The economics of quality of life - and of violent talk

Two new articles today on the measuring intangibles. The first is from Mark Whitehouse in 1/10/11 Wall Street Journal in which he assesses the failings of GDP as an economic indicator of quality of life. The second, which follows Whitehouse's article is by Brent Lang in The Wrap, is entitled Climate of Hate? CAble News and the Economics of Violent Talk


GDP unreliable as measure of nations' well-being
* Mark Whitehouse
* From: The Wall Street Journal
* January 10, 2011 11:55AM

MONEY isn't everything. But in measuring the success of nations, it remains difficult to find a substitute for the gauge of GDP.

Political leaders are increasingly expressing dissatisfaction with gross domestic product - a monetary measure of all the goods and services a country produces - as a gauge of a nation's success in raising living standards.

Late in 2010, British Prime Minister David Cameron announced plans to build measures of national well-being that would take into account factors such as a person’s life satisfaction, following a similar effort by French President Nicolas Sarkozy.

Their efforts cut to the core of what economics is supposed to be about: What makes us better off? How can we all have more of it? Anyone hoping for a clear-cut answer, though, is likely to be disappointed.

Said Paul Allin, director of the Measuring National Well-Being Project in Britain’s Office of National Statistics: “There is more to life than GDP, but it will be hard to come up with a single measure to replace it and we are not sure that a single measure is the answer.

“Maybe we live in a multi-dimensional world and we have to get used to handling a reasonable number of bits of information.”

After a session on creating a national success indicator at the annual meeting of the American Economic Association last Friday, Carol Graham, fellow at the Brookings Institution, summed up the situation: “It's like a new science. There's still a lot of work to be done.”

For much of the past four decades, economists have puzzled over a paradox that cast doubt on GDP as the world's main indicator of success.

People in richer countries didn't appear to be any happier than people in poor countries. In research beginning in the 1970s, University of Pennsylvania economist Richard Easterlin found no evidence of a link between a country’s income - as measured by GDP per person - and an individual’s reported levels of happiness.

More recent research suggests GDP isn't quite so bad. Using more data and different statistical techniques, three economists at the University of Pennsylvania's Wharton School - Daniel Sacks, Betsey Stevenson and Justin Wolfers - found that a given percentage-increase in GDP per person tends to coincide with a similar increase in reported well-being. The correlation held across different countries and over time.

Still, for measuring the success of policy, GDP is far from ideal.

Making everybody work 120 hours a week could radically boost a country's GDP per capita, but it wouldn't make people happier. Removing pollution limits could boost GDP per hour worked, but wouldn't necessarily lead to a world we'd want to live in.

One approach is to enhance GDP with other objective factors such as inequality, leisure and life-expectancy. In a paper presented last Saturday at the American Economic Association meeting, Stanford economists Peter Klenow and Charles Jones found that doing so can make a big difference.

By their calculation, accounting for longer life-expectancy, additional leisure time and lower levels of inequality make living standards in France and Germany look almost the same as those in the US, which otherwise leads the pack by a large margin.

Mr Klenow points out that the calculation is fraught with difficulties. For one, many countries have poor data on crucial factors such as life-expectancy.

For the purpose of comparing well-being across countries, asking people how they feel might be better than monetary measures. Angus Deaton, an economist at Princeton University, notes that placing values on the extremely different goods and services consumed in the US and, say, Tajikistan, can be impossible to do in a comparable way. Just asking people about their situation could be much easier and no less accurate.

Surveys already play a meaningful role in the way many countries assess their performance, from consumer confidence in the US to the Netherlands's Life Situation Index, which accounts for factors such as relationships and community involvement.

As part of its effort to gauge well-being, Britain plans to add more subjective questions to its household surveys.

But surveys can also send misleading policy signals.

Mr Wolfers, for example, has found that surveys of women's subjective well-being in the US suggest that they are less happy than they were four decades ago, despite improvements in wages, education and other objective measures. That, he says, doesn't mean the feminist movement should be reversed. Rather, it could be related to rising expectations or greater frankness among the women interviewed.

Peoples' true preferences are often revealed more by what they do than by what they say.

Surveys suggest people with children tend to be less happy than those without, yet people keep having children - and nobody would advocate mass sterilisation to improve overall well-being.

“What we care about in the world is not just happiness,” says Mr Wolfers.

“If you measure just one part of what makes for a full life you're going to end up harming the other parts.”

For the time being, that leaves policy-makers to choose the measures of success that seem most appropriate for the task at hand. That's not ideal, but it's the best economics has to offer.

CLIMATE OF HATE: CABLE NEWS AND THE ECONOMICS OF VIOLENT TALK By Brent Lang

Almost from the moment Rep. Gabrielle Giffords (D-Ariz.) was shot through the brain by a political extremist on Saturday, the media has been wringing its hands over the toxic power of partisan news talk.

But despite the remorse, the economics of cable news and talk radio suggests that nothing is going to stop the hyper-partisan approach that has fuelled the rise of Fox, MSNBC and the career of Glenn Beck.

Read also: Rhetoric vs. Reportage: How TV News Is Covering the Tucson Shootings


“It is in the economic interest of cable news and talk radio to outrage their audience, to turn their segments into car wrecks that we can’t take our eyes away from,” Martin Kaplan, director of the Norman Lear Center and professor at the USC Annenberg School, told TheWrap.

He added: “The economics favor the extreme point of view and the paranoid claims. You get better numbers and you can control the expense side by reducing a reporting staff.”

Giving Beck, Bill O’Reilly and Sean Hannity a platform to flex their right-wing muscles has made Fox the king of the cable news heap. Fox owned the top 12 cable news shows in average total viewers and swept the top 10 among 25 to 54-year-olds. In the front of the ratings pack, O’Reilly (3.2 million total viewers), Hannity (2.3 million) and Beck (2.2 million), firebrands all.

Rhetoric vs. Reportage: How TV News Is Covering the Tucson Shootings Jan 10, 2011Shot Congresswoman Got Olbermann Contribution Jan 09, 2011
Likewise, MSNBC’s decision to ratchet up the left-leaning political posturing allowed the network to boast a prime-time win over CNN and the 25 to 54 year old demographic for the past two years.

“It’s like the late night model. Even though the host makes money, the cost of everything else is low. It’s a lot cheaper to have a host espousing opinions with couple of guests, than to have correspondents across the globe,” Alex Weprin, co-editor of TVNewser, told TheWrap.

When it comes to radio, an ultra-conservative such as Limbaugh has maintained his ratings dominance for two decades by offering withering criticism of Democrats. His claims about Democrat-backed death panels may bear only a tenuous relationship with reality, but his 15 million listeners will prevent stations from messing with the overheated formula -- even in the wake of an assassination attempt on a U.S. congresswoman.

“I don’t think you’ll see cable channels change their ways. Anchors and network bosses may play lip service to the idea of changing the rhetoric, but the 2012 campaign is just around the corner and when it heats up we’ll be back to using violent imagery,” Weprin said.

In the wake of last weekend’s shocking violence, everyone from PimaCounty, Ariz. Sheriff Clarence Dupnik to New York Times columnist Paul Krugman to Olbermann himself has placed the blame partly on the inflammatory rheotric currently clogging the airwaves.

But however well-intentioned the critique of Glenn Beck, Keith Olbermann, Rush Limbaugh and others may be, it’s not clear that cable news is responsible for whatever turned suspect Jared Lee Loughner into a killer. In the past, acts of violence have been ascribed to everything from violent video games to rap music, but the connections have always seemed tenuous at best.

“To blame the shooting on cable news is simplistic. We don’t really know what motivated the shooter. We’re going to find a lot of different constituencies adopting this issue to promote their agendas,” Andrew Heyward, former president of CBS News, told TheWrap.

Unsurprisingly, Limbaugh, Fox News chief Roger Ailes and others reject the notion that they incited violence.

“It’s just a bullshit way to use the death of a little girl to get Fox News in an argument,” Ailes told hip hop mogul Russell Simmons.

Limbaugh was even more provocative in rejecting criticism, implying the the left would use the event to stifle political debate.


Rhetoric vs. Reportage: How TV News Is Covering the Tucson Shootings Jan 10, 2011Shot Congresswoman Got Olbermann Contribution Jan 09, 2011
"I wouldn't be surprised if somebody in the Obama administration or some FCC bureaucrat or some Democrat congressman has it already written up, such legislation, sitting in a desk drawer somewhere just waiting for the right event for a clap-down," Limbaugh said on his radio show. "They have been trying this ever since the Oklahoma City bombing."

When it comes to tempering the rhetoric, Limbaugh clearly didn’t get the memo. In the short-term, however, the general tone of political discourse should grow more civil.

“We will see a temporary shift in the zeitgeist. It won’t be as large and long, but it will be like the way it was after 9/11. That's a similar period in which people were shocked and chastened by an event, and inspired by the incidents of heroism around it, and Americans came together,” Heyward said.

But toning down the partisanship could be hazardous to cable news’ health. After all, take CNN. The network has publicly boasted that it will leave the ideology to MSNBC and Fox, while it focuses on objective coverage.

The reward for taking the journalistic high ground? Last year, CNN had its lowest rated year in 14 years in primetime, both in terms 25-54-year-old viewers and average total viewers.

It may not even matter. Heyward, for one, thinks that more guilt lies with the politicians than with media figures such as Beck and Olbermann.

“We have an extraordinarily polarized culture. It reminds me of the height of the Vietnam War. There is no common ground around which the extremes can have a conversation,” Heyward said.The signs of the times are thus: Sarah Palin uses cross-hairs to indicate districts where she intends to target Democrats in the voting booth, and Rep. Michelle Bachmann (R-Minn.) exhorts her supporters to take up arms against a proposed energy task. Both thrive on the sort of political vitriol decried by Sheriff Dupnik, as much as, if not more than Beck, Olbermann and their ilk.

Of course, television news bears some responsibility for giving professional political provocateurs a platform to air even the most outrageous claims.

As the country sorts through the Giffords tragedy, we may be seeing fewer extremists on prime time, but Palin’s status as a Fox News commentator and Bachman’s postition as a favored cable news guest aren’t imperiled.

They may make waves -- they may even bear some responsibility for fostering a climate of hatred. But they definitely make good television.