Impetus for studying happiness and well-being

Watkins: Whereas most economists have traditionally focused on income, Carol was one of the first to investigate happiness and has done extensive work on patterns of its determinants across countries and time. She’s also been a leader in exploring the properties of well-being, and showed for example that people with greater well-being tend to do better in the labor market and health arenas, a pattern she identified as early as 2004. So Doug and I wanted to learn more about what led her to pursue this particular line of research.

Graham: I was born in Peru, and I was always very interested in poverty and inequality and development issues. The first part of my career I chomped around the world looking at safety nets during market transitions, and have been in probably more slums and weird places, than most people: Africa, Eastern Europe, East Asia, a lot of Latin America obviously, and I was thinking about basically social mobility as part of the inequality puzzle, and why inequality matters to people, and why it doesn’t. And working in Peru at a time when there were a lot of protests against the World Bank, and people saying that globalization was bad for the poor in poor countries. But I was in Peru, they’re growing 14% and people are coming out of poverty in record numbers, so what’s the disconnect here? I had data on these people over a 10-year period, and I could tell who had come out of poverty, how much their income gains had been, a lot of detail over time with several observations. I thought I wonder how these people think they’ve done, how do they report their welfare, I wasn’t using the term happiness term or their well-being, I wasn’t using that term either. And we went back and interviewed people in this panel dataset and found that over half of the people who had done the best, so you know, they’d started off pretty poor below the poverty line, but had made the biggest income gains. Over half of them said they were worse off than they were before, and that seemed a little odd. And we thought maybe it wasn’t the day of the survey, maybe Chile had beaten Peru in soccer and everybody’s in a bad mood. We repeated it, we kept getting these results. And then poor rural people who had low income change said they were the same or better. So I called these people my happy peasants and frustrated achievers ⁠— kind of glibly at the time. But then I kept getting this pattern with other data. Data from Russia, data from China, and I was trying to understand it. And a wonderful thing about Brookings is the great collection of scholars there who didn’t feel threatened by these findings. So basically it’s upended the idea that it’s all about income.

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The measurement of well-being

Leigh: We’ve long known that the pursuit of happiness is an important determinant of human behavior. In 1902, the American philosopher and psychologist William James wrote: “how to gain, how to keep, and how to recover happiness is — in fact, for most men at all times — the secret motive for all they do.” Here’s what Carol had to say about how the measurement of well-being has enabled the exploration of many other questions within the field of economics.

Graham: Sort of the determinants of happiness our well-being were pretty much the same across individuals, across countries, and over time. And then that allowed us to start exploring other questions, right? If you could control for these standard things that seem to be pretty constant across all people, then you could look at the well-being effects of things that vary. And that could be, you know, any number of things. How does, you know, smoking, exercising, bad governance, you know, inequality, all sorts of things were your standard economics assumptions that, you know, everybody’s a rational actor and you observe their consumption choices and that’s a proxy for their welfare. But there’s so many situations in human life where your consumption choice is either flawed because people make bad choices or they try and keep up with the Joneses, or where people don’t have the agency to express a preference. And so we were able to open up the inquiry into a whole set of questions and issues that revealed preferences don’t provide a good answer too. And then that wraps back around to my finding: very low levels of well-being among poor whites in the United States. So I spent my last two years working on something I never thought I’d be working on which is why are less than college-educated whites in the US are so much less resilient, less happy, angry, frustrated, desperate than let’s say poor minorities.

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Defining well-being

Watkins: While it’s a motivator of behavior, well-being is a multi-dimensional and subjective state defined by the individual, often in comparison to the real or perceived well-being of others. We asked Carol to describe the main ways in which she and other researchers defined well-being.

Graham: So the first one is what we call hedonic or experience well-being, and that is how you experience your daily life, or you’re stressed or angry, content or smiling as you went through your day’s activities. And that’s a measure of kind of daily quality of life. It doesn’t correlate as strongly with income as the other measures. Because, in the end, if you’re destitute it’s bad for everything including your moods, but you know, after a certain amount of money more money won’t make you enjoy your commute or, you know, sitting in traffic an hour and a half, whether you love your car or not, it’s still sitting in traffic. Enough money to meet basic needs, depending on the context you’re in, matters to moods and daily experience, but after that not so much. But the second dimension which is what we call a valued of well-being, or how satisfied are you with your life. That’s a metric that assesses how people assess their lives as a whole, and that’s a life course measure, so if you’re young and you answer that question you’re thinking not only about today but your opportunities and what you want to do with your life. If you’re old you tend to reflect upon again your life as a whole and what you were able to do. And that measure correlates more with income, because people with means have the ability to choose what they want to do in their lives, right? They have more of a chance to choose to be professors or artists or you know doctors. People without means have much less ability to choose the kinds of jobs and lives they want to have. And the last measure is related and that’s having meaning or purpose in life, and we call that eudaimonic well-being which comes from Aristotle’s concept of happiness, which was a combination of you meaning abundance and Damen meaning control over your life, or over your fate. We find that tracks pretty closely with the life satisfaction measures they’re not all that different with a couple of nuances. And also differences depending more where you live, you know, you can think about that in the sense that the US values material success more than other societies. You’d find that what people define as meaning and purpose might be different in different contexts. But they’re nuanced differences, they are not that great. That’s also the measure we know least about — I think it may be the most important one but we’re, you know, just starting to work with it with large-scale surveys.

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Underemployment

Leigh: Carol analyzed data from multiple waves of the Gallup World Poll, a cross-sectional nationally representative survey collected each year across more than 150 countries. From 2010 to 2017, Carol was particularly interested in the subgroup that self-identified as being “out of the labor force.” The group of people that just about any White House administration doesn’t like to talk about: people who aren’t working but also aren’t officially counted as unemployed. Ryan and I asked Carol to tell us more about what it means to be “out of the labor force.”

Graham: Everybody talks about the US having record low numbers of unemployment, and yet 15 to 20 percent of prime-age men are out of the labor force. And so what “out of the labor force” means is that you have stopped looking for a job. So people qualify as unemployed if they report to have been looking for a job in the past six months. If they stop doing that, they drop out of the numerator of the employment rate calculation. So that means the unemployment rate looks lower if you don’t account for the people who have simply dropped out of looking for a job, dropped out of the labor market, and have given up. But have they given up forever? It’s hard to say a lot of the “out of the labor force” males in the US have given up? A lot of them are on disability insurance, they’re over-represented in opioids category, they’re over-represented in deaths of despair, so a lot of them can’t get jobs anymore. But others have just dropped out and are frustrated and in our paper, we use the Gallup World Poll so that we can compare the group in the US with that same group of “out of the labor force” in other regions. The issue with out of labor force in other regions — like say the Middle East or Latin America as we know in the papers — they maybe in the informal sector doing all kinds of things, but they’re not in the formal labor force. In Europe, they’re much more likely to just be “out of the labor force” as in the US. But we also used the Gallup Daily data which is much larger dataset for the United States with about 500 to 1000 people a day since 2008, and that gives us a much larger sample of “out of the labor force” men in the United States. So I don’t know if you noticed, but the confidence intervals on our main charts are larger for the US when we use the Gallup World Poll data, because the US is just counted as one country in the Gallup World Poll. But we replicated our findings with a much larger sample in the Gallup Daily poll, and we get essentially the same findings.

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Men out of the labor force

Watkins: The economic and emotional toll of being out of the workforce don’t seem to be experienced the same way among people within the United States as they are among those who live in other countries. Carol’s research compared the data for males — 25 to 54 years of age — who are out of the labor force, and in four specific regions or countries: the United States, the European Union, the Middle East and North Africa which economists referred to by the acronym MENA, and Latin American countries. We asked Carol to explain what she learned through these comparisons.

Graham: We compared within regions — and let’s just use the US as this data point to start with — so that means we compare how the well-being levels of prime-age males out of the labor force to the well-being levels of other people in different employment categories in the US: So to the unemployed, to the part-time employed, to females out of the labor force, to, you know, full-time employed, and we found that in the US they are typically on almost every marker they’re much less satisfied with their lives, they’re more angry, they’re more frustrated, they’re less optimistic than most other employment categories on almost every indicator. One or two may be more nuance between the unemployed and the out of the labor force people, but pretty much they score the worst, and we are controlling for age, education, gender, all these things, and then we compare all the employment categories to each other within the US. But when we compare across regions, what we’re doing is we are just looking at this group of prime-age males out of the labor force — age 25 to 54 — in the US, in the Middle East and North Africa, Latin America, and Europe, and then we compare simply how do prime-age males out of the labor force compared with each other across these regions; again, the US doesn’t look great, US prime-age males. If you look, the absolute levels of life satisfaction and other markers of well-being are very low in the Middle East in North Africa. So on some of the charts you’ll see prime-age males out of the labor force about the level or even a little bit above prime-age males out of the labor force in the Middle East, but on many others they’re below prime-age males in the Middle East. And that for us was pretty remarkable, it made us think a lot about one the stigma of being out of the labor force in the United States, but also the greater acceptability and kind of norm of being an informal sector worker in places like the Middle East and Latin America. You know, some informal sector jobs are good, informal labor is much more than norm and some informal sector workers in developing markets like Latin America and Middle East, particularly Latin America, are very entrepreneurial, and they’re often more satisfied with their jobs than say being in a lousy formal sector job with a terrible boss, right? You know, they have flexibility, they’re entrepreneurial. Not so in the US, if you look at self-employed workers in the US granted, they’re sort of big tails on that distribution. So you have some very wealthy successful ones but most self-employed workers in the US are self-employed due to lack of better alternatives, and they’re, you know, they’re like driving the market trucks on the mall in DC or they’re driving Uber or whatever it might be. And so even though we separate self-employed, when you look at the developing markets, the labor categories merge much more, and people who are reporting to be out of the labor force may actually be informal sector workers, versus in the US, people who report to be out of the labor force are really out of the labor force.

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Working in the informal economy

Leigh: Those who work for cash and under-report the taxable earnings, comprise the informal sector, and such unregulated economic activity is a substantial part of many of the world’s economies. Those working in the informal economy, however, don’t typically have unemployment and disability benefits, nor is their work protected by minimum wage in labor laws. Ryan and I wondered what, if any, role the informal sector may play in the relationship between labor force participation and well-being.

Graham: Whether you like it or not we’re moving towards an economy where the gig economy is increasing the big piece of the puzzle, AI is displacing a lot of low-skilled jobs. You know, the labor markets are evolving in a way that I don’t think we can fully predict, and it may be that these slightly less developed economies with large informal sectors are more flexible, and may find that transition easier than, you know, the more developed economies with very structured formal sector labor markets and benefit systems linked to jobs, and all kinds of things. And that model is going to have a harder time — at least at the low skill end of the model — transitioning into high tech gig, all these things that are starting to dominate the way labor markets work. I don’t know the answer to that, but that’s a hypothesis I had in the paper, just based on the well-being levels of people in the informal sector in these markets compared to the well-being levels of prime-age workers out of the labor force in the US. And I don’t emphasize that much in this paper, but in other work more precursors to this, is why are poor minorities so much more resilient and optimistic than poor whites in the current context in the US, and I think that has to do with a history of having to multitask and do all kinds of jobs. So not having the steady blue-collar job doesn’t mean you lose your identity versus for blue collar white males that it does. There are available jobs in places where manufacturing has deteriorated, or the coal mines have shot their jobs in the health sector, and male minority workers will take them but white males won’t. You know, their identity was the manufacturing job or the coal mining job they’re not represented in those new sectors or those growing sectors, and I think it does have to do with the kind of classic American Dream which was, you know, graduating high school, you got a stable job in the manufacturing sector of the coal mining sector, and you could have, you know, kind of an approximate middle-class life, it wasn’t luxurious, you worked hard but you had the stable job, and the stable family, and both those things have gone away. And it seems that it’s the white blue-collar worker that has had the hardest time sort of switching out of that identity.

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Pessimism and discontent and among White, unemployed, American men

Watkins: Carol’s research testifies to the fact that many white prime working age males in the United States struggle in today’s economy. Next, Carol discusses why it seems that men in this demographic are so much less optimistic and more discontent than their counterparts in that in Latin America and MENA.

Graham: None of the Latin American findings surprised me, because Latin Americans they always score higher on optimism, happiness, and experience well-being than their income levels would predict. There’s a cultural component to that, there’s a quality of life component to that, there’s a Family Ties component to that, they’re all kinds of, sort of, things you can’t measure explicitly that seemed to matter a lot to Latin Americans’ high levels of well-being. So, you know, didn’t surprise me that out of the labor force or informal sector workers would also be happier and more optimistic. But with MENA, you know, you’ve got this narrative of oh oh all the budding terrorists in the Middle East are these unemployed young and middle-aged guys out of the labor force, right? That’s the standard narrative that we hear over and over again, and then you look at their well-being levels they seem perfectly fine, you know, at least compared within their own region to their counterparts they’re more content and more optimistic than the unemployed, and this formerly employed in the Middle East which is a very small group of the group that has formal sector jobs, right? So I think that has to do with this kind of informal sector multitasking kind of existence that’s quite usual for developing and middle-income economies, no stigma surrounding it, and we’re trying to understand that a little better again pushing forward with this research. And so in the US you’ve got this narrative or, not a narrative but a reality, where white blue-collar workers had stable jobs and they kind of did what their dads did and they had a respected existence, and they lived a stable lower middle-class life, and the opportunity to do that is gone, right? If you graduate from high school only now your opportunities are very very limited, and marriage rates have gone down. So now all of a sudden you have the markers of kind of the respected white blue-collar workers life are gone, and they don’t have a narrative to replace it, and it turns out that minorities — Hispanics and blacks — who’ve always had to multitask and deal with discrimination, they’re more resilient.

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State and other socio-demographic in economic trends

Leigh: in 2017, Carol and her colleagues created a report for Brookings called “the geography of desperation in America” which suggested that those that don’t believe in their futures are much less likely to invest in education, health, and job training, all of which increase the likelihood of America becoming even more unequal in the future. The Gallup polling data used in the study allowed for the United States to be disaggregated by state and other socio-demographic in economic trends. This ability led to various insights, which Carol shares after this short break.

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Leigh: Here again is Carol Graham.

Graham: One issue that’s very tricky because of the different aggregation levels of the data, but sort of, how does place matter? So the places where minorities were most optimistic or least optimistic, and where poor whites were most optimistic and least optimistic — controlling for everything else: education, employment rates, rural, urban, all sorts of things — and we’ve got some really interesting findings there. For example — again, this is controlling for all sorts of objective indicators like health, and employment rates, and everything else — that the places where minorities were most optimistic were the south-eastern cluster of states: Alabama, Georgia, Mississippi, Louisiana. So that seems absurd there, objectively full of discrimination, awful indicators of poverty, but there’s an agglomeration of African-American culture music, churches, those unobservable things matter a lot to people’s optimism, and well-being, and sense of identity. The other very optimistic part of the country for minorities was the southwestern cluster states, where there’s a concentration of immigrants from Latin America and Hispanic culture, and food, and language, and then whites tended to be more optimistic in the same places that are desperate, but they’re more homogeneously white, at least blue-collar whites did.

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Adapting to a changing economy

Watkins: Since at least the early days of the Industrial Revolution, change has been an economic constant. But are the economic changes we’re witnessing today a different kind of change? And, are we now more uncertain of the future than people were a hundred years ago? We asked Carol to offer her thoughts on what can help people adapt to a changing economy.

Graham: The work I’ve done on adaptation, how people can adapt to a lot of things and maintain their well-being, so things you think would be terrible — like a physical injury — that limits you, or constant crime and corruption in places like where I grew up — it’s improved a lot, but I used to be in Peru, you paid the cop a bribe or the customs guy, and it didn’t bother you because everybody did it and there was no fear, there was no uncertainty about it, that’s how it was — so I found that people can adapt to unpleasant certainty and retain their well-being, and that could be bad governance, it could be lots of crime and corruption — petty crime not violent crime — and it turns out that things that involve change and uncertainty, which could be a reduction in crime and corruption from a new regime, but it’s chaotic for a while or improvements and governance that also shake things up, or it could be a whole range of things that may in the end make things better. But the change, people have fear of change and uncertainty, and that tends to be bad for their well-being. So that sort of fits with that sort of fear of the unknown, and if you look at this, sounds a little orthogonal but it’s not, because it goes back to this political question. If you look at negative attitudes about migrants in the US, it turns out that people who actually know a migrant are much less likely to be negative about migrants, because they’re a normal person just like me, but you can look at both the Trump vote and the Brexit vote in Britain, the places that tended to vote for Trump and Brexit often on the basis of, you know, anti-immigrant have the least immigrants. They just have a few immigrants there, these oh these people are creeping in, we don’t know them, they’re scary, versus places that are more diverse and have more migrants, are much less likely to be anti-migrant.

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Cultural emphasis on jobs

Leigh: In episode 25 of Parsing Science, we spoke with Sherry Moss about how people form work identities in changing economic landscapes. During that conversation it became apparent to Ryan and I that work identities can be transient, tied to economic conditions beyond any individuals control, and that’s not the best foundation for building our personal identities. Reflecting on Carol’s research, we asked her if — especially in the United States — she thinks we place too much emphasis on our jobs.

Graham: You know, I’ve lived in places where markets didn’t work, and economies didn’t work, and you had hyperinflation and terrible poverty, and the poor get hit the worst. So I don’t think you can just toss out the baby with the bathwater and say you don’t need economic growth, and you don’t need markets, and all these things, but that said, I mean we’re clearly moving into a — I think — tectonic shift in the nature of work, and in particular, the future of low-skilled labor because of the challenges from AI, the challenges from technology-driven growth, and even in the high-skilled sectors you’re moving to just different work arrangements where people value the quality of jobs as much as the jobs, and where, you know, when people reach a certain amount of income, quality of life matters a lot. And so we know from all the work on well-being around the world that freedom matters a tremendous amount, having purpose in life matters more than income, good health matters. And so I think when we think about what’s going to happen at the low-skill end of the market, we’re right now you have people working long hours unpredictable jobs, terrible quality jobs, not a whole lot of creativity and learning in those jobs, the other dimensions of life need to be emphasized and matter a lot. And we learn a lot from some ongoing efforts we have that I’m involved in, like there’s an organization in the UK called What Works Well-Being, they implement low-cost interventions that enhance well-being in deprived communities, and there are different sorts they actually do a cost-benefit analysis, how much they cost, what are the benefits in terms of well-being, other kinds of benefits, are they scalable, you know, a lot of robust evaluations of these things. But what they do, for example, is they find that providing isolated older adults with opportunities to volunteer or, you know, to participate in the arts or to otherwise collectively get together has a very large effect on well-being in declining communities. People who used to go to work and they don’t anymore, they sit alone at home, that’s terrible for your well-being, right? So they find that providing opportunities to spend more time outdoors or to commute on buses and on bikes rather than alone in cars, it’s very, you know, simple things that don’t cost much, make a big difference to well-being, and they enhance the other parts of people’s lives that matter a lot. And social isolation is a huge factor, going back to the kind of the start of what we were talking about prime-age males out of the labor force, and the declining manufacturing towns in the Midwest, and the sort of poor health, a lot of it has to do with losing not just an identity and a narrative of life, but a way of convening. If you used to have a stable job in that stable family at home, and all the sudden those are gone and you live in a place that doesn’t provide a lot of other alternatives for socializing, collective activities, social isolation is a very big part of the negative drivers of this health and political crisis.

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Links to article, bonus audio and other materials

Leigh: That was Carol Graham discussing her research report “Men without work: Why are they so unhappy in the US compared to other places?,” which she published with Sergio Pinto on February twelfth, 2019 though the Brookings Institution. You’ll find a link to their paper at parsingscience.org/e49, along with bonus audio and other materials we discussed during the episode.

Watkins: If you enjoy Parsing Science, consider becoming a patron for as little as $1 a month. And as a sign of our thanks, you’ll get access to hours of unreleased audio from all of our episodes so far, as well as the same for all of our future ones. You’ll help us continue to bring you the unpublished stories of researchers from around the globe while supporting what we hope is one of your favorite science shows. If you’re interested in learning more, head to parsingscience.org/support for more information.

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Preview of next episode

Leigh: Next time, in episode 50 of Parsing Science, we’ll be joined by Wataru Toyokawa from the University of St. Andrews in Scotland. He’ll talk with us about how observing and imitating others and crowds can at times enhance collective wisdom, though at other times it can lead to collective madness.

Wataru Toyokawa: A human case or other like social animal, we haven’t evolved to optimize a group decision-making, unfortunately. So we sometimes behave in optimizing own single individual decision performance, but that doesn’t necessarily improve the group decision performance.

Leigh: We hope that you’ll join us again.

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