A "Florentine Moment?"

I have been discussing Martin Seligman's new book, Flourish: A Visionary New Understanding of Happiness and Well-being.

Towards the end of the book, he discusses the "Politics and Economics of Well-Being." It is not a matter of left versus right, he says.

Left and right are the politics of means - empowering the state versus empowering the individual - but, stripped to essentials, they both advocate similar ends: more material prosperity, more wealth. Positive psychology is a politics that advocates no particular means but rather another end. That end is not wealth or conquest but well-being.

Economics, he says, reigns unchallenged in the policy arena.

At the time of the industrial revolution, economic indicators were a very good approximation of how well a nation is doing. Meeting simple human needs for food, shelter and clothing was chancy, and satisfying these needs moved in lockstep with more wealth. Basic goods and services, once scarce, became so widely available that in the twenty-first century, many economically developed nations such as the United States, Japan and Sweden experience an abundance, perhaps overabundance, of goods and services. Because simple needs are largely satisfied in modern socieities, factors other than wealth now play an enormous role in how well these societies are doing.

Seligman argues that GDP does not capture much of this - which is true, and I remember similar arguments being made twenty years ago as well. But we still await the BEA GDP numbers with huge apprehension to see if we are slipping into recession again. I will come back to issues of measurement later.

He dismisses critics like Barbara Ehrenreich, who argued a in a recent book Bright-Sided: How Positive Thinking Is Undermining America (which I haven't read yet) that accepting reality is more important than fostering happiness:

What Ehrenreich appears to be after is a world in which human well-being follows only from externalities such as class, war and money. Such a crumbling, Marxist worldview must ignore the enormous number of reflexive realities in which what a person thinks and feels goes on to influence the future. The science of positive psychology (and this book) is entirely about reflexive realities." (p236)

He cites George Soros' arguments about reflexivity (see The Alchemy of Finance (Wiley Investment Classics)). Financial markets do indeed depend fundamentally on perceptions and beliefs about the future, although they are the sum of many people's beliefs, not individual belief alone.

And Seligman argues that, just like the Florentine Republic around 1450, we have a choice of what to do with our wealth. Florence decided to invest in beauty, he says ( a bit simplistically. They also got Savonarola and invading French armies).

The wealthy nations of the world - North America, the European Union,Japan, and Australia - are at a Florentine moment: rich, at peace, enough food, health and harmony. How will we invest our wealth? What will our renaissance be?

That is indeed an excellent question, the one I want to help answer in this blog. Amidst all the economic gloom, there is immense possibility. But we need new thinking.

I think maximizing some measure of well-being is a more sensible course of action if there are diminishing returns to looking at GDP and exchange transactions in the economy alone. Seligman's measures, including the 24 positive psychological strengths he and his colleages identify, may not be the last word.

But I think the key thing here is he does have something as a tangible, concrete end. It is an improvement on the long-standing liberal approach of neutrality between ends and a focus on means only, or at best distribution of means. This is why I have a strand on the right looking at ethics and philosophy - for example, Amartya Sen's argument here.

Well-being is not a coercive end. It does not require belief in a particular faith or adherence to a particular ideology. But it does assume there are some things about human nature and human beings which will are common, that in the same way all human beings need food, there are some mental and moral needs in common too.

Angst for the Educated

For labor day, a post about the labor market. Here's a story in the Economist about changing job prospects for graduates and professionals like lawyers:

The gale of creative destruction that has shaken so many blue-collar workers over the past few decades is beginning to shake the cognitive elite as well. ..

The supply of university graduates is increasing rapidly. The Chronicle of Higher Education calculates that between 1990 and 2007 the number of students going to university increased by 22% in North America, 74% in Europe, 144% in Latin America and 203% in Asia. ..The best and the brightest of the rich world must increasingly compete with the best and the brightest from poorer countries who are willing to work harder for less money.

Changing technology also means demand for routine mid- level skills is being "hollowed out":

At the same time, the demand for educated labour is being reconfigured by technology, in much the same way that the demand for agricultural labour was reconfigured in the 19th century and that for factory labour in the 20th.

This is becoming quite a common observation. Of course, the agricultural revolution led to more and better jobs elsewhere. Economist and uberblogger Brad DeLong makes this point in a post from earlier this year:

I don't see a problem with the number of jobs: I don't see any reason that technological unemployment should be any more in our future than it has been in our past.

What is of interest is the effect of all of this on the wage distribution. Here, however, I think the key thing to look at is not demand but supply: the supply of workers. White collar, blue collar, skilled, unskilled, whatever--the high salary occupations in the future will be those that manage to construct and maintain barriers to entry to entrench incumbents.

He sees social barriers to entry and winner-take all competition in other sectors ("there is only one Oprah Winfrey.")

Agreed. Barriers to entry are a fundamental part of analyzing any market, as matter of basic industrial economics. It is a struggle to get people to understand this sometimes, though. I try to explain some of Michael Porter's ideas, likeCompetitive Strategy: Techniques for Analyzing Industries and Competitors to people at work who do not know much economics.

But DeLong is mistaken when he says there is no reason to think there will be any more technological unemployment in the future than the past. The kind of demand matters.

The point I've been consistently making is we have to think of the changing nature of needs and preferences as well, which is where mainstream economics has been weak. Yes, people moved off the farm, and off the factory, and we have vast abundance of food and manufactured goods. But the next things people want up the chain of needs may be different in character. In fact, I believe they are. This is not a reason for pessimism. Instead, it is a call to look more carefully about what people actually want.

And that brings us to one final post on Seligman's book.

Avoiding the big questions for fifty years

I'm discussing Martin Seligman's book, Flourish: A Visionary New Understanding of Happiness and Well-being, starting here.

One thing he talks about is how psychology came to be so reductive.

Originally, I went in to psychology to relieve human suffering and to increase human well-being. I thought I was well-prepared to do this, but I was actually miseducated to tis task. It took me decades to recover and to work my way out of solving puzzles and into solving problems...Indeed this is the story of my entire intellectual and professional development.

He blames the influence of Wittgenstein on philosophy and psychology.

At the heart of both incarnations of the Wittgenstein movement is analysis. The job of philosophy is to analyze in rigorous and minute detail the basic underpinnings of reality and of language. The larger issues that concern philosophy - freewill, God, ethics - cannot be tackled (if ever) until this preliminary analysis concludes.'Of what we cannot speak, we must be silent,,", the Tractatus famously concludes.

But he and others were assuredly not taught about Popper's views, including the famous encounter where Wittgenstein waved a poker at Popper and then stormed out of the room.

Popper accused Wittgenstein of suborning an entire generation of philosophers by setting them to work on puzzles - the preliminary to the preliminaries. Philosophy, Popper argued, should not be about puzzles but about problems: morality, science, politics, religion and law.

How I wish I had suspected in my college years that Wittgenstein was not the Socrates but the Darth Vader of modern philosophy.

Of course, I think this general orientation spread to economics as well, a kind of logical positivism-lite.

Fast forward to 1995, when Seligman wants to hire an applied psychologist to his department. He asked an older psychologist "why the entire faculties of the great universities work only on basic processes and not on the real world."

It happened at a moment in time, Marty," said Jerry. "and I was there. It was at a 1946 meeting of the Society of Experimental Psychologists. ..the chairmen of Harvard, Princeton and Penn met at lunch and agreed that psychology should be more like physics and chemistry - doing basic research only - and that they would hire no applied psychologists. All the rest of academia immediately fell into line. (p59-60)

That might be a little close to conspiracy to be the whole story. But nonetheless Seligman says that basic and applied science depend on each other.

Physics was proceeded by an ancient science of engineering, which actually solved problems, before it grafted on abstract, basic research...Good science requires the interplay of analysis and synthesis.

Why am I so interested in this? Because I think most if not all of the social sciences, including economics, went off track in the 1930s and 1940s, and for over fifty years all the institutional forces - for a variety of reasons - militated against asking deeper questions about what people want and need, and purpose. Psychology is waking up with Seligman's work. Psychology also (separately) started to tip over into economics in the 1990s with Kahneman and Tversky's work on prospect theory, now the increasingly flourising field of behavioral economics.

For fifty years the academy by design avoided the questions we most need to answer when we approach a condition of material abundance. That helps explain why the essay I've used as a benchmark for my questions in this blog - Keynes' Economic Possibilities for our Grandchildren, starting here - dates back to 1930, before big questions became unfashionable.

I felt the same when studying economics, where I grew impatient with parsimonious mathematical models. "Research" seemed to consist in many cases of just finding more ways to torture econometrically the same narrow set of national accounts data - thin and unconvincing.

No wonder we flounder when trying to see our way forward as a society.

Happiness is important, but not the only thing

Seligman's new approach helps deal with one objection - the monism of looking at happiness alone.

Amartya Sen, whose bookThe Idea of Justice we were discussing here, says:

The central issue is not the significance of happiness, but the alleged insignificance of everything else, on which many of the advocates of the happiness perspective seem to insist. (p273)

This was one of the problems of the older utilitarian tradition.

Martin Seligman"s Flourish

I've just finished reading Martin Seligman's new book Flourish: A Visionary New Understanding of Happiness and Well-being.

Seligman is a Professor of Psychology at the University of Pennsylvania, and is generally recognized as the founder of the "positive psychology" movement which has attracted enormous attention in the last few years. The basic idea is psychology mostly focused on pathology for most of the twentieth century, "relieving misery and uprooting the disabling conditions of life", as he puts it. In 1998 he gave a speech to the American Psychological Association arguing that the discipline needed to look at healthy situations as well, a new goal of "exploring what makes life worth living and building the enabling conditions of a life worth living."

I find the book pathbreaking and persuasive in many ways. It solves some of the major problems with using "happiness" as an indicator. It is an argumentative and quirky insight into how research and academic politics work in practice. And it is remarkably engaged with real problems, such as trying to help US army veterans with their family relationships and their resilience when they return home from Iraq or Afghanistan. It is not simply theory, it is applied policy and something whih can be tested in terms of the difference it makes to real people's lives. And the difference seems to be considerable, at least on present evidence.

Of course, one of the principal reasons I find it so interesting is that it helps deal wtth the fundamental question I've been grappling with on this blog - what happens when you have abundance of material goods? How should the economy work then and what should we aim for in order to deliver more of what we actually want?

The positive elements of well-being Seligman identifies are an important part of the answer to that question.

To start off with, though, it is important to look at how his own thought has evolved. He had a major change of mind after writing a seminal book on happiness, Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment, in 2002.

He explains why he changed his mind, and lays out his theory of well-being. It is substantially different from the one he advanced in his previous work. This in itself fascinating, an exampe of a very prominent academic changing his mind in resonse to argument and evidence.

He begins by saying happiness is not one thing, or even a useful term.

.. I actually detest the word happiness, which is so overused it has become almost meaningless. It is an unworkable term for science, or for any practical goal such as education, therapy, public policy, or just changing your personal life. The first step in positive psychology is to dissolve the monism of "happiness" into more workable terms.(p9)



He argued until recently in favor of life satisfaction as the major objective. His original theory in the 2002 book broke "happiness" down into three more measurable and tractable elements which together made up life satisfaction.

The first is positive emotion, which means the presence of positive feelings like pleasure, warmth, or ecstasy.

The second is engagement, which is essentially flow - being utterly absorbed in an activity. This is the same as in Mihaly Csikszentmihaly's famous book Flow: The Psychology of Optimal Experience.

The third of his components is meaning. The meaningful life, he says, "consists in belonging to and serving something that you believe is bigger than the self".

Now he has changed his mind. The new theory emphasizes well-being over life satisfaction. Life satisfaction is too influenced by cheerful mood alone at a point in time, he says, and not enough by how you judge your life to be going.

What is more, there are other things we pursue for their own sake beyond happiness. And this must be taken into account. "Positive psychology, as I intend it, is about what we choose for its own sake". (p11). So he needs a wider concept.

Well-being is a construct, he says, with different elements that contribute to it. It is not a single measure. Instead, like "weather", it consists of different components that you can measure, such as rainfall, temperature, pressure or windspeed.

He keeps positive emotion, engagement and meaning from the previous theory. But he adds, first, accomplishment - winning, achievement and mastery for its own sake. People do pursue it for its own sake "even when it brings no positive emotion, no meaning and nothing in the way of positive relationships." It may not bring happiness in the more restricted sense.

The final element is positive relationships. "Other people are the best antidote to the downs of life and the single most reliable up." (p20). Indeed, he notes the new theories that the human brain evolved in size to deal with complex social calculations.

Put the five elements together and you have the acronym PERMA.

The rest of the book discusses practical exercise and studies. These actually appear to produce positive outcomes in schools and the US army. He talks, for example, of the power of "what went well" exercises, "signature strength" studies and the value of teaching skills in processing emotions. He looks at the outcomes of positive emotion on biological health.

A new industrial revolution

The head of the Freelancer's Union writes in The Atlantic

It's been called the Gig Economy, Freelance Nation, the Rise of the Creative Class, and the e-conomy, with the "e" standing for electronic, entrepreneurial, or perhaps eclectic. Everywhere we look, we can see the U.S. workforce undergoing a massive change. No longer do we work at the same company for 25 years, waiting for the gold watch, expecting the benefits and security that come with full-time employment. We're no longer simply lawyers, or photographers, or writers. Instead, we're part-time lawyers-cum- amateur photographers who write on the side.

Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces. Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.

And, perhaps most surprisingly, many of them love it.

This transition is nothing less than a revolution. We haven't seen a shift in the workforce this significant in almost 100 years when we transitioned from an agricultural to an industrial economy. Now, employees are leaving the traditional workplace and opting to piece together a professional life on their own. As of 2005, one-third of our workforce participated in this "freelance economy." Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work. While the economy has unwillingly pushed some people into independent work, many have chosen it because of greater flexibility that lets them skip the dreary office environment and focus on more personally fulfilling projects.

But as she says it is not always voluntary. It offers greater opportunity but much greater vulnerability - although perhaps that is the essence of life.

The payroll numbers on Friday - no job growth at all, zero compared to a Bloomberg survey expectation of 68k - was just awful. it is likely a sign that a double dip is on the way.

it is big corporations who have come through the crisis relatively well. I think freelance sounds attractive in many ways - but in practice it may also mean some massive corporation doesn't pay you for work you've done for 90 days or much longer to get an extra kick in its cashflow.

It has also been a theme for many years - I believe Charles Handy wrote about it the 1990s, and Robert Reich and others in the 2000s. I'll explore it and related ideas about entrepreneurship in future posts.

Density and Vitality in Cities

Here's an interesting opinion piece in the NYT on how density in cities fosters growth, by giving niche or experimental businesses more chance to find an audience:

How great are the benefits of density?... Some economists have concluded that more than half the variation in output per worker across the United States can be explained by density alone; density explains more of the productivity gap across states than education levels or industry concentrations or tax policies.

Put two workers with similar skill levels in cities of different densities and the one in the denser place will be more productive, according to two decades’ worth of research from economists...

What is it exactly that dense cities are doing? Consider a simple example. Suppose that within a population one person in 100 develops a taste for Vietnamese cuisine, and suppose that a Vietnamese restaurant needs a customer base of 1,000 people to operate profitably. In a city of 10,000 residents, there aren’t enough people to support a Vietnamese restaurant. The only restaurants that can operate profitably are those appealing to considerably more than one in 100 people — restaurants offering less daring fare. In a city of 10,000 people, there is little room for specialization, and less for experimentation.

A city of one million people, by contrast, can support multiple Vietnamese restaurants. Not only will this larger city enjoy a specialty cuisine unavailable in less populous places, but its ability to support multiple producers of this cuisine allows for competition, improving the price and quality.

The problem, accruing to author Ryan Avent, s that residents of dense cities like San Francisco also limit building, to preserve neighborhoods, and that drastically forces up house prices. And that means skilled workers can't afford to move there, or leave for places like Phoenix with a much lower cost of living.