12:00—1:30 PM
Center for Global Development, 1800 Massachusetts Avenue, NW, Third Floor, Washington, DC

Why Societies Stay Stuck in Bad Equilibrium: Insights from Happiness Studies amidst Prosperity and Adversity

Some individuals who are destitute report to be happy, while others who are very wealthy report to be miserable. There are many possible explanations for this paradox; this paper focuses on the role of adaptation. Adaptation is the subject of much work in economics, but its definition is a psychological one. Adaptations are defense mechanisms; there are bad ones like paranoia, and healthy ones like humor, anticipation, and sublimation. Set point theory--which is the subject of much debate in psychology--posits that people can adapt to anything, such as bad health, divorce, and extreme poverty, and return to a natural level of cheerfulness. My research from around the world, meanwhile, suggests that people are remarkably adaptable. Respondents in Afghanistan, for example, are as happy as Latin Americans and 20% more likely to smile in a day than Cubans. I posit that while this may be a good thing from an individual psychological perspective, it may also facilitate collective tolerance for bad equilibrium. I provide examples from the economics, democracy, crime, corruption and health arenas. 

On Tuesday, January 12, 2010, The Center for Global Development and The Paul H. Nitze School of Advanced International Studies hosted a Massachusetts Avenue Development Seminar (MADS)* on Why Societies Stay Stuck in Bad Equilibrium: 
Insights from Happiness Studies amidst Prosperity and Adversity 
featuring Carol Graham, Brookings Institution and University of Maryland, and author of Happiness Around the World: The paradox of happy peasants and miserable millionaires. John Williamson, of Peter G. Peterson Institute for International Economics, served as the discussant.

Access Graham's presentation (pdf, 218K).

Read Why Societies Stay Stuck in Bad Equilibrium paper (pdf, 276K).

*The Massachusetts Avenue Development Seminar (MADS) series is an effort by the Center for Global Development and The Paul H Nitze School of Advanced International Studies to take advantage of the incredible concentration of great international development scholars in the Metro Washington, DC area. The series seeks to bring together members of this community and improve communication between them.


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