Rajesh Vishwas has become famous, though it’s probably not the kind of ill-repute he desired. He is a Food Inspector from Chhattisgarh and dropped an expensive phone into a reservoir. He drained the reservoir of 21 lakh litres of water to retrieve the phone. He has been suspended and fined Rs 53,000.
The cost of the water is, of course, much more. But that’s not what I want to focus on. Research on happiness has exploded. I am sceptical about economists dabbling in it and trying to measure it, though many famous economists have tried to measure happiness and well-being through surrogate indicators. Essentially, you choose a set of indicators that should have something to do with happiness. You get data on these, assign weights and aggregate them to get an index.
The economist has measured happiness like a magician producing a rabbit out of a hat. It becomes worse when that index, which incorporates value judgements, is extended for cross-country comparisons, ignoring that cultures differ in attitudes towards happiness. Happiness is a state of mind; many religious texts tell us that what makes us happy or unhappy is temporary and transient. Take Rajesh Vishwas. Is he a happy person or an unhappy one?
He would have been miserable when he dropped his phone into the reservoir. He would have been delirious after draining the water and retrieving the phone. With the suspension and fine, he became miserable again. This does not negate the possibility of individuals mastering the art of being happy through meditation or whatever means they choose. One can stimulate the hormones – serotonin, dopamine, endorphin and oxytocin. If someone tries to measure their flow in the brain, I can understand.
But economists don’t do that. They use economic indicators. Per capita GDP and poverty ratios measure welfare in some sense. If one is dissatisfied those, there are the quality of life indicators, HDI (human development index) and multi-dimensional poverty index (MDPI). If someone says these measure human development, deprivation and welfare, there is nothing wrong with the statement. But happiness?
The opposite of happiness is misery. Arthur Okun was an economist, generally remembered now for Okun’s Law, a relationship between the unemployment rate and GDP (actually changes in these). He also constructed a misery index for the USA based on the unemployment and inflation rates. Take something like the inflation rate. Economists will be divided on the implications an inflation rate has for growth. Venezuela’s inflation rate is 1198%.
Every economist will say this is bad. South Sudan has an inflation rate of minus 11.6%. Every economist will also say that this is bad. It all depends on the levels. Since there is always some frictional unemployment, this is equally true of the unemployment rate. The Okun misery index presumed both high unemployment and high inflation rates were bad.
These were value judgements and reasonable ones because the index was applied to different time periods in US economic history. Since this was the same country, both indicators were within a certain band, with no extremes. Another famous economist, Robert Barro, expanded the Okun index by adding the interest rate and the gap between actual GDP growth and the potential. These are important, too, though there is virtue in keeping an index simple. But the Barro index was also for the USA alone.
We get into perilous territory when this becomes cross-country. This is precisely what Steve Hanke from Johns Hopkins does. This is called HAMI (Hanke’s Annual Misery Index). To quote him, “My version of the misery index is the sum of the year-end unemployment (multiplied by two), inflation, and bank-lending rates, minus the annual percentage change in real GDP per capita. Higher readings on the first three elements are “bad” and make people more miserable. These “bads” are offset by a “good” (real GDP per capita growth), which is subtracted from the sum of the bads to yield a HAMI score.” Fair enough.
At least one is not using subjective responses to questionnaires. These are hard objective data, though one should baulk at this being called a misery index. I think this is more serious than quibbling about semantics. In 2022, 157 countries were ranked. Which is the most miserable country, ranked number 1? Zimbabwe. Which is the least miserable country, ranked 157? Switzerland. India is ranked number 103, ahead of Finland, ranked number 109. In both countries, unemployment is a major concern. Let that sink in. The average citizen of Finland is more miserable than the average citizen of India.
Contrast this with the 2023 version of the World Happiness Report (WHR). According to that, Finland is the happiest country in the world. It may very well be. But in that case, why is the suicide rate in Finland more than the European average? Why are depression and mental ailment levels so high? Why is there so much drinking and substance abuse compared to neighbouring countries?
All this is known, and there has been research on such issues. I am not picking on Finland. I am picking on WHR. Henry David Thoreau wrote, “Some circumstantial evidence is very strong, as when you find a trout in the milk.” The circumstantial evidence is extremely strong that WHR has got it completely wrong. Finland is an illustration. I am certain there will be other examples.
The methodology of the Cantril ladder and the nature of the Gallup World Poll are extremely suspect, as are the arbitrary indicators, weights, sample sizes and scaling. To quote from FAQs on methodology, “A sample size of 2,000 to 3,000 is large enough to give a reasonably good estimate at the national level.” Finland’s population is around 5.5 million.
Delhi metropolitan area’s population is of the order of 33 million. Any statistician worth the degree will shudder at the sample size of 2,000 to 3,000 for India, respectable though it might be for Finland. That’s why WHR has been roundly criticised, and nothing I have said about WHR is new. In this column, all that I have brought in is HAMI.
On methodological grounds, HAMI is sounder but doesn’t seem as popular and known, probably because those who lend their weight to WHR are powerful collective global voices. However, compared to HAMI, WHR is ham-handed.