November 17, 2024

It’s the Economy: Money Changes Everything

And economists will definitely have a theory about your happiness based on where you live. In collaboration with psychologists, a number of respected economists have spent much of the past decade or so mapping our levels of happiness across borders and daytime hours. Angus Deaton, an economist at Princeton University, is helping shape the movement to incorporate subjective measures of emotions into serious economic analysis. The goal is to use this new data to inform more traditional measures, like G.D.P. or the unemployment rate, and to influence government policy. Or at least that’s the idea.

Happiness quantification sounds a bit wishy-washy, sure, and through a series of carefully administered surveys across the globe, economists and psychologists have certainly confronted a fair number of sticky issues around how to measure, and even define, happiness. Still, some of the data make lots of anecdotal sense. Given that Nevada was ground zero for the housing bust, it’s not surprising that its citizens are less happy than Coloradans. Other findings, though, are more opaque. Why does western Long Island score several points higher on the happiness scale than most of Brooklyn? (Does being richer make you feel better than being cooler?) Why do Filipinos, who live in a relatively poor country, report such positive emotions?

Though still unrefined, happiness quantification has come quite a long way since 1974, when a University of Southern California economist named Richard Easterlin published an important paper that put the field on the map. His conclusion, known as the Easterlin paradox, stated that people do not become happier as they get richer. Around the same time, the Kingdom of Bhutan (population 738,000; average income, around $5,800) also began plans to measure what it called gross national happiness. These ideas might have had an impact, but nobody paid attention. “The general reaction of economists,” Easterlin told me, “was: ‘This is just subjective testimony that nobody puts any credit in.’ ”

Happiness studies became a hot discipline in the early 2000s, and France, Britain and other governments now conduct surveys of their own national levels of emotional well-being. It can be fairly instructive. Deaton, who advised the French government on its report, said, “The French are pretty miserable.” The United Kingdom’s Office of National Statistics reports only a slight happiness dip despite a deep recession. On the other hand, Bhutan’s happiness survey is so complex that I have no idea what the Bhutanese are feeling. Nonetheless, a United Nations committee has called upon the world’s governments to adopt happiness measures. A United States government panel is exploring the issue here.

As more data come in, however, many economists are becoming convinced of one significant change: the original Easterlin paradox doesn’t quite hold up. Broadly speaking, the data now indicate that as people get richer, they report getting happier too. Though it’s not quite that simple. Justin Wolfers, an economist at the University of Michigan who helps advise the U.S. government on happiness statistics, told me that poor people in poor countries are not unhappy simply because they don’t have wads of cash. They are more likely to have fewer choices, more children who die in childbirth and other grave problems. And while wealthier nations are generally happier, there is no evidence, Wolfers says, that an artist would be happier if she became a hedge-fund trader.

Article source: http://www.nytimes.com/2013/02/10/magazine/money-changes-everything.html?partner=rss&emc=rss

Unrelenting Downturn Is Redrawing America’s Economic Map

The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.

Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.

For decades, the nation’s economic landscape consisted of a prospering Sun Belt and a struggling Rust Belt. Since the recession hit, though, that is no longer the case. Unemployment remains high across much of the country — the national rate is 9.1 percent — but the regions have recovered at different speeds.

Now, with the concentration of the highest unemployment rates in the South and the West, some economists and researchers wonder if it is an anomaly of the uneven recovery or a harbinger of things to come.

“Because the recovery is so painfully slow, people may begin to think of the trends established during the recovery as normal,” said Howard Wial, a fellow at the Brookings Institution’s Metropolitan Policy Program who recently co-wrote an economic analysis of the nation’s 100 largest metropolitan areas. “Will people think of Florida, California, Nevada and Arizona as more or less permanently depressed? Think of the Great Lakes as being a renaissance region? I don’t know. It’s possible.”

The West has the highest unemployment in the nation. The collapse of the housing bubble left Nevada with the highest jobless rate, 13.4 percent, followed by California with 12.1 percent. Michigan has the third-highest rate, 11.2 percent, as a result of the longstanding woes of the American auto industry.

Now, though, of the states with the 10 highest unemployment rates, six are in the South. The region, which relied heavily on manufacturing and construction, was hit hard by the downturn.

Economists offer a variety of explanations for the South’s performance. “For a long time we tended to outpace the national average with regard to economic performance, and a lot of that was driven by, for lack of a better word, development and in-migration,” said Michael Chriszt, an assistant vice president of the Federal Reserve Bank of Atlanta’s research department. “That came to an abrupt halt, and it has not picked up.”

The long cycle of “lose jobs, gain jobs, lose jobs” that kept Georgia’s unemployment rate at 10.2 percent in August — the same as it was a year earlier — is illustrated by Union City, a small city on the outskirts of Atlanta.

It suffered a blow when the last store in its darkened mall, Sears, announced that it would soon close. But the city had other irons in the fire: a few big companies were hiring, and earlier this year Dendreon, a biotech company that makes a cancer drug, opened a plant there, lured in part by state and local subsidies.

Then, Dendreon announced this month that it would lay off more than 100 workers at the new plant as part of a national “restructuring.”

Union City, with a population of 20,000, now calls itself the place “Where Business Meets the World” and has been trying to lure companies by pointing out its low business taxes, various incentive programs and proximity to Hartsfield-Jackson Atlanta International Airport.

Steve Rapson, the city manager, said that the challenge there, as in much of America, has been to get employers to hire again. “It’s hard to get your mind around what can you do as a city to encourage future jobs and jobs growth,” he said.

The reordering of the nation’s economic fortunes can be seen in the Brookings analysis, which found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing that are helping them recover from their deep slump, while Sun Belt and Western states with sharp drops in home values are still suffering. The areas that have been hurt the least since the recession, the study said, rely on government, education or energy production. Places that were less buoyed by the housing bubble were less harmed when it burst.

In Pennsylvania, the analysis found, the Pittsburgh area — which is heavily reliant on education and health care — is weathering the downturn better than the Philadelphia area. In New York, areas around long-struggling upstate cities like Buffalo and Rochester are recovering faster by some measures than the New York City metropolitan area. And the rate of recovery in Rust Belt areas around Youngstown and Akron, two Ohio cities that were hit hard, has outpaced that of former boomtowns like Colorado Springs and Tucson.

Article source: http://feeds.nytimes.com/click.phdo?i=a90fa0f14bd76cf967be60e5583c254f