Happiness, income and status

Lots of people (including Kevin Drum, Brad DeLong and Tyler Cowen have jumped in on this post by Will Wilkinson about this NBER study of habituation to changes in income and status. Wilkinson and most commentators focus on the findings regarding the subgroups on the right and left of the political spectrum, which I’ll come to, but it’s worth mentioning the general findings first.

Most people (in the German sample population) initially react more, as regards self-reported happiness, to a change in income than to a change in occupational status, but gradually get habituated to changes in income. This is consistent with the standard view of the happiness literature, that income changes don’t have a big effect on happiness, so that people in rich countries aren’t on average much happier than those in poor countries. Moreover, by looking at the same people over relatively short periods of time the analysis overcomes, to a significant extent, the objection I’ve made previously, that the scale on which happiness is measured is inherently relative to some notion of what is reasonable to expect.
Read More »

G8 and APEC

The deal on climate change announced at the G8 conference is, in practical terms, a face-saving compromise rather than a substantive agreement. But it does have some real implications.

First, barring some last-minute pullout by China or India, it locks everyone who matters into the UN’s post-Kyoto process ending in 2009. As far as I can tell, no-one at G8 noted Australia’s world-leading initiatives or suggested that it would be a good idea to wait until September when the issue could be discussed at APEC in Sydney. Maybe there’s some wiggle room to reopen the topic, but as far as I can see the idea of a Sydney declaration is dead on arrival. Bush’s initial proposal, similar to Howard’s idea, got no support from anyone and was dropped.

Second, although Bush’s promise to “consider” a 50 per cent cut by 2050 is worthless, the deal makes it clear that this will be the focal point for future discussions, at least as far as developed countries are concerned. The idea that Australia might be able to announce its own lower target is just silly. The remaining sticking point is the starting date from which the cut is to be calculated. The EU wants 1990. The government would obviously prefer to calculate from 2012, but as I’ve observed previously, our failure to ratify Kyoto leaves us without a leg to stand on here.

Finally, while Bush didn’t give a lot of ground, he certainly didn’t gain any. Canada and Japan sided with the EU, and they all committed to the 50 per cent cut. Bush’s concessions may have been mainly rhetorical but they will provide political cover for his successor to follow through with some real action.

Howard rolls the dice

I was surprised to see, in today’s papers, that Howard has committed himself to the idea of a “Sydney declaration” on climate change, coming out of the APEC meeting in September. It seems to me that there are an awful lot of potential traps for Howard here, and relatively long odds against producing something that will stand up to scrutiny over a month-long election campaign. In particular, any understandings Howard may have with either Bush or Canadian PM Harper might turn out to be obsolete in a couple of days when (and if) the G8 meeting produces a statement on the topic. More when this happens.

In the meantime, my piece in today’s Fin (over the fold) covers some related topics
Read More »

Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

Elsevier buckles

Over at the RSMG blog, Nanni points out that Reed Elsevier will no longer host arms fairs. This has followed a long campaign by academics and others. The case raised a bunch of questions about boycotts. My general feeling was that moral suasion should be tried first, but that if that failed, boycotts should follow. It’s not clear whether the outcome was purely the product of suasion or whether increasingly loud noises about possible boycotts prompted Elsevier to move.

World’s Greatest Shave update

I’ve just returned from a thankyou event held by the Leukaemia Foundation of Queensland for participants in the World’s Greatest Shave, for which my son and I shaved our beards (here’s the result, and many readers of this blog gave generous donations. Together we raised over $6000, which was in the top ten efforts for the entire state.

The thankyou event was both interesting (I’ve never seen so many women with the identical haircut in one place) and inspirational (talks from leukaemia patients, family members and fundraisers really brought home how much this effort means). The $3.6 million raised this year has enabled the Foundation to clear the debt on this new accommodation facility for families of leukemia patients. This is a huge boon. Thanks again to everyone who contributed.

Zugzwang …

… is a term from chess meaning compulsion to move. Most of the time, it’s an advantage to have the next move, but there are situations, particularly in the endgame when you’d much rather it was the other player’s turn.

So it has been with climate change, at least for some players in the game. The big divide in the negotiations for the Kyoto protocol was between the more developed countries, which had created the problem and continued to produce most emissions of greenhouse gases, and the less developed, which were the main source of likely future growth. The agreement reached was that the developed countries would make the first round of cuts, reducing emissions below 1990 levels* by 2012, after which a more comprehensive agreement would require contributions from everyone.

As soon as the Bush Administration was elected though, it denounced this as unfair and said the US would do nothing unless China and India moved first. The Howard government, until then a fairly enthusiastic proponent of Kyoto, immediately echoed the Bush line. Meanwhile, not surprisingly, China and India stuck to the agreement they’d signed and ratified.

The resulting standoff suited lots of people. Most obviously, while the Bushies were denouncing the unfair advantages given to China and India, they were also pushing as hard as they could to ensure that they and other developing countries did nothing that would facilitate a post-Kyoto agreement. And of course plenty of people in China and India were happy enough not to have to take any hard decisions on the topic.

In the last month or so, this has all started to fall apart. The Australian policy debate has shifted to the point where Howard has had to announce support both for emissions trading and for the logical corollary, binding targets for emissions reductions, though he still refuses to give any actual numbers. China and India have agreed to negotiate a post-Kyoto agreement by 2009, though they are still resisting targets.

That has left Bush isolated. Only a week or so ago, the Administration contemptuously rejected a draft G8 meeting statement on climate change prepared by the Germans, who are hosting the meeting. But as Bush’s lame-duck status has become increasingly apparent, his capacity to throw his weight around has diminished. The reaction from the Germans, and the rest of the Europeans was ferocious. It became clear that the G8 meeting would be a disaster, possibly even ending with an overt statement of disagreement, although (as far as I can tell) such an outcome is viewed by those who run these events as unthinkable.

So Bush came out with a plan. As with his response to the recent Supreme Court decision requiring the EPA to control CO2 emissions, Bush came up with a plan that would have no effect until late 2008, by which time his term would be nearly finished. As Dan Froomkin observed, the US reaction showed that Bush still knows how to play the American press like a harp, but the European reaction ranged from tepid (those who interpreted Bush as offering largely meaningless rhetoric) to hostile (those who viewed him as attempting to derail the post-Kyoto process). And this gradually fed back into US coverage.

So, the pieces are moving again, and the system o mutually supportive intransigence is breaking down. It remains to be seen if anything positive can be achieved, but the untenability of Bush’s position is now clear for all to see.

* Australia held out for a special deal, allowing an 8 per cent increase, then decided not to ratify anyway.