Economic Freedom and Happiness

I was recently looking at the economic freedom numbers for countries around the world and I wanted to know what the connection to actual outcomes was; in particular, the happiness of the people in those countries. All the rest are surrogates. Political and economic debates sometimes lose focus on this fact.

I looked at the following data, for all countries that had them (evident in the datasets); for each, it was always a clear majority of countries on the planet.

- The Heritage Foundation's Economic Freedom Index for 2011

- White's Life Satisfaction Index

- GDP per capita (IMF data, supplemented by CIA for small countries, non-reporting countries, or inaccurately reporting countries)

- Gini index (from the U.N., or for some countries in the midst of conflict the Global Peace Index statistic)

- Economic growth for countries 1990-2007 (data from United Nations Statistics Division)

As I've done previously, rather than show a bunch of scatter-plots, I'll give you the statistical highlights. I'm happy to share the spreadsheet if anyone is interested, although this is not quite graduate-study-level QC'd data.


Map of White's life satisfaction index in 2006. This is what counts.

Highlights:

1. Interestingly, economic freedom correlates more closely with life satisfaction than with economic growth (R^2=0.239 vs 0.1075). This suggests that economic freedom adds to utility other than through direct material gain. Freedom does correlate better with per capita GDP than with growth (more below).

2. Economic freedom is associated (albeit weakly) with a decrease in Gini, that is with a more equitable income distribution.

3. There were a number of outliers in the plot of economic growth vs. life satisfaction. Most of these were very high Gini countries.

4. In the "unsurprising" cateogry: there were two R^2 that rose above 0.3 were the correlation between per capita GDP and life satisfaction (0.3106, stronger without outliers). The correlation between economic freedom and per capita GDP was even stronger at 0.3873. The curve appears to flatten at the high end of per capita GDP (removing three outliers raised the R^2 to 0.4665) reinforcing the conclusion that once basic needs are met there is a diminishing return. It bears emphasizing that this is a correlation, not a cause; economic growth may CAUSE economic freedom, or they may both be caused in parallel by the same thing.

Correlation	R^2	Relationship Means?
Econ free & PCI	0.3873	Every point increase in econ freedom (range 0-100), raise PCI US$70
PCI & life sat.	0.3106	Raise PCI US$1,000, increase life sat. 1.14 pts (range 100-250)
Econ free & life sat.	0.239	Add a point in econ freedom (range 1-100), increase happiness 1.67 points (range 100-250)
Econ free & growth	0.1075	Add a point in econ freedom (range 1-100), increase growth 0.001%
Econ free & Gini	0.0837	Add a point in econ freedom (range 1-100), decrease Gini 0.2685
Growth & life sat.	0.0544	Every 10% increase in growth, get 25 points happier (range 100-250)
Gini & life sat.	0.0258	Increase Gini by 1, life sat. drops by 0.5 (range 100-250)

CONCLUSIONS:
Unsurprising, but interesting to see in this form. Adopt policies that expand economic freedom in order to make people happier, partly by increasing growth. The best way to produce happiness is to reach a target high per capita income, but there is a diminishing return. Economic freedom has a weak beneficial effect on Gini, but Gini can offset the happiness effects of high PCI and good growth.


Future questions:
- There are a number of countries that, looking merely at per capita GDP, aren't as life-satisfied as they should be. These countries usually have large Gini; a surface in a 3D scatterplot would show this distortion. It might be informative to see which countries are "off the surface" in terms of how much we expect their Gini to distort their happiness:PCI ratio, and then ask how this effect is transmitted - a first guess to investigate would be degree of media saturation. Prediction: countries with more media and a high Gini will tend to be less happy that those with less media but the same Gini. Seeing how the other half lives forces everyone into the same status game.

- Are certain regions of the world off these curves in predictable ways because of cultural commitments? (See the World Values Survey.) E.g., are Confucianist countries less happy per dollar of PCI? Or are cultures with more family-oriented, traditional values differentially susceptible to the effects of Gini distortion?

- (Added later: personal economic freedom in the 50 U.S. States can be found by category here.)

What Happens When You Confront Chinese Secret Police?

This. The reporter then asks for the "regular" police for protection, who, shockingly, don't show up. One approach: next time, might be worthwhile telling the regular police that there are "Falun Gong hooligans" harrassing foreigners trying to spend money, just to see the look on the regular cops' faces when they arrive.

Meanwhile, in a fun report on General Motors in China, GM "gratifies the Party orally" in a CCP propaganda film.

How to Measure Ideologies

From a post at my atheist blog:

The existence of dissidents is a fair acid-test for whether there is actual logic underlying the ideology, however monstrous its manifestations in the real world ever became; in the barks and howls of race- and personality-driven dictatorships it's not clear what "dissident" could mean, apart from diametrically opposed. To my knowledge there has never been a North Korean hetero-ideologue driven from the Kim family's inner circle to exile with artists in Mexico, to scribble furiously about how his version of Juche was the pure one, and the Kims had perverted it to their own ends. The same is true of the Nazis: without Germany and its late iron age tribal chief, there could have been no grounds for schism.

Full post is here. It reflects a point I made earlier that discussions of cultural preservation or serving an ideology or political system only to preserve that system are badly and dangerously missing the point of how we should live; bottom line, cultures can't suffer but people can. Plus the new post features a rare disagreement with a Hitchens piece.

Finally My Tragic Artistic Genius Has Been Recognized

I entered a "freestanding art" piece in the UCSD grad student art show. There's no picture here, because there's no need. It was just one of those old plastic boxes used for holding cassettes, with 15 cassettes in it - Megadeth, Skid Row, etc. - and if you're under about 30 and you don't know what I'm talking about, my trying to explain it further won't help. I was about to give or throw it away anyway, and for grins I thought I would tug on some nostalgia strings by setting it out unaltered and titling it "Still Can't Go Back".

It won third place.

Not only is this an insult to the amazing talent obviously required for my spraypaint-on-canvas piece Black's Beach (which I also entered but which garnered little attention), it in general is a high indictment of the UCSD community's taste in art! (Sniff.) Mostly I'm mad because 3rd place has no prize money or certificates. Do you think Dali had to deal with this kind of thing? Did Velasquez give up when the Germans bombed Pearl Harbor?

Brilliant Review of Joyce's Ulysses

Ulysses is an overwrought, overwritten epic of gratingly obvious, self-congratulatory, show-off erudition that, with its overstuffed symbolism and leaden attempts at humor, is bearable only by terminal graduate students who demand we validate the time they've wasted reading it.

Ron Rosenbaum is my new hero. I'm going to make an effort to use the phrase "terminal graduate student" every day for a month. (Found via The Daily Dish.)

Alternative History 1: What If Homo Erectus Still Existed Today?

Next in the series, alternate history vs actual history test: which really happened?

Also check out geographic counterfactuals in fiction

I'm nerdy enough that I keep a list of possible branchpoints in history where it would be interesting to explore counterfactuals, and which (to my knowledge) no one has. Originally I was going to write them as short stories, but since short stories take longer to write than blog posts and in alternative history the characters and dialogue are often afterthoughts, so this would seem a better venue. Starting with this one I'm going to go in chronological order of the branchpoints.

First: there are neanderthal alternative histories. There's a Harry Turtledove story about a present where Neanderthals have their own nation-state in the dry Mediterranean salt beds, as well as (excellent) Robert Sawyer novels about a Neanderthal physicist from a parallel universe where sapiens died out.

But in these stories the neanderthals were of equal intelligence; the point of alternative history, as a subgenre of speculative fiction, is to bring setting into play as a variable among the elements of literature to ask questions that would have otherwise been senseless or impossible (discussed here.) In this case, that question is what happens if there is an intelligence gap? In fact there were erectus-descended hominids still on Flores until 10,000 years ago or so, and presumably the arrival of humans didn't help them very much. So the first problem with such an alternative history is it's hard to imagine a coherent sequence of events that would have allowed erectus, if they're less intelligent than us, to have survived to the present unless they're in complete isolation - and the converse is true as well. Harry Harrison explored the same idea in East of Eden, where humans isolated in North America meet the highly advanced descendants of dinosaurs, previously unknown to them, as they push out from the continent-spanning city in their home in Africa. Once contact is made it's hard to imagine a good outcome for both species. Might this not be truer the more biologically similar they are? After all, reptiles and mammals aren't competing for the same resources.

So, perhaps imagine an alternative history where eighteenth century English sailors talk to Chinese fisherman off the coast of Australia, and take the Chinese myths of small hairy men they met on the shores of a vast southern land to be just old wives' tales - and then find they're true. If the representatives of King George had found Australia carpeted with the glittering crystalline technology of an erectus nation-state, all of whose citizens spend the day in quiet inward-looking meditation (which is why they haven't colonized the world), might they not have been well-advised to quietly turn around and sail back out to sea, hoping not to have been noticed?


What if that spear were a ray-gun?

Conversely, let's assume that today, there is a mistake that's been buried in satellite code since the first launches that has resulted in a certain latitude-longitude blind spot in the south Atlantic, where there turns out to be an island harboring barely-tool-using erectus. With our modern sensibilities, would it be moral to make contact with these "people"? Could we make contact with them, if they can't fully understand language? Meaningful and fair trade would seem to be out of the question. They could barely be assimilated into the global economy as manual laborers, and their island would be quickly swindled out from under them by the tall pretty people who came to visit them. What could be a possible positive outcome for them? In 2100, will humans again accept serfdom as a moral alternative for these not-chimps-but-not-people? Or should the U.N. keep them isolated as a nature preserve, defending the island from smugglers and poachers, and darting the curious ones that swim out to the observation boats, to be replaced back in their brush-nests before they see anything?

Rand Paul at the Congressional Correspondents Dinner

You gotta love the guy, he actually made a Star Trek reference. Given that he was in D.C., I'm not sure how many people in the room got it.



He's doing a valuable service. We're in a bad spot right now. Democrats are a-okay with being Team America: World Police when it's their guy doing the bombing - and among many, Rachel Maddow's fawning that Obama's "attitude" is what makes the difference is particularly disgusting. I don't think the people dying in what is now our conflict, on either side, particularly care about Obama's attitude. And we hear precious little real opposition from the GOP, who don't dare criticize a war on humanitarian grounds for fear of looking soft.

Of course, one suspicion is that by starting a new war and simultaneously saying he'll encourage new oil drilling inside the U.S. (that's right Democrats, drill baby drill!) Obama is co-opting the GOP's few remaining sane moral and economic points and forcing them further to the fringe. Think how this war will play to the heartland during the 2012 debates when the GOP primary winner tries to call him soft on defense, or says the Democrats are weak on energy. Appointing Jon Huntsman ambassador to China was another move designed to assimiliate possible GOP moderation, and it's still not clear why Huntsman isn't more widely considered a literal Manchurian candidate in the GOP primary field, to torpedo a certain fellow moderate Mormon, and let the evangelicals have their way with the GOP in spring 2012.

The bottom line: the crazier the tea party and social conservatives get, the happier the Obama administration is, and the more rotten (or completely ignored) our discourse and legislative process become. This problem of democracy is not a uniquely American problem. Sarkozy's hair-trigger enthusiasm to bomb someone seems to have been influenced by similar electoral calculations. You're serious about human rights, gentlemen? What about North Korea and Congo and Somalia? I guess human rights must have something to do with oil that we just aren't understanding.

Political strategizing is fine but not when a side effect is using my tax dollars to end human lives.