Sunday, April 30, 2017

Easterlin (2016) Relocates the Seemingly Lost Paradox

Richard A. Easterlin, “Paradox Lost?” USC Dornsife Institute for New Economic Thinking, Working Paper No. 16-02, 2016.

• Easterlin’s version of the Paradox: At a given point in time, within a country, happiness is positively correlated with income, and furthermore, at a given point in time, richer countries are happier than poorer countries. That is, cross-section evidence suggests a positive association between income and happiness. Over time, however, happiness is not positively correlated with income. Paradox! But the time period in which the relationship between income and happiness collapses needs to be substantial: it is long trends in happiness and income that seem to be uncorrelated. 

• Over nearly 70 years, happiness trends in the US have been zero or slightly negative, despite per-capita income tripling. 

• Easterlin looks at countries with at least 1 million people, and that possess data from at least three Subjective Well-Being surveys, conducted over a period of at least ten years and one GDP cycle: 43 countries make the cut. He finds no significant relationship between growth and happiness in this panel data. 

• Some other researchers generate different answers because they look over shorter timespans. Transition countries, for example, tend to be included with only one phase of their transition cycle in the data, biasing results towards a positive connection between GDP and happiness.

Links to outlines of a few closely-related papers:

Betsey Stevenson and Justin Wolfers, “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox.Brookings Papers on Economic Activity, pages 1-87, Spring 2008. 

Daniel W. Sacks, Betsey Stevenson and Justin Wolfers, “The New Stylized Facts About Income and Subjective Well-Being.Emotion 12(6): 1181- 1187, 2012.

Richard A. Easterlin, “Happiness, Growth, and Public Policy.” Economic Inquiry 51(1): 1–15, January 2013. 

Richard A. Easterlin, “Happiness and Economic Growth: The Evidence.” USC Dornsife Institute for New Economic Thinking, Working Paper No. 14-03, November 6, 2014.

Wednesday, April 5, 2017

Samek (2016) Nudges Schoolchildren to Drink Healthier Milk

Anya Samek, “Gifts and Goals: Behavioral Nudges to Improve Child Food Choice at School.” CESR-Schaeffer Working Paper Series, Paper No: 2016-007, January, 2016; available at SSRN.

• The author arranges for a field experiment to take place at eight public elementary schools in Chicago; the 1400 or so child subjects do not know that they are participating in an experiment. 

• The only lunch menu choice that is available to these schoolkids every day is whether to get the (low-fat) white milk, the (low-fat) chocolate milk, or do without milk altogether. On the first day of the experiment, students are nonchalantly observed when they make their milk choices. Chocolate milk is the big favorite: more than 85% of kids take the chocy, 11% take white, and 3.4% go milkless.

• In the second and final day of the experiment, a control and two treatment goups are implemented. In the control condition, teachers very briefly explain the relative merits of white milk (chocy milk has added sugar, and that is less healthy, you see) shortly before lunch. In the “Gift” condition, the explanation is followed up by a gift of a sticker to all students, no questions asked and nothing required in return; and in the third condition, “Goal,” students are asked to make an unenforceable goal, a written pledge, as it were, to choose the white milk (though they can pledge themselves to chocolate). 

• The control condition induces a huge increase in white milk purchasing, to over 47%. The Gift condition brings a slightly larger shift to white, with the Goal condition in between. The goal-setting “works” better for younger kids, but the sticker “works” about the same for everyone. 

• The unconditional gift tries (and seemingly succeeds) to connect the milk choice to reciprocity; one advantage of an unconditional gift is that no enforcement (of conditions) is needed. 

• The choices in the Goal group suggest a good deal of time inconsistency – lots of kids who pledge to get the white milk change their mind when the decision itself is at hand – even though the elapsed time between pledge and decision is only about 15 minutes. 

• The fact that the nudge and its recorded effects are of the one-day-only variety is a pretty severe restriction on drawing policy advice from the experiment. My main takeaway, as it were, concerns the large shift towards choosing white milk in the control condition: a very short piece of pro-white-milk propaganda delivered by a teacher alters lots of elementary student milk choices. Use this power wisely!