 It's on, okay. My subject is something called happiness research. It's a new type, relatively new kind of research in economics over the past 30 years or so. And probably the biggest name in this is Bruno Frey from University of Zurich. And he may well win the Nobel Prize someday in economics because of this. That's usually what it takes, a new and different twist on some aspect of the field of economics. And what it also is, is an insidious attempt to pretty much ignore the progress economic science has made over the past 50 or 75 years in order to promote socialism. And so, let me explain to you briefly what this so-called happiness research is and why people like Bruno Frey think it's so important is that they say basically rather than measuring economic performance in terms of such things as GDP and how much is produced, how much affluence is created, what's really important is happiness. It's not how much stuff would create, it's just happiness per se. And there are some really socialists who have written several books about this. One of them is both the spirit level and the other one is called affluenza, claiming that affluence is a disease like influenza. And so it really is an attack on the whole idea that affluence is a good thing. And so as Hans mentioned this morning to me that while Bruno Frey ever does win the Nobel Prize, he surely would give the money back because it would make him very unhappy to accept a quarter of a million dollars or whatever they pay for the Nobel Prize. And the really horrible thing from the perspective of an economist of this is that this research is based on opinion polls. And for a long, long time it was understood by all economists, not just the Austrian school, that what matters in studying human behavior is what we call demonstrated preference, people's actual choices in the marketplace. Not their opinions because people will say anything. I can think of an opinion poll on environmental issues that I recently ran across where people were asked are you in favor of recycling and something like 95% said yes. And then the question was changed to are you in favor of recycling if it will cost you $50 a month and it was something like 10% said yes on that. So these can certainly be manipulated. But to give you an idea of why this is sort of a shocking abandonment of common sense in economics is that there's a famous article, at least among the Austrian school economists by Murray Rothbard called toward a reconstruction of utility and welfare economics. And so for those of you not everyone, you know, we don't have that many economists here in the room I guess. But here's what he says about demonstrated preference. And this is not unique to the Austrians. This is something that most economists subscribed to for a long, long time. The concept of demonstrated preference is simply this, that actual choice reveals or demonstrates a man's preferences. That is his preferences are deductible from what he has chosen in action. Thus if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred over an entire on his value scale. Similarly, if a man spends $5 on a shirt, we deduce that he preferred purchasing the shirt to any other uses he could have had found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis and particularly of utility and welfare analysis. And on the subject of opinion polls, here's what Rothbard said, one of the most absurd procedures based on a constancy assumption. That is the assumption that people's preferences never change, which of course they do. Women are legendary, aren't they for changing their minds? The enemy, yet change of mind, who knows? A few more days. Here's what Rothbard said, one of the most absurd procedures based on a constancy assumption has been the attempt to arrive at consumers preference scales, not through observed real action, but through quizzing him by questionnaires. In Vacuo, a few consumers are questioned at length on which abstract bundle of commodities they would prefer to another abstract bundle and so on. Not only does this suffer from the constancy error, but no assurance can be attached to the mere questioning of people when they are not confronted with the choices in actual practice. Not only will a person's evaluations differ when talking about them from when he is actually choosing, but there is also no guarantee that he is telling the truth. And so the people who are doing this so-called happiness research just ignore this. The whole economics profession, for the most part, accepted this for generations. And all of a sudden there are these economists who said, well, what people say in a questionnaire is acceptable. They give no reason for this. I searched a lot of the literature, I couldn't find any explanation given for why all of a sudden they think this is legitimate to do this. They just do it because it has provided a goldmine for economists looking for ways to pad their resumes. Because no longer do they have to go and do the hard work of finding data with which they can use to test their hypotheses or their theories. They just make it up. They send out questionnaires and that's their data. So they fabricate their own data now related to so-called happiness. And another thing that they do with this is they assume that utility in the language of economics is cardinal after all. If you take a Principles of Economics course, the word utility is basically used as a synonym for satisfaction, human satisfaction. And it's been understood for a long time that utility is subjective. It's in the eye of the decision maker. There's no way of putting an objective value on how many utils of satisfaction you get from consuming a cappuccino or a glass of red wine or something like that. It's subjective. The happiness researchers say, nah, forget that. It's objective after all because we will send out questionnaires and ask people how they rank that cup of cappuccino on a scale of one to six. And we will get a number. We'll get a three or a four or five and that'll be our measurement of utils. How many utils they get based on their opinions, not based on their actual choices. And so once you've done that, you can make interpersonal utility comparisons. You can say such things as, well, an extra thousand dollars that goes to a millionaire doesn't create much additional satisfaction because he's already a millionaire. But an extra thousand dollars that goes to a poor man probably creates a great many utils because it goes to a poor man who doesn't have much money. Therefore, we can increase total societal satisfaction by taking the money a thousand dollars away from the rich man and giving it to the poor man. Now on net society will be improved and this in the language of economics is called a social welfare function. It's one of the things that was debunked by the marginal beginning with the marginal revolution in the 19th century and on into the 20th century with the improved analysis of what is called welfare economics. And so the so-called happiness researchers have pretty much abandoned really the heart of the study of decision making in economics in order to base their work on questionnaires, which are very questionable indeed. And so I have here a summary article of this by Bruno Fry and Aloise Stutzer in the Journal of Economic Literature. This is published by the American Economic Association and so it's a very prominent publication and it's called What Can Economists Learn from Happiness Research? In this Journal of Economic Literature all the articles are big long surveys of the state of the art in a particular sub-discipline area of research. And so if you want to know what this is about this is the article to start with right here is in the June 02 issue of the Journal of Economic Literature. And so to describe what is going on here in this happiness research I'll tell you what it says, what Bruno Fry and his co-author would say here. One of the things that as I said they simply assume the utility is cardinal after all by virtue of having conducted opinion surveys, which is a very dubious thing. And Bruno Fry writing this article he's just celebrating this, he's very cheerful about the whole thing. And so maybe he does think he's going to get the Nobel Prize for this. And here's one of the things he says is happiness functions as in mathematical function have sometimes been looked at as the best existing approximation to a social welfare function. It seems that at long last the so far empirically empty social welfare maximization is given a new lease on life. So like I said they're sending out these opinion surveys and they're claiming that they can use the surveys to instruct the government on how to maximize societal welfare. And I did a little web search of this in preparing this lecture and one article I found said that the government of Brazil is amending its constitution. I don't know if it's done it yet already to mandate that the government must maximize happiness of the people. And so we already have that in the U.S. Constitution. It has been so perverted and misinterpreted over the years that the government thinks the Constitution gives it a rubber stamp to do just about anything. But this would be assumed the Brazilian version of that if the government gives itself a mandate to create happiness. Well who's to define what happiness is? Well of course the government will define what happiness is. And so this will be a rubber stamp to do anything there. Also another big claim in this literature is that it claims that income has increased dramatically since World War II but happiness has not. So the wealthier on average people of the world have gotten the more unhappy they become. And this doesn't seem to make a lot of sense to me. It says if you work hard to save your money and you succeed, you're an entrepreneur, you create new products, you have employees who work for you, you're thriving, it makes you unhappy, therefore you do more of it. You go to work every day, you keep it up. And so that's the logic of what they're saying here. And this is a claim that's made in the paper. Interpersonal utility comparisons are resurrected like they say. Here's another quote from the article. Wealthier people impose a negative external effect on poorer people but not vice versa. That is hard working, industrious, entrepreneurial people who are successful financially impose a negative externality and a negative cost on poorer people because the poorer people are envious of their success. But on the other hand, the welfare parasites of the world do not impose any kind of cost on the people who pay for their welfare. There's no cost at all of that. That's what this says. It says black is white, night is morning, up is down. That's what modern economics is doing. Another conclusion to this research is that raising everybody's income does not increase everyone's happiness. However, improving one's income in comparison to others does. So reducing materiality quality increases overall happiness somehow. Socialism, in other words, as Friedrich Hayek says in one of the later editions of the Road to Serfdom, socialism began as nationalization of the means of production. But by the time you get to the 1930s and 40s, it had essentially become the mean, the redistribution of income through the institutions of the welfare state and the progressive income tax. But the objective was always the same. It was always egalitarianism. It was always redistribution, whether the vehicle was nationalization or welfare statism. And so that's what this happiness, so-called happiness research is saying, is that socialism is what makes us happy. And you know, the logical conclusion of all this is that the people who lived in the Soviet Union must have been the happiest people in the world, because that was the whole ideological basis. It wasn't a theory of socialism in the Soviet Union. Another conclusion from this article is that the production of luxury goods, such as expensive watches or yachts, is a waste of productive resources, because overall happiness is reduced since such objects create so much envy. And so therefore we should not allow this to happen. You know, I have to think of what Ludwig von Mises said about this, as he pointed out the historical fact that almost all of the things that people enjoy in their normal lives, refrigeration, automobiles, all started out as luxury goods for the wealthiest people. But the entrepreneurs always figured out that you can't become really, really rich unless you figure out how to sell the thing cheap enough so that the masses can buy it. That's how to make the big money. That's how Henry Ford and John D. Rockefeller and Bill Gates made the big, big money, is selling it to the masses as cheaply as possible. And so this kind of statement by an economist totally ignores that. They also resurrect Keynesianism, in addition to socialism with this. Here's another statement from the Bruno Frey article. If unemployment rises by 5 percentage points, the inflation rate must decrease by 8.5 percentage points to keep the population equally happy. And so they look at happiness trade-offs between inflation and unemployment as a way of sort of a backdoor sneaking in the long-discredited Phillips curve into economics. Another conclusion from this article in the Journal of Economic Literature, welfare payments should be increased to compensate for larger families so as to maintain the subjective well-being of the families. There's no discussion at all in this article of the economic side effects of the welfare estate. There's no discussion of destruction of the work ethic, destruction of the family. All the gigantic literature on the ill effects of welfare and stateism are just totally ignored. They just say greater material equality is a good thing, period. And how unscholarly is that? How scholarly is it to ignore 50 years of research in your fields of economics on the effects of the welfare estate? Another statement on page 427 is, quote, the fight for relative positions is socially wasteful and the high-income recipients as winners of these races should be more heavily taxed. So they call working, saving your money, investing, taking risks, being an entrepreneur, producing new products, running a race. They totally ignore the fact that the results of all this kind of behavior is not just the production of wealth for you but the creation of wealth for a lot of others, job creation and so forth. That's not even mentioned here. It's just all about envy and inequality, the fight for relative positions. Not surprisingly, Bruno Fry in this article mentions that the socialist John Kenneth Galbraith is held up as the father of happiness research thanks to his book, The Affluent Society, in which he argued that money does not buy happiness. But I don't think Galbraith ever gave a penny of his money to charity that he made from publishing The Affluent Society. So he was not known as a philanthropist at all. And so if you want to know where this is coming from, John Kenneth Galbraith is sort of the godfather of this. And one other thing I'd like to mention here, the next thing, is a lot of economic research. If you look at the top economics journals and you look at them, there's usually a blur of mathematics, a blur of econometrics and statistics. And then if you read the summary at the very end or the abstract at the beginning of the article, you'll often find articles that say the most mundane, pedestrian and downright stupid sounding things, water runs downhill. So they'll use all this very impressive scientific looking math and statistics to prove that water runs downhill. And mostly it's because they choose a topic that they know has to be true, you know, no person on earth would ever argue with some very simple minds of proposition and then use all this pyrotechnics to prove that it's true and they get another line on the resume. And this happiness research is among the worst in this. And so I'm going to read you some direct quotes from this research. And keep in mind, all of these quotes I'm going to read follow pages and pages of mathematics, mathematical model building and econometric testing to come at these conclusions. So these are all quotes. The first one is, persons with higher income have more opportunities to achieve what they desire. Who would ever guess? British lottery winners reported higher mental well-being the following year. Who would ever guess that? There is more to subjective well-being than just income level. Well, that's the Austrians have been saying that forever, of course. Another quote, on average, persons living in rich countries are happier than those living in poor countries. Page 416 of the Bruno Fraun. Happiness of unemployed persons is much lower than that of employed persons. This is what the economics profession has become. Experiencing unemployment makes people very unhappy. Freedom and happiness are positively related. Okay, they're advocating socialism, which is slavery. They don't realize that they're contradicting themselves when they say freedom is good for happiness. And then they advocate the slavery of socialism. Inflation lowers reported individual well-being. So if in that new car you buy cost three times more than it did a year ago, you'll be unhappy. Aren't you glad? But you have to read an economics journal article to know that. Allowing people to vote makes them happy. That's probably true. That's a bad thing, but it's probably true. Happy people smile more during social interactions. I'm not making this up. This is in the prestigious Journal of Economic Literature. Persons with higher income have more opportunities to achieve what they desire. In particular, they can buy more material goods and services. It sounds like a two-year-old wrote this article. People receiving an inheritance reported a higher mental well-being in the following year. That's enough of that. That's the sort of mundane idiocy that you see in the happiness research. Then you see it everywhere else in it, in every other field of economics, in the so-called mainstream journals. The one very bad book was published in Great Britain by, it's called The Spirit Level. The subtitle is Why Equality is Better for Everyone by Richard Wilkinson and Kate Pickett. This book is a textbook example. If I taught a course in econometrics or statistics to undergraduates, I would use this book as an example of how not to work with statistics. The whole book is filled with scatter diagrams purporting to find correlations between inequality and some other things. They don't investigate any other cause of the other things than inequality. They don't even do multiple regressions. It's just a page after page after page of correlation coefficients. The conclusions, which the British government loves by the way, I've read the rave reviews by members of parliament and they just love this. Just like they must have loved the general theory by Keynes because it provides sort of a phony baloney intellectual cover for what politicians want to do anyway and to spend money like drunken sailors with no responsibility on their part. But here's what, among the things, greater material equality, not equality of opportunity or anything like that, but material equality supposedly leads to the following. Better community life, better mental health, less drug use, better physical health, less obesity, smarter people, more recycling. Thank God for that, more recycling. Fewer teenage births, less violence, less imprisonment, greater social mobility, fewer dysfunctional people. Imagine that. The bigger the welfare state, the fewer the dysfunctional people there are. That surely is exactly the opposite of the truth. When you pay people to pretty much exit society and live on welfare and they don't have to get up and get dressed and go to work every day, that's how they become dysfunctional. Less anxiety, there's much less anxiety and greater self-esteem supposedly. And there's also a very good book called The Spirit-Level Delusion that's written by Christopher Snowden. So he's also a British intellectual and he takes us on and just shreds the Spirit-Level book. He just totally blows it apart because the people who wrote this book are epidemiologists, they're not economists and that's what they do. They find these correlations, but of course correlation is not causation. And one of the things Christopher Snowden does in his book is to mock the sort of low level of statistical analysis in this other book which has become apparently quite the hit in England by some of his own scatter diagrams. And one of them is my favorite where he purports a positive correlation between the rate of recycling and the suicide rate. So when you look at this, the higher the rate of recycling, the more likely it is that you have more suicides in your community. Because he used that to make the point that if you torture the data long enough it will confess and you can do these things. And one example of the shoddiness of this research is teenage births. They claim that greater inequality creates higher teenage births and they actually use data from some American states and they compare Utah. I'll read you one short sentence from the critique by Christopher Snowden. He says Wilkinson and Pickett seem unable to look beyond inequality for any explanation. And so for example when they say that teen births are twice as high in the state of Mississippi in the US than in Utah, they put it down to inequality and only inequality. Then they say a far more likely explanation is that 60% of Utah's population belong to the strict Mormon religion. So there are many reasons why teenage births would fluctuate state by state and it's not just inequality. The whole book is like this. They don't even attempt multiple regression in that book. But the economists do but their research is just as bad as far as I'm concerned. And so I think you have a good idea by now of what happiness research is about. And I'm going to conclude with one concluding statement from Christopher Snowden's book that I think really explains what this is all about. And here's what he says in his concluding chapter. Apologists for Marxism have made myriad excuses for their ideologies failure to provide the same standard of living and liberty as was enjoyed in capitalist nations. Until recently few have been so brazen as to claim that lowering living standards and curtailing freedom were the intended consequences, let alone that people would be happier with less of either. In that sense books like The Spirit Level represent a departure for the left. Limiting choice, reducing wealth, and lowering aspirations are now openly advocated as desirable ends in themselves because that's what makes everybody happy, supposedly. And so the socialists have given up on saying socialism can produce more material wealth. They lost that argument a long time ago. And so they've resorted now to saying wealth schmelch. It's inequality that counts. That's what makes us happy even if we have to make us all poor, everybody all the way around. And so that's really what's going on. I don't think Bruno Fry is a socialist. He's known as being a pretty conservative, free market oriented guy. I've been reading his research for 30 years. I think very highly of a lot of his research in the field of public choice, for example. But I think the motivation by these economists is that you have to understand that in a lot of schools in the U.S. which are very similar to Europe, graduate training in economics is several years of training in math and statistics. And then you write a doctoral dissertation, which is basically you'll get some hot new econometric technique that your dissertation advisor is known for. And he will tell you, or she will tell you, go find a topic that you can use this technique with. And happiness is a very broad area. And so for economists it provides unlimited opportunities for doctoral dissertations and research papers and publications and resume building. And that's why I think Bruno Fry is so giddy about this. And I've seen him personally get a presentation about this. And he does that kind of giddy and happy about all this, sort of celebrating this because he has done a lot of publishing in this area. So I don't think people like that are just, you know, hardcore socialist ideologues, but they're falling into the trap. That's why another presentation I made on this, the title I gave was the Trojan Horse of Happiness Research. And so a lot of the economists like Bruno Fry, I think, are just stepping into the trap that the socialists have laid for them by adopting their research on happiness. Because it will be used to make the case that we can use solution more socially and more control and so forth. And it will all have to be prestige of the economics profession, especially if the Nobel Prize is awarded for this. It will be a huge boost for the cause of socialism, just like the Nobel Prize to Paul Krugman was a boost for Keynesianism. And I guess if they can give the Nobel Prize to Krugman they can give to anybody. I would much prefer Bruno Fry to Krugman as far as that's concerned. And my time is up, thank you.