Daniel Gilbert has written a wonderful book entitled Stumbling on Happiness. The front cover asks "Think you know what makes you happy?" It will appeal to a wide audience, including professional research economists - and not only those interested in neuroeconomics, behavioral economics, and, happiness economics. With material touching on utility, consumer behavior and consumer choice, as well as discounting, it will appeal to economists interested in what goes on in the minds of those agents we try to model.
Frequent readers of this blog know that one of my (and others economists') pet peeves is being asked "What's the economy going to do?" This sort of question is especially annoying to microeconomists. I always want to say "Heck if I know. I don't even know what I want for dinner." But I'm polite in my response, which usually does not contain an answer. But why am I so reticent?
The human brain is similar to your computer's hard drive in that it reads and stores information, but it obtains vast amounts of information in a matter of milliseconds. How can it possibly record every detail we sense? It doesn't, Gilbert argues. Instead, the mind fills in some details without us even knowing it. But that's stuff that we actually experience. Wwhat about stuff that we haven't experienced? What does the mind do in that case? Gilbert writes (page 111):
Most reasonably sized libraries have a shelf of futurist tomes from the 1950s with titles such as Into the Atomic Age and The World of Tomorrow. If you leaf through a few of them, you quicky notice that each of these books says more about the times in which it was written than about the times it was meant to foretell. Flip a few page and you'll find a drawing of a housewfe with a Donna Reed hairdo and a poodle skirt flitting about her atomic kitchen, waiting for the sound of her husband's rocket car before getting the tuna casserole on the table. Flip a few more and you'll see a sketch of a modern city under a glass dome, complete with nuclear trains, antigravity cars, and well-dressed citizens gliding smoothly to work on converyor-belted sidgewalks. You will also notice that some things are missing. The men don't carry babies, the women don't carry briefcases, the children don't have pierced eyebrows or nipples, and the mice go squeak instead of click. There are no skateboarders or panhandlers, no smartphones or smartdrinks, no spandex, latex, Gore-Tex, Amex, FedEx, or Wal-Mart. What's more, all the people of African, Asian, and Hispanic origin seem to have missed the future entirely. Indeed, what makes these drawings so charming is that they are utterly, fabulously, and ridiculously wrong. How could anyone ever have thought that the future would like some hybrid of Forbidden Planet and Father Knows Best.
Daniel argues that human minds fill in the missing pieces about the future with things we know - things we've experienced, likening this to how the mind fills in the blind spot resulting from where the optic nerve attaches to the retina. From page 113:
As it turns out, when brains plug holes in their conceptualizations of yesterday and tomorrow, they tend to use a material called today.
In other words, how we think about the future and what we remember about the past is colored by what we are experiencing now. The reason I'm reticent in forecasting the future direction of the economy is that I realize that the future will be much different from today.
Daniel discusses research where people were given a series of three letters (triads like THX or NFL) and are asked which one is unique. Consider 2 sets of 15 triads: set 1 and set 2. Set 1's unique triad is the only one containing the letter "S." Set 2's unique triad is the only one that does not contain the letter "S." Folks more readily identified the only triad that has the letter "S" than they were able to identify the one missing the letter S because people are more perceptible to what is seen than what is unseen. What would Bastiat think?
And then there is this passage which will be near and dear to my fellow economists:
Among life's cruelest truths is this one: Wonderful things are especially wonderful the first time they happen, but their wonderfulness wanes with repetition. ... Psychologists call this habituation, economists call it declining marginal utility, and the rest of us call it marriage.
Gilbert's writing is very approachable, and it's chatty without being padded or condescending. Some of the figures are a bit misleading, though. For instance, there is a graph on page 221 that shows the association that marital happiness has with the age of children. Married couples are most happy when they are first married and least happy when the kids are teenagers. The y-axis (measuring "marital satisfaction" - not sure what that means) starts at 45 and ends at 55, making the drop during the teenage years much more pronounced than it really is. By looking at it you'd think that there is almost no satisfaction in being married when the kids are teens.
But reading this book, you might feel as if you are at the brewpub* on a Friday afternoon, discussing the mind with your colleague Daniel Gilbert - only without the ensuing hangover and the threat of public intox. It's a very informative and enjoyable book that will appeal to a wide variety of readers. If you are the least bit interested in how the human mind works, this book is an excellent read.
*Why did I imagine that you were at a brewpub with Daniel Gilbert?