negative shift (explanation below). Whether this is what could/should do with the data was not entirely clear.

      Why does this shift occur. Results are plotted as ‘relative’ values (i.e. normalized about the mean). Thus if original value (x,y) it is plotted at (x-m1,y-m2) where m1 is the overall x-mean and m2 is overall y-mean. Adding duration means original values are now (dx,dy) and these are plotted relative to n1,n2 where n1,n2 are new duration weighted means.

      Letting dbar be the mean duration we could make the rough approximation that n1 = dbar m1, n2 = dbar y1. Then the new x position is: dx-n1 = dx – dbar m1 = d(x-m1) + (d-dbar)m1. Hence the new x-position will be a combination of a linear scaling out from the origin by d plus some offset of (d-dbar)m1. Since m1 is always positive this offset is positive (negative) as the duration of the activity is greater (less) than the mean duration of an activity.

  6. After discussion

    • pop-ups (thoughts either +ve or -ve) have a big impact
    • in a regression on day-satisfaction number of +ve and-ve popups explained more than hedonic or eudamonic variables (total value for whole day)
    • could be useful to look at something more than a simple integral [ed: e.g. use contextual judgment stuff]
    • Eudamonia: enters day satisfaction regressions negatively. This is what we would expect given association of ‘satisfaction’ with ‘pleasurable’ activites and slight negative correlation of ‘rewarding’ (eudamonic) activities with ‘pleasurable’ (hedonic) ones.
    • ed: could interpret eudamonic value as discounted future value coming from associated payoffs. I.e. if I work hard now this might not be pleasurable but it has high eudamonic content reflecting the future hedonic payoffs (nice garden, good holidays etc) of doing that work (NB: this is intentionally putting things very crudely).

Andrew Steptoe: DRM Analyses

  1. Primarily interested in ‘positive affect’ and health outcomes

  2. Questions:

    • how accurate is DRM
    • what does DRM tell us about activities and feelings of depressed people
  3. Data: Daytracker study

    • 200 healthy women in full-time work
    • 2 x 24hr starting @ 5pm (one work day and one non work-day)
    • International dimension
    • EMA and DRM
  4. Comparing EMA and DRM

    • Across aggregate data already see some differences (DRM shows noticeable rise towards end day while EMA does not really show this)
    • Per individual: similar differences but also fairly close correlation
    • Doing actual correlation looking at 4 different aspects (happy, tired, stress, anger) find medium correlations (0.2-0.7) which is reasonable but not great
    • also noticeable that timepoints are important: worst correlations are generally 12noon and 3pm
  5. How accurate is the DRM for estimating feelings (esp. in relation to depression)

    • Do depressed people: have diminished pleasure in all activities or is reduced exposure to good stuff?
    • Depressed people are less happy across most interactions (except with Grandchildren) though effect (of depression) does vary and is strongest for being Alone or with your Partner
    • Looking at time: depressed people seem to spend more time (compared to non-depressed) doing things they don’t like
    • Similarly, looking across activities, depressed people are less happy doing most stuff
    • Again looking at time, seem to find depressed people spending more time on things that they particularly dislike (relative to others)
    • [ed: Not sure what this is telling us. After all the activities depressed people spend more time on may still be better than other options even if those options do not get as large a negative ‘hit’ from being depressed — e.g. house-work may not be much worse when depressed than non-depressed but it still might be worse than everything else]

Workshop on Well-Being III

Following on from the second workshop a month ago, today saw the third in the series of “Workshops on Well-being” take place at the LSE. This time the presentation was given by Andrew Clark of PSE. Below are some (very) impressionistic notes.

Presentation by Andrew Clark on Job Satisfaction: What do we Know and What Next?

  1. Job satisfaction (JS) and individual well-being (LS)

    • well-being/LS function LS = f(Job satisfaction, health satisfaction, leisure etc)
    • data in BHPS (waves 6-15 though 11 missing)
    • health/ income / house / spouse / job / social life / amout leisure / use leisure (scale 1-7)
    • all highly significant
    • social life is top, followed by health, use of leisure, income and job satisfaction is last
    • robust to demographic controls
    • But do individual personality types make any difference (fixed effects)
  2. Panel results

    • all effects go down (there are ‘happy types’) except JS (which doubles) though still the smallest
    • Is this ranking unique to Britain?
    • Is it the same for everyone? (subregressions: old/young, men/women; or do a latent class analysis)
  3. JS is important to firms as well as it will predict worker behaviour

    • Labour turnover
    • Absenteeism
    • Counter-and non-productive work/productivity
    • Worker quitting (but almost impossible to do properly as quitting is self-reported so unreliable)
    • P(quit(t+1)) = f(JS, X(t))
  4. Compare quitting GB and Germany

    • pretty similar, JS is pretty significant
  5. Cognitive biases and context in relation to quitting (SPELL data from BHPS)

    • have panel data so can look at series of JS for an individual
    • refers to Kahnemann and Riedelmeier on evaluation of colonoscopy
    • suggest Peak-End evaluation: evaluations of peak and end point
    • Apply to job quitting (peak-end, min, max, avg, current …)
    • peak-end does best (followed by running max (close), and current)
    • => behaviour would not then seem to max their utility
  6. Try do the same with income but need variations in income (since normally just rises)

    • use truckers as they have exog changes
    • other potential sources: tax changes
    • peak-end divorce
  7. Relative income

    • Traditional: W/LS/JS = W(y,…)
    • Comparisons: LS/JS = W(y/yr, …)
    • yr is comparison/relative income
    • to whom do we compare? (peers, others in HH, spouse, myself in the past, friends, neighbours, work, expectations)
    • Results:
    • +ve effect of income
    • But falling as other’s income rises
    • Overall effect is zero: if everyone’s income rises then no effect
  8. Preference for structure of income

    • same income but in different ways
    • flat slope (A), steeper (+ve) slope (B), and v. +ve slope (C)
    • even though flat slope (using saving to mimic C) would result in being overall better off
    • asked about this (they were told they could this) they still chose C (apparently because of self-control issues — they wouldn’t be able to save)
  9. Does other’s income always affect one negatively

    • Hirschmann’s tunnel effect (happy for something good for you because it means something good is going to happen to me)
    • Danish ECHP (1994-2001): fantastic data (which gave not only individuals but all of their colleage’s info including pay)
    • here one does find a +ve effect of others income on me (check how it varies across firm so not just selection effect at firm level)
  10. Do 2 wrongs make a right?

    • Peak-end utility could be thought of as ‘correct’ as:
    • with adaptation
    • current utility (after something good) understates actual total flow benefits (as one has adapted)
    • PE corrects for this
  11. Instrumental uses of JS

    • ‘Good job’ lit has mainly focused on money
    • But self-employed earn less but are happier (though significat issues about reporting bias)
    • Also why are there different avg. wages in different industries (when they look the same)
    • Compensating differentials vs. rents
    • So let’s use JS to explain different
    • looking at the data: high wage goes with high JS (so suggests this about rents not compensation)
  12. Job Quality: Are things going to the dogs?

    • ISSP (repeated XS in 3 waves 1989 – 2005)
    • Multivariate regressions: JS is improving (went down 1989-1997 but bounced back in 2005)
    • But stressful/dangerous/difficult work has been rising
    • Good job content has been going down.
    • However enough other stuff has been getting better faster (income, opportunities, flexible hours)


  • Paul Dolan:
    • Causality
    • Experienced Utility? Kahnemann would be unhappy
    • Peak-end seems difficult for JS since already a retro-spective evaluation (so peak-end of a peak-end)
  • Gordan:
    • relative ranked position not just compared to the avg
    • care more about those above than those below
    • need to be more specific about form of relativities
  • All: Context, Context, Context
  • RP: Peak-end vs. range-frequency. Take colonoscopy: PE predicts that increasing pain at a single point (early on) would worsen evaluation while range-frequence would predict it would improve evaluation (since you spend more time at a level relatively better than the worst)
  • BHPS: now have a question asking for whether your LS is better/worse than last year
  • Gordan: gratitude is single biggest predictor of happiness
    • individual differences
  • Propensities to adapt
  • Gordon: Andrew Oswald and he also found +ve avg income effects in workplace
  • Judgment vs. Adaptation
  • Paul Dolan: generally we overestimate our +ve attributes but underestimate (their relative) income level