Are you happy with your lot in life? The chairman of the Federal Reserve wants to know.
Lately, Ben Bernanke, head of the nation’s main fiscal policy body, has been talking about happiness and how to measure it. As he has noted, how people feel about their wealth, their financial stability and what the future holds says a lot about how they conduct themselves in the marketplace.
In short, people who are happy and comfortable are more likely to spend money and perhaps take a few more economic risks.
Data show that when people have financial security, either through jobs or personal wealth, they tend to be happier. That makes sense; someone who knows where his next meal is coming from is likely to have a better outlook than an individual who doesn’t.
The Federal Reserve tracks all manner of hard data, ranging from money supply to productivity to interest rates as part of the process in determining monetary policy. Bernanke is now pushing for what economists sometimes call “happiness studies.”
“We should seek better and more-direct measurements of economic well-being,” the Fed chief said in a speech last week to economists and statisticians in Cambridge, Mass. As Bernanke sees it, the Fed’s economic tasks ultimately boil down to an effort to make people happy.
We can’t argue with the notion that happiness plays a role in how a nation may recover from an economic downturn. Emotion plays a significant role in the financial decisions of human beings.
But at the same time, we also know that happiness is a subjective concept that isn’t easy to measure.
Ask people a question about their happiness two different times in the same week and you are likely to receive different responses. For many people, happiness is linked to the emotions of the moment, not some long-term rational assessment of one’s financial situation.
So if the Federal Reserve intends to make happiness a factor in assessing the state of the nation’s economy, it must be careful. It will need to do a lot of measuring. And it will have to do extensive testing to determine the best way to ask the right questions.
Meanwhile, the Fed might want to make use of existing data. We note that public opinion pollsters routinely ask Americans about job satisfaction and similar happiness-related matters.
Even in an era where government wants to measure emotions, it makes fiscal sense to use what’s already available.
New Castle News, New Castle, Pa.
Opinion
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