craschworks

For you Steven Landsburg fans out there:

The Economist on the Playground: What My 10-Year-Old Daughter and I Taught Each Other About Economic Justice

[I think I've linked this before, but it bears revisiting.]

Via Marginal Revolution:

http://healthandenergy.com/pursuit_of_happiness.htm

The Futile Pursuit of Happiness

By JON GERTNER
September 7, 2003

f Daniel Gilbert is right, then you are wrong. That is to say, if Daniel Gilbert is right, then you are wrong to believe that a new car will make you as happy as you imagine. You are wrong to believe that a new kitchen will make you happy for as long as you imagine. You are wrong to think that you will be more unhappy with a big single setback (a broken wrist, a broken heart) than with a lesser chronic one (a trick knee, a tense marriage). You are wrong to assume that job failure will be crushing. You are wrong to expect that a death in the family will leave you bereft for year upon year, forever and ever. You are even wrong to reckon that a cheeseburger you order in a restaurant — this week, next week, a year from now, it doesn't really matter when — will definitely hit the spot. That's because when it comes to predicting exactly how you will feel in the future, you are most likely wrong.

A professor in Harvard's department of psychology, Gilbert likes to tell people that he studies happiness. But it would be more precise to say that Gilbert — along with the psychologist Tim Wilson of the University of Virginia, the economist George Loewenstein of Carnegie-Mellon and the psychologist (and Nobel laureate in economics) Daniel Kahneman of Princeton — has taken the lead in studying a specific type of emotional and behavioral prediction. In the past few years, these four men have begun to question the decision-making process that shapes our sense of well-being: how do we predict what will make us happy or unhappy — and then how do we feel after the actual experience? For example, how do we suppose we'll feel if our favorite college football team wins or loses, and then how do we really feel a few days after the game? How do we predict we'll feel about purchasing jewelry, having children, buying a big house or being rich? And then how do we regard the outcomes? According to this small corps of academics, almost all actions — the decision to buy jewelry, have kids, buy the big house or work exhaustively for a fatter paycheck — are based on our predictions of the emotional consequences of these events.

Until recently, this was uncharted territory. How we forecast our feelings, and whether those predictions match our future emotional states, had never been the stuff of laboratory research. But in scores of experiments, Gilbert, Wilson, Kahneman and Loewenstein have made a slew of observations and conclusions that undermine a number of fundamental assumptions: namely, that we humans understand what we want and are adept at improving our well-being — that we are good at maximizing our utility, in the jargon of traditional economics. Further, their work on prediction raises some unsettling and somewhat more personal questions. To understand affective forecasting, as Gilbert has termed these studies, is to wonder if everything you have ever thought about life choices, and about happiness, has been at the least somewhat naive and, at worst, greatly mistaken.

The problem, as Gilbert and company have come to discover, is that we falter when it comes to imagining how we will feel about something in the future. It isn't that we get the big things wrong. We know we will experience visits to Le Cirque and to the periodontist differently; we can accurately predict that we'd rather be stuck in Montauk than in a Midtown elevator. What Gilbert has found, however, is that we overestimate the intensity and the duration of our emotional reactions — our ''affect'' — to future events. In other words, we might believe that a new BMW will make life perfect. But it will almost certainly be less exciting than we anticipated; nor will it excite us for as long as predicted. The vast majority of Gilbert's test participants through the years have consistently made just these sorts of errors both in the laboratory and in real-life situations. And whether Gilbert's subjects were trying to predict how they would feel in the future about a plate of spaghetti with meat sauce, the defeat of a preferred political candidate or romantic rejection seemed not to matter. On average, bad events proved less intense and more transient than test participants predicted. Good events proved less intense and briefer as well.

Gilbert and his collaborator Tim Wilson call the gap between what we predict and what we ultimately experience the ''impact bias'' — ''impact'' meaning the errors we make in estimating both the intensity and duration of our emotions and ''bias'' our tendency to err. The phrase characterizes how we experience the dimming excitement over not just a BMW but also over any object or event that we presume will make us happy. Would a 20 percent raise or winning the lottery result in a contented life? You may predict it will, but almost surely it won't turn out that way. And a new plasma television? You may have high hopes, but the impact bias suggests that it will almost certainly be less cool, and in a shorter time, than you imagine. Worse, Gilbert has noted that these mistakes of expectation can lead directly to mistakes in choosing what we think will give us pleasure. He calls this ''miswanting.''

''The average person says, 'I know I'll be happier with a Porsche than a Chevy,' '' Gilbert explains. '' 'Or with Linda rather than Rosalyn. Or as a doctor rather than as a plumber.' That seems very clear to people. The problem is, I can't get into medical school or afford the Porsche. So for the average person, the obstacle between them and happiness is actually getting the futures that they desire. But what our research shows — not just ours, but Loewenstein's and Kahneman's — is that the real problem is figuring out which of those futures is going to have the high payoff and is really going to make you happy.

''You know, the Stones said, 'You can't always get what you want,' '' Gilbert adds. ''I don't think that's the problem. The problem is you can't always know what you want.''

Gilbert's papers on affective forecasting began to appear in the late 1990's, but the idea to study happiness and emotional prediction actually came to him on a sunny afternoon in October 1992, just as he and his friend Jonathan Jay Koehler sat down for lunch outside the psychology building at the University of Texas at Austin, where both men were teaching at the time. Gilbert was uninspired about his studies and says he felt despair about his failing marriage. And as he launched into a discussion of his personal life, he swerved to ask why economists focus on the financial aspects of decision making rather than the emotional ones. Koehler recalls, ''Gilbert said something like: 'It all seems so small. It isn't really about money; it's about happiness. Isn't that what everybody wants to know when we make a decision?' '' For a moment, Gilbert forgot his troubles, and two more questions came to him. Do we even know what makes us happy? And if it's difficult to figure out what makes us happy in the moment, how can we predict what will make us happy in the future?

In the early 1990's, for an up-and-coming psychology professor like Gilbert to switch his field of inquiry from how we perceive one another to happiness, as he did that day, was just a hairsbreadth short of bizarre. But Gilbert has always liked questions that lead him somewhere new. Now 45, Gilbert dropped out of high school at 15, hooking into what he calls ''the tail end of the hippie movement'' and hitchhiking aimlessly from town to town with his guitar. He met his wife on the road; she was hitching in the other direction. They married at 17, had a son at 18 and settled down in Denver. ''I pulled weeds, I sold rebar, I sold carpet, I installed carpet, I spent a lot of time as a phone solicitor,'' he recalls. During this period he spent several years turning out science-fiction stories for magazines like Amazing Stories. Thus, in addition to being ''one of the most gifted social psychologists of our age,'' as the psychology writer and professor David G. Myers describes him to me, Gilbert is the author of ''The Essence of Grunk,'' a story about an encounter with a creature made of egg salad that jets around the galaxy in a rocket-powered refrigerator.

Psychology was a matter of happenstance. In the midst of his sci-fi career, Gilbert tried to sign up for a writing course at the local community college, but the class was full; he figured that psych, still accepting registrants, would help him with character development in his fiction. It led instead to an undergraduate degree at the University of Colorado at Denver, then a Ph.D. at Princeton, then an appointment at the University of Texas, then the appointment at Harvard. ''People ask why I study happiness,'' Gilbert says, ''and I say, 'Why study anything else?' It's the holy grail. We're studying the thing that all human action is directed toward.''

One experiment of Gilbert's had students in a photography class at Harvard choose two favorite pictures from among those they had just taken and then relinquish one to the teacher. Some students were told their choices were permanent; others were told they could exchange their prints after several days. As it turned out, those who had time to change their minds were less pleased with their decisions than those whose choices were irrevocable.

Much of Gilbert's research is in this vein. Another recent study asked whether transit riders in Boston who narrowly missed their trains experienced the self-blame that people tend to predict they'll feel in this situation. (They did not.) And a paper waiting to be published, ''The Peculiar Longevity of Things Not So Bad,'' examines why we expect that bigger problems will always dwarf minor annoyances. ''When really bad things happen to us, we defend against them,'' Gilbert explains. ''People, of course, predict the exact opposite. If you ask, 'What would you rather have, a broken leg or a trick knee?' they'd probably say, 'Trick knee.' And yet, if your goal is to accumulate maximum happiness over your lifetime, you just made the wrong choice. A trick knee is a bad thing to have.''

All of these studies establish the links between prediction, decision making and well-being. The photography experiment challenges our common assumption that we would be happier with the option to change our minds when in fact we're happier with closure. The transit experiment demonstrates that we tend to err in estimating our regret over missed opportunities. The ''things not so bad'' work shows our failure to imagine how grievously irritations compromise our satisfaction. Our emotional defenses snap into action when it comes to a divorce or a disease but not for lesser problems. We fix the leaky roof on our house, but over the long haul, the broken screen door we never mend adds up to more frustration.

Gilbert does not believe all forecasting mistakes lead to similar results; a death in the family, a new gym membership and a new husband are not the same, but in how they affect our well-being they are similar. ''Our research simply says that whether it's the thing that matters or the thing that doesn't, both of them matter less than you think they will,'' he says. ''Things that happen to you or that you buy or own — as much as you think they make a difference to your happiness, you're wrong by a certain amount. You're overestimating how much of a difference they make. None of them make the difference you think. And that's true of positive and negative events.''

uch of the work of Kahneman, Loewenstein, Gilbert and Wilson takes its cue from the concept of adaptation, a term psychologists have used since at least the 1950's to refer to how we acclimate to changing circumstances. George Loewenstein sums up this human capacity as follows: ''Happiness is a signal that our brains use to motivate us to do certain things. And in the same way that our eye adapts to different levels of illumination, we're designed to kind of go back to the happiness set point. Our brains are not trying to be happy. Our brains are trying to regulate us.'' In this respect, the tendency toward adaptation suggests why the impact bias is so pervasive. As Tim Wilson says: ''We don't realize how quickly we will adapt to a pleasurable event and make it the backdrop of our lives. When any event occurs to us, we make it ordinary. And through becoming ordinary, we lose our pleasure.''

It is easy to overlook something new and crucial in what Wilson is saying. Not that we invariably lose interest in bright and shiny things over time — this is a long-known trait — but that we're generally unable to recognize that we adapt to new circumstances and therefore fail to incorporate this fact into our decisions. So, yes, we will adapt to the BMW and the plasma TV, since we adapt to virtually everything. But Wilson and Gilbert and others have shown that we seem unable to predict that we will adapt. Thus, when we find the pleasure derived from a thing diminishing, we move on to the next thing or event and almost certainly make another error of prediction, and then another, ad infinitum.

As Gilbert points out, this glitch is also significant when it comes to negative events like losing a job or the death of someone we love, in response to which we project a permanently inconsolable future. ''The thing I'm most interested in, that I've spent the most time studying, is our failure to recognize how powerful psychological defenses are once they're activated,'' Gilbert says. ''We've used the metaphor of the 'psychological immune system' — it's just a metaphor, but not a bad one for that system of defenses that helps you feel better when bad things happen. Observers of the human condition since Aristotle have known that people have these defenses. Freud spent his life, and his daughter Anna spent her life, worrying about these defenses. What's surprising is that people don't seem to recognize that they have these defenses, and that these defenses will be triggered by negative events.'' During the course of my interviews with Gilbert, a close friend of his died. ''I am like everyone in thinking, I'll never get over this and life will never be good again,'' he wrote to me in an e-mail message as he planned a trip to Texas for the funeral. ''But because of my work, there is always a voice in the back of my head — a voice that wears a lab coat and has a lot of data tucked under its arm — that says, 'Yes, you will, and yes, it will.' And I know that voice is right.''

Still, the argument that we imperfectly imagine what we want and how we will cope is nevertheless disorienting. On the one hand, it can cast a shadow of regret on some life decisions. Why did I decide that working 100 hours a week to earn more would make me happy? Why did I think retiring to Sun City, Ariz., would please me? On the other hand, it can be enlightening. No wonder this teak patio set hasn't made me as happy as I expected. Even if she dumps me, I'll be O.K. Either way, predicting how things will feel to us over the long term is mystifying. A large body of research on well-being seems to suggest that wealth above middle-class comfort makes little difference to our happiness, for example, or that having children does nothing to improve well-being — even as it drives marital satisfaction dramatically down. We often yearn for a roomy, isolated home (a thing we easily adapt to), when, in fact, it will probably compromise our happiness by distancing us from neighbors. (Social interaction and friendships have been shown to give lasting pleasure.) The big isolated home is what Loewenstein, 48, himself bought. ''I fell into a trap I never should have fallen into,'' he told me.

Loewenstein's office is up a narrow stairway in a hidden corner of an enormous, worn brick building on the edge of the Carnegie-Mellon campus in Pittsburgh. He and Gilbert make for an interesting contrast. Gilbert is garrulous, theatrical, dazzling in his speech and writing; he fills a room. Loewenstein is soft-spoken, given to abstraction and lithe in the way of a hard-core athlete; he seems to float around a room. Both men profess tremendous admiration for the other, and their different disciplines — psychology and economics — have made their overlapping interests in affective forecasting more complementary than fraught. While Gilbert's most notable contribution to affective forecasting is the impact bias, Loewenstein's is something called the ''empathy gap.''

Here's how it expresses itself. In a recent experiment, Loewenstein tried to find out how likely people might be to dance alone to Rick James's ''Super Freak'' in front of a large audience. Many agreed to do so for a certain amount of money a week in advance, only to renege when the day came to take the stage. This sounds like a goof, but it gets at the fundamental difference between how we behave in ''hot'' states (those of anxiety, courage, fear, drug craving, sexual excitation and the like) and ''cold'' states of rational calm. This empathy gap in thought and behavior — we cannot seem to predict how we will behave in a hot state when we are in a cold state — affects happiness in an important but somewhat less consistent way than the impact bias. ''So much of our lives involves making decisions that have consequences for the future,'' Loewenstein says. ''And if our decision making is influenced by these transient emotional and psychological states, then we know we're not making decisions with an eye toward future consequences.'' This may be as simple as an unfortunate proclamation of love in a moment of lust, Loewenstein explains, or something darker, like an act of road rage or of suicide.

Among other things, this line of inquiry has led Loewenstein to collaborate with health experts looking into why people engage in unprotected sex when they would never agree to do so in moments of cool calculation. Data from tests in which volunteers are asked how they would behave in various ''heat of the moment'' situations — whether they would have sex with a minor, for instance, or act forcefully with a partner who asks them to stop — have consistently shown that different states of arousal can alter answers by astonishing margins. ''These kinds of states have the ability to change us so profoundly that we're more different from ourselves in different states than we are from another person,'' Loewenstein says.

Part of Loewenstein's curiosity about hot and cold states comes from situations in which his emotions have been pitted against his intellect. When he's not teaching, he treks around the world, making sure to get to Alaska to hike or kayak at least once a year. A scholar of mountaineering literature, he once wrote a paper that examined why climbers have a poor memory for pain and usually ignore turn-back times at great peril. But he has done the same thing himself many times. He almost died in a whitewater canoeing accident and vowed afterward that he never wanted to see his runaway canoe again. (A couple of hours later, he went looking for it.) The same goes for his climbing pursuits. ''You establish your turn-back time, and then you find yourself still far from the peak,'' he says. ''So you push on. You haven't brought enough food or clothes, and then as a result, you're stuck at 13,000 feet, and you have to just sit there and shiver all night without a sleeping bag or warm clothes. When the sun comes up, you're half-frozen, and you say, 'Never again.' Then you get back and immediately start craving getting out again.'' He pushes the point: ''I have tried to train my emotions.'' But he admits that he may make the same mistakes on his next trip.

ould a world without forecasting errors be a better world? Would a life lived without forecasting errors be a richer life? Among the academics who study affective forecasting, there seems little doubt that these sorts of questions will ultimately jump from the academy to the real world. ''If people do not know what is going to make them better off or give them pleasure,'' Daniel Kahneman says, ''then the idea that you can trust people to do what will give them pleasure becomes questionable.'' To Kahneman, who did some of the first experiments in the area in the early 1990's, affective forecasting could greatly influence retirement planning, for example, where mistakes in prediction (how much we save, how much we spend, how we choose a community we think we'll enjoy) can prove irreversible. He sees a role for affective forecasting in consumer spending, where a ''cooling off'' period might remedy buyer's remorse. Most important, he sees vital applications in health care, especially when it comes to informed consent. ''We consider people capable of giving informed consent once they are told of the objective effects of a treatment,'' Kahneman says. ''But can people anticipate how they and other people will react to a colostomy or to the removal of their vocal cords? The research on affective forecasting suggests that people may have little ability to anticipate their adaptation beyond the early stages.'' Loewenstein, along with his collaborator Dr. Peter Ubel, has done a great deal of work showing that nonpatients overestimate the displeasure of living with the loss of a limb, for instance, or paraplegia. To use affective forecasting to prove that people adapt to serious physical challenges far better and will be happier than they imagine, Loewenstein says, could prove invaluable.

There are downsides to making public policy in light of this research, too. While walking in Pittsburgh one afternoon, Loewenstein tells me that he doesn't see how anybody could study happiness and not find himself leaning left politically; the data make it all too clear that boosting the living standards of those already comfortable, such as through lower taxes, does little to improve their levels of well-being, whereas raising the living standards of the impoverished makes an enormous difference. Nevertheless, he and Gilbert (who once declared in an academic paper, ''Windfalls are better than pratfalls, A's are better than C's, December 25 is better than April 15, and everything is better than a Republican administration'') seem to lean libertarian in regard to pushing any kind of prescriptive agenda. ''We're very, very nervous about overapplying the research,'' Loewenstein says. ''Just because we figure out that X makes people happy and they're choosing Y, we don't want to impose X on them. I have a discomfort with paternalism and with using the results coming out of our field to impose decisions on people.''

Still, Gilbert and Loewenstein can't contain the personal and philosophical questions raised by their work. After talking with both men, I found it hard not to wonder about my own predictions at every turn. At times it seemed like knowing the secret to some parlor trick that was nonetheless very difficult to pull off — when I ogled a new car at the Honda dealership as I waited for a new muffler on my '92 Accord, for instance, or as my daughter's fever spiked one evening and I imagined something terrible, and then something more terrible thereafter. With some difficulty, I could observe my mind overshooting the mark, zooming past accuracy toward the sublime or the tragic. It was tempting to want to try to think about the future more moderately. But it seemed nearly impossible as well.

To Loewenstein, who is especially attendant to the friction between his emotional and deliberative processes, a life without forecasting errors would most likely be a better, happier life. ''If you had a deep understanding of the impact bias and you acted on it, which is not always that easy to do, you would tend to invest your resources in the things that would make you happy,'' he says. This might mean taking more time with friends instead of more time for making money. He also adds that a better understanding of the empathy gap — those hot and cold states we all find ourselves in on frequent occasions — could save people from making regrettable decisions in moments of courage or craving.

Gilbert seems optimistic about using the work in terms of improving ''institutional judgment'' — how we spend health care dollars, for example — but less sanguine about using it to improve our personal judgment. He admits that he has taken some of his research to heart; for instance, his work on what he calls the psychological immune system has led him to believe that he would be able to adapt to even the worst turn of events. In addition, he says that he now takes more chances in life, a fact corroborated in at least one aspect by his research partner Tim Wilson, who says that driving with Gilbert in Boston is a terrifying, white-knuckle experience. ''But I should have learned many more lessons from my research than I actually have,'' Gilbert admits. ''I'm getting married in the spring because this woman is going to make me happy forever, and I know it.'' At this, Gilbert laughs, a sudden, booming laugh that fills his Cambridge office. He seems to find it funny not because it's untrue, but because nothing could be more true. This is how he feels. ''I don't think I want to give up all these motivations,'' he says, ''that belief that there's the good and there's the bad and that this is a contest to try to get one and avoid the other. I don't think I want to learn too much from my research in that sense.''

Even so, Gilbert is currently working on a complex experiment in which he has made affective forecasting errors ''go away.'' In this test, Gilbert's team asks members of Group A to estimate how they'll feel if they receive negative personality feedback. The impact bias kicks in, of course, and they mostly predict they'll feel terrible, when in fact they end up feeling O.K. But if Gilbert shows Group B that others have gotten the same feedback and felt O.K. afterward, then its members predict they'll feel O.K. as well. The impact bias disappears, and the participants in Group B make accurate predictions.

This is exciting to Gilbert. But at the same time, it's not a technique he wants to shape into a self-help book, or one that he even imagines could be practically implemented. ''Hope and fear are enduring features of the human experience,'' he says, ''and it is unlikely that people are going to abandon them anytime soon just because some psychologist told them they should.'' In fact, in his recent writings, he has wondered whether forecasting errors might somehow serve a larger functional purpose he doesn't yet understand. If he could wave a wand tomorrow and eliminate all affective-forecasting errors, I ask, would he? ''The benefits of not making this error would seem to be that you get a little more happiness,'' he says. ''When choosing between two jobs, you wouldn't sweat as much because you'd say: 'You know, I'll be happy in both. I'll adapt to either circumstance pretty well, so there's no use in killing myself for the next week.' But maybe our caricatures of the future — these overinflated assessments of how good or bad things will be — maybe it's these illusory assessments that keep us moving in one direction over the other. Maybe we don't want a society of people who shrug and say, 'It won't really make a difference.'

''Maybe it's important for there to be carrots and sticks in the world, even if they are illusions,'' he adds. ''They keep us moving towards carrots and away from sticks.''

Via Marginal Revolution:

http://www.psy.miami.edu/faculty/mmccullough/Gratitude_Page.htm

Highlights from the Research Project on Gratitude and Thankfulness
Dimensions and Perspectives of Gratitude
Co-Investigators: Robert A. Emmons, University of California, Davis
(contact: [email protected]; 530.752.8844)
Michael E. McCullough, University of Miami
(contact: [email protected]; 305.284.8057)

Gratitude is the “forgotten factor” in happiness research. We are engaged in a long-term research project
designed to create and disseminate a large body of novel scientific data on the nature of gratitude, its causes,
and its potential consequences for human health and well-being. Scientists are latecomers to the concept of
gratitude. Religions and philosophies have long embraced gratitude as an indispensable manifestation of
virtue, and an integral component of health, wholeness, and well-being. Through conducting highly focused,
cutting-edge studies on the nature of gratitude, its causes, and its consequences, we hope to shed important
scientific light on this important concept. This document is intended to provide a brief, introductory
overview of the major findings to date of the research project. For further information, please contact either
of the project investigators. This project is supported by a grant from the John Templeton Foundation.
We are engaged in two main lines of inquiry at the present time: (1) developing methods to cultivate
gratitude in daily life and assess gratitude’s effect on well-being, and (2) developing a measure to reliably
assess individual differences in dispositional gratefulness.

Gratitude Interventions and Psychological and Physical Well-Being

· In an experimental comparison, those who kept gratitude journals on a weekly basis exercised more
regularly, reported fewer physical symptoms, felt better about their lives as a whole, and were more
optimistic about the upcoming week compared to those who recorded hassles or neutral life events
(Emmons & McCullough, 2003).

· A related benefit was observed in the realm of personal goal attainment: Participants who kept
gratitude lists were more likely to have made progress toward important personal goals (academic,
interpersonal and health-based) over a two-month period compared to subjects in the other
experimental conditions.

· A daily gratitude intervention (self-guided exercises) with young adults resulted in higher reported
levels of the positive states of alertness, enthusiasm, determination, attentiveness and energy
compared to a focus on hassles or a downward social comparison (ways in which participants
thought they were better off than others). There was no difference in levels of unpleasant emotions
reported in the three groups.

· Participants in the daily gratitude condition were more likely to report having helped someone with a
personal problem or having offered emotional support to another, relative to the hassles or social
comparison condition.

· In a sample of adults with neuromuscular disease, a 21-day gratitude intervention resulted in greater
amounts of high energy positive moods, a greater sense of feeling connected to others, more
optimistic ratings of one’s life, and better sleep duration and sleep quality, relative to a control group.
Measuring the Grateful Disposition

· Most people report being grateful (an average rating of nearly 6 on a 7 point scale).

· Well-Being: Grateful people report higher levels of positive emotions, life satisfaction, vitality,
optimism and lower levels of depression and stress. The disposition toward gratitude appears to
enhance pleasant feeling states more than it diminishes unpleasant emotions. Grateful people do not
deny or ignore the negative aspects of life.

· Prosociality: People with a strong disposition toward gratitude have the capacity to be empathic and
to take the perspective of others. They are rated as more generous and more helpful by people in
their social networks (McCullough, Emmons, & Tsang, 2002).

· Spirituality: Those who regularly attend religio us services and engage in religious activities such as
prayer reading religious material score are more likely to be grateful. Grateful people are more
likely to acknowledge a belief in the interconnectedness of all life and a commitment to and
responsibility to others (McCullough et. al., 2002).

· Materialism: Grateful individuals place less importance on material goods; they are less likely to
judge their own and others success in terms of possessions accumulated; they are less envious of
others; and are more likely to share their possessions with others relative to less grateful persons.

_______________________________________________________________________________________
Bibliography
Bono, G., & McCullough, M.E. (in press). Bringing forgiveness and gratitude into psychotherapy. Journal of
Cognitive Psychotherapy.
Bono, G., Emmons, R.A., & McCullough, M.E. (in press). Gratitude in practice and the practice of gratitude.
In P. A. Linley and S. Joseph (Eds.), Positive Psychology In Practice. New York: Wiley
Emmons, R.A., & McCullough, M.E. (Eds.). The psychology of gratitude. New York: Oxford University
Press.
Emmons, R.A., & McCullough, M.E. (2003). Counting blessings versus burdens: Experimental studies of
gratitude and subje ctive well-being. Journal of Personality and Social Psychology, 84, 377-389.
Emmons, R.A. (in press). Gratitude. In M.E.P. Seligman & C. Peterson (Eds.), The VIA
taxonomy of human strengths and virtues. New York: Oxford University Press.
Emmons, R.A. (2003). Acts of gratitude in organizations. In K. S. Cameron, J. E. Dutton, & R.
E. Quinn (Eds.), Positive organizational scholarship (pp. 81-93). San Francisco: Berrett-
Koehler Publishers.
Emmons, R.A., McCullough, M.E., & Tsang, J. (2003). The assessment of gratitude. In S.
Lopez & C.R. Snyder (Eds.), Handbook of positive psychology assessment (pp. 327-342)
Washington, DC: American Psychological Association.
Emmons, R.A. & Shelton, C.S. (2001). Gratitude and the science of positive psychology. In
C.R. Snyder and S.J. Lopez (Eds.), Handbook of positive psychology (pp. 459-471). New York: Oxford
University Press.
Emmons, R.A., & Hill, J. (2001). Words of gratitude for body, mind, and soul. Radnor, PA: Templeton
Foundation Press.
Emmons, R.A. (2001). Gratitude and mind-body health. Spirituality and Medicine Connection, 5, 1-7.
Emmons, R.A., & Crumpler, C.A. (2000). Gratitude as a human strength: Appraising the
evidence. Journal of Social and Clinical Psychology, 19, 56-69.
McCullough, M.E. (2002). Savoring life, past and present: Explaining what hope and gratitude share
in common. Psychological Inquiry, 13, 202-204.
McCullough, M.E., Emmons, R.A., & Tsang, J. (2002). The grateful disposition: A conceptual
and empirical topography. Journal of Personality and Social Psychology, 82, 112-127.
McCullough, M.E., Kirkpatrick, S., Emmons, R.A., & Larson, D. (2001). Is gratitude a moral
affect? Psychological Bulletin, 127, 249-266.
McCullough, M.E., Tsang, J.T., & Emmons, R.A. (in press). Gratitude in intermediate affective
terrain. Journal of Personality and Social Psychology.

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From: Issue 84 July 2004, Page 70
By: Charles Fishman
URL: http://www.fastcompany.com/magazine/84/wholefoods.html

The Anarchist's Cookbook

John Mackey's approach to management is equal parts Star Trek and 1970s flashback. It seems like a recipe for disaster, but at Whole Foods it's a prescription for world-beating growth — and maybe for a world-changing company.

In March 2003 in the elegant ballroom of the Fairmont hotel in Santa Monica, California, John Mackey, CEO of Whole Foods Market, tried several times to cut off the animal-rights activist.

Lauren Ornelas, director of Viva! USA, a group devoted to improving the living conditions of farm animals, was doing a lot more than asking a question at Mackey's annual shareholder meeting. She had taken the floor to make a speech about ducks — a speech about the treatment and lives of the ducks that end up trussed and chilled in the display cases of Mackey's stores, ready to cook and eat.

“She was disrupting our meeting,” says Mackey. “She was trying to force her worldview on other people.”

Ornelas, in fact, was lecturing a man who has done more to improve the quality, sustainability, healthfulness, and purity of the food Americans eat — from farm field and barnyard to kitchen table — than anyone else in the past 25 years.

Whole Foods, the company Mackey cofounded and heads, is the largest organic- and natural-foods grocer in the country, and the world. It is also Mackey's ongoing experiment in battling the industrialization of the food supply, in making apparently ordinary work engaging and rewarding, and in running a large public corporation in radically new ways. At a time when grocery chains treat food as just another SKU in the supply chain, to be bar-coded, shelved, and self-scanned, Whole Foods has succeeded with exactly the opposite strategy. In 157 stores in 28 states, the District of Columbia, Canada, and Great Britain, Whole Foods creates markets that are a celebration of food: bright, well-staffed, and seductive; a mouth-watering festival of colors, smells, and textures; an homage to the appetite.

Worried about the safety of the farm-raised salmon? Some of Mackey's stores recently displayed placards detailing test results for PCB contamination in the chain's farm-raised and wild salmon, along with FDA limits. Curious about the life of a chicken in the display case? It comes with a 16-page booklet and an invitation to visit the live chickens at the company's Pennsylvania farm.

And so Mackey's initial response to the duck lady was dismissive — even classically corporate. “I actually said to Lauren, 'We have the best animal standards in the country — go bother somebody else,' ” he recalls. And then, as Ornelas talked on about the meager lives of farm ducks, Mackey stepped from the lectern and strode from the ballroom. He says he was just taking a bathroom break, but it looked as if the CEO was walking out in a huff — so much so that he was followed by several of his senior executives and a handful of Whole Foods stockholders.

After he returned and the meeting wrapped up, Ornelas found Mackey in the crowd. They had a cordial chat, and the CEO gave the activist his email address. For several weeks, they traded arguments about how animals are raised. Mackey quickly found the exchange tedious — rhetorical rather than persuasive — and says he sent Ornelas a final email that basically said, “I'm done. We're not going to agree about this.”

And then the CEO of what will this year be a $3.7 billion corporation did something very un-CEO-like — something that shows why he is such an unusual leader and ultimately such an influential one. Instead of simply dismissing Ornelas from his busy brain, Mackey decided to try to make sense of her and her beliefs. “I didn't understand why these people were so passionate about this issue,” he says. “I perceived them as our enemies. Now, the best way to argue with your opponents is to completely understand their point of view.”

He tackled the puzzle of Ornelas the way he has addressed other difficult questions over his career — by reading dozens of books about Japanese management in the 1970s to figure out how Whole Foods should be organized, for example, or becoming a student of labor unions when he was confronted by unionization efforts in the 1990s. Over three months, he gave himself a solo tutorial on modern factory farming. “I read a dozen books about how animals are raised in this country,” he says, “going all the way back to Peter Singer's Animal Liberation in 1975. The more I read, the more I was interested in it. I said, Damn, these people are right. This is terrible.”

Mackey did two things. He changed his vegetarian diet to vegan (he no longer eats food produced from animals, including dairy products). And he sent Ornelas an email telling her she was right — not just about ducks, but about chickens, pigs, and cows. Mackey wrote that Whole Foods would immediately begin using its influence and buying power to demand that the meat it sells comes from animals that have been treated with a measure of dignity before being slaughtered. He invited Ornelas to help.

“I was at the office when that email came in,” she says. “And I just about fell on the floor.”

Mackey's conclusion is both simple and revolutionary. And if his past record is any guide, it may ultimately change the lives not only of every American but of hundreds of millions of farm animals. Before being consumed by humans, animals should at least be allowed, in his words, “to live out their fundamental animal nature.” The ducks that so concerned Ornelas are a perfect example.

Whole Foods has been buying ducks from Grimaud Farms in California for nine years. Grimaud is known as a small, high-quality raiser of ducks. That means no antibiotics, no steroids, and feed that is free of animal by-products. Still, says Mackey, the ducks raised by Grimaud spend their lives in barns. They don't have access to the outdoors. Their bills are trimmed so they don't peck one another. Most stunning to Mackey, “they are not allowed to swim. Ever. Ducks who never get to swim.”

Right this minute, at one of its California farms, Grimaud is designing swimming areas for its ducks.

John Mackey started out with a small health-food store that he opened with his then-girlfriend, Renee Lawson Hardy, in a three-story building on 8th and Rio Grande in Austin in 1978. There was the store on the first floor, a health-food restaurant on the second, a bed on the third. “We didn't even have a shower,” says Mackey. “Renee and I would take showers in the Hobart dishwasher in the restaurant, you know, using the spray hose.”

It has always been easy to underestimate Mackey, who says that he first discovered vegetarian food when he joined a vegetarian group house in college. “I thought I would meet some really cool women there,” he says. “And I did.” His business acumen, his instinct for the market, and his astonishing competitiveness were well camouflaged back then. They still are today.

Now 50, Mackey still has an undisciplined head of hair, and he typically wears shorts and hiking boots to work. Before the adjournment of every business meeting at Whole Foods, including the ones that Mackey conducts, participants do a round of “appreciations,” saying something nice about the people in the meeting.

Mackey flies commercial and likes to rent the cheapest car. A half-dozen times a year, his two senior operating executives — A.C. Gallo and Walter Robb, each of whom runs half the country for Whole Foods, from Boston and San Francisco, respectively — come to Austin and stay at Mackey's house. They make their own beds, and talk shop at 6:45 a.m. over soy yogurt and fruit. Mackey “is hardly a manager at all,” says a former executive who reported to him for years. “He's an anarchist.”

Maybe so. But there is nothing undisciplined about Whole Foods' performance. The company cleared $188 million in profits in the last two years. Food Lion, with seven times as many stores as Whole Foods and five times the revenue, made $150 million in the same period. Safeway lost $1 billion.

As for consistency, Whole Foods has five-year performance numbers that are little short of incredible. In the last five years, grocery sales in the United States have grown a total of 13%, or 2.5% a year compounded. Here, in reverse order, are the year-over-year sales increases at Whole Foods, starting with last year: 17%, 21%, 21%, 23%, and 14%. For Whole Foods, the five-year total growth in U.S. grocery sales would have been a bad single-year performance.

Even more revealing than the overall sales growth, though, is Whole Foods' comparable-store sales growth. Comparable-store sales are a measure of how well similar stores that are already open do year over year. You can grow by frantically opening stores (see, for instance, Gap), or you can grow by attracting more and more customers and selling more and more stuff in existing stores. Again, in reverse order, here are Whole Foods' comparable-store sales increases, starting with last year: 8.6%, 10%, 9.2%, 8.6%, and 7.7%. A typical Whole Foods store that did $15 million in business in 1999 did $21.4 million in 2003 — $6 million in added sales that it mostly took away from the likes of Safeway, Kroger, Albertson's, and Food Lion.

Whole Foods has even tromped the nation's largest grocer, Wal-Mart. In each of the last four years, Whole Foods beat Wal-Mart in both overall and comparable-store sales growth. In the last two years, as the nation slogged through the downturn, Whole Foods' comparable-store sales have grown at nearly twice the pace of Wal-Mart's.

Ten years ago, Mackey was worried about a lot of things with what then seemed like a big ($402 million in sales, 35 stores) company. What worried him most was that someone much bigger would catch on to the potential of natural food, and simply wallop him. “If someone had been ruthless enough, or opportunistic enough — or, really, just smart enough — we could've been crushed,” he says. “But I don't fear that anymore. We're not that vulnerable anymore. Our culture is too strong. Our locations are too good. And we know so much more than we used to.”

Just yesterday, it seems, Whole Foods was a cute, engaging market, obsessed with organic and natural foods, and with a puzzling egalitarian work culture. The customer-service staff had piercings, tattoos, spiky hair — and an apparently limitless patience to talk about the origins of the fresh mozzarella cheese, or the ingredients of the orzo salad, or the virtues of various homeopathic remedies.

The company had a written “Declaration of Interdependence” (1,571 words, 249 more than the Declaration of Independence). It had a set of written core values (“satisfying and delighting our customers,” “team-member happiness and excellence”). And most striking of all, even for a small company, it had a set of quirky management rules that made Whole Foods an odd but effective workplace.

Each store had a book in the office that listed the pay of every employee for the previous year. The book was available to anyone — and was especially valuable if you were promoted or if you relocated, and wanted to see how your pay compared with your colleagues'. The pay book, surprisingly little used, set a tone of what Mackey called “no secrets management.”

Every store was divided into about eight functional teams: You were hired to the seafood team, or the prepared-foods team, or the cashier/front-end team. But you didn't just get hired. You got hired provisionally. After four weeks of work, the team you had joined voted whether to keep you; you needed a two-thirds yes vote to join the staff permanently.

Additional pay (beyond base wages) was linked to the teams, so people were careful about who got their votes. Thirteen times a year, Whole Foods calculated the performance of the people on each team in every store. How productive had the team been against goals? Teams that did well shared in the profits — up to $1.50 or $2.00 extra an hour was paid right back to team members, every other paycheck. So people didn't want buddies on their teams; they wanted workers — people who were going to make them some money.

Individual team leaders made decisions about what to stock in their stores, in consultation with the store team leaders. No one in regional offices or in Austin dictated what would go on the shelves. Stores were encouraged to buy and stock local produce, fish, or meat, so long as they met Whole Foods' quality standards. Stores competed against each other in 11 “customer snapshot” reviews a year — on everything from cleanliness to the drama of the produce displays. Ordinary employees qualified for stock options, and executives limited their own pay to eight times that of the average frontline employee. The company gave 5% of its after-tax profits to charity. And, of course, whenever possible, Whole Foods stocked organic or natural foods.

In 1992, a year after going public, Mackey announced, “We're creating an organization based on love instead of fear.”

The question of the 1990s — after Whole Foods had acquired Wellspring, in North Carolina (two stores); Bread & Circus, in New England (six stores); Mrs. Gooch's, in California (seven stores); and Fresh Fields, on the East Coast (22 stores), while opening an average of five new stores a year — was about how the whole charming, loving, unlikely enterprise would scale up.

In 2004, with 26,000 employees (twice the number at Apple Computer) and nearly a billion in sales in just the first three months of the year, what has happened to all those Woodstock-generation management ideas?
The question was how a charming, loving, unlikely enterprise would scale up.

Every one of them is still in place — except that executive salaries are now limited to 14 times frontline workers' pay.

The salary book is still in every store. If you want to join a team — including, say, the national IT team — you still need a two-thirds thumbs-up vote. Nonexecutive employees hold 94% of company stock options. And just last year, the National Leadership Team took the health-insurance options to employees for a vote. (Whole Foods pays 100% of the cost for full-timers.)

The ideas have been put to the test as Whole Foods slowly opens larger stores in labor markets where untraditional management may seem, simply, weird. This February, Whole Foods opened a signature store in Manhattan, in the new Time Warner building at Columbus Circle. It is the largest supermarket in Manhattan, with 59,000 square feet. The ceilings are airy, the cafe is skylit, the aisles are so wide that two shopping carts and a baby stroller — three abreast — can easily slide past one another. The Columbus Circle Whole Foods is a carnival of comestibles. The prepared-foods area includes a sushi bar, staffed at lunch with 11 people; a pizza bar with 14 kinds of pizza; a coffee and tea bar; a salad bar with 40 items; and a daily hot-lunch bar that includes separate arrays of Asian, Indian, and Latin food. The produce section recently offered 15 different varieties of organic greens, including dinosaur kale; the meat case held four dozen kinds of meat. The store has 30 checkout stations, a single bank-style line, and a line monitor to speed customers to the next open cashier.

But as gorgeous, and even sexy, as it is, the food is really not the challenge. It's the people. Columbus Circle opened with 292 people on staff, which means some of the 14 teams had 50 or more members, a hard group to wrangle. The key is one of Mackey's favorite metaphors: yogurt culture.

Of those 292 staff members, 70 came from other stores. With their understanding of the company, they were the starter culture, in Mackey's metaphor, launching the fermentation that would turn Columbus Circle into a true Whole Foods store. Some even took lesser titles just to get into Columbus Circle. The store has a team leader and two associate store team leaders, both of whom were previously running their own stores in Georgetown, Maryland, and Albuquerque, New Mexico, before coming to New York.

Although Whole Foods is pricey — customers have ruefully nicknamed it “Whole Paycheck” — the opening staff was quickly swamped by the business in New York. Three months after it opened, Columbus Circle now has 468 team members, including 140 people on the cashier/front-end team alone, more people than used to work in a whole store.

Aaron Foster, 22, a two-year company veteran, came to Columbus Circle from a Philadelphia Whole Foods. He's a cheese buyer, and standing at the cheese display, he's pondering the tension in Whole Foods' values — as he puts it, to “further the goals of sustainable agriculture and artisanal food production while being as big as we are and growing as fast as we are.” A customer comes up. “Excuse me,” she says, “I'm looking for a certain cheese.” She's abashed. “It begins with a C.” Foster is all ears. “It's one syllable,” she says. Foster focuses on the roster of C cheeses in his brain. “I bought it yesterday at Dean & DeLuca!” the woman offers, as if this might be helpful.

“Comte,” Foster suggests.

“That's it!” the woman says, and they head off to get her some.

Barry Keenan is working the fresh-seafood case with full-throated theatricality, calling the weights of the salmon and the shrimp he is selling before the scale can display them. “I shopped at the Whole Foods in Chelsea all the time,” the 32-year-old says. “I figured I'd put in my application; they hired me in September.”

So is Whole Foods a New York kind of workplace? Keenan laughs. “Not at all. People here are used to being trod on. I was in the restaurant business 10 years. I got no benefits of any kind the entire time, not to mention, say, a lunch break.” The restaurant veteran has no qualms about working retail at the seafood counter. “They have a lot more respect for you as a person here.”

Indeed, Chris Hitt, who was at Whole Foods for 16 years and who left as president in 2001, says, “Customers experience the food and the space, but what they really experience is the work culture. The true hidden secret of the company is the work culture. That's what delivers the stores to the customers.”

Wendy Steinberg, 44, has worked at Whole Foods since 1992 (her husband works at Whole Foods, too), and she is now one of the associate team leaders at Columbus Circle. She has a story from her first year at the company, when she was working in a store in Providence, Rhode Island.

“I was on break, in the break room. I hadn't been a team member more than six months, and there was this guy in the break room. He was sitting there, with his hands crossed, with this big 1970s-style Afro, just checking things out. We talked. He asked me a lot of questions. I had no idea who he was. I figured he was just another team member.”

Finally, says Steinberg, “I was like, who are you, anyway?”

That was John Mackey.

“He's an observer,” Steinberg says of her CEO.

It's hardly the oddest description of Mackey. His management style, his beliefs, are a baffling blend that defies categorization. Through stock ownership, Mackey is a multimillionaire, but he is unpretentious and uninterested in money. He's now a vegan, on the principle that all food causes harm to the animals that produce it. He does eat eggs produced by the chickens that he and his wife raise on their Texas farm “because I know those chickens are happy. They live in chicken heaven.”

Raised in Houston, Mackey studied philosophy at the University of Texas in Austin, but he never got a degree. He remains an omnivorous intellect. In the course of an hour's conversation, he'll quote from the management theories of Ryan Matthew and Watts Wacker's The Deviant's Advantage , the demographics book Millennials Rising , Somerset Maugham's novel set in 1930s Paris, The Razor's Edge , and J.R.R. Tolkien's Lord of the Rings . Animal-rights activist Ornelas says Mackey read books about animal husbandry that even she had never heard of. On a wall of Mackey's office is a framed poster of the starship Enterprise ; Mackey is an admirer of the political organization of Star Trek's United Federation of Planets — and the regional organization of Whole Foods is similar.

The National Leadership Team of the company has 24 people on it, and, says Mackey, “We make decisions by majority vote. I almost never overrule them.” He doesn't just delegate; in fact, he can seem almost diffident about his company. Asked how 140 cashiers can function as a single team in the way that Mackey originally imagined — an absolutely fundamental question in preserving the culture of Whole Foods — he looks like an anthropologist who has just had a student ask a great question.

“That does sound like a problem,” he says. “A team that large could confound the basic operating principle. But I'll tell you, I don't have the faintest idea how they've solved that problem. That's not my job anymore. But call them up, ask. I guarantee they have found a solution. I'd be curious to know what it is.” (In practice, the team has 13 supervisors, one subteam, and everyone meets as a massive group each month.)

And yet last year, Mackey spent months on the road, visiting 135 stores, talking to hundreds of employees. He overruled everyone to dictate the massive size of the new Austin flagship store — it will be 80,000 square feet. And as inclusive and decentralized as he wants management to be, Mackey is more clearly in charge at Whole Foods than ever before. Eight years ago, two longtime veterans of the business and the company, Chris Hitt and Peter Roy, were each helping run operations nationwide. Both eventually had the title “president,” and Mackey said either could run the company.

Both Hitt and Roy are gone now, as are cofounder Craig Weller, food guy Lex Alexander, and several other longtime executives. Feelings are still pretty raw on all sides — “There are power struggles and crap that goes on below the surface at every company,” says Mackey — but there was no crisis. Just personality differences, growing pains, and people whose expectations didn't get met. Mackey has taken back the title of president, and he won't say a word about succession except, “I have no plans to go anywhere for at least 10 years.”
Trouble in paradise? “There are power struggles and crap at every company,” the CEO says.

Hitt says he thinks Mackey may one day be considered as much a pioneer as Bill Gates or Steve Jobs. But in the same breath, he says, “Whole Foods isn't just John Mackey. It's a huge number of incredibly committed senior executives and people who [have worked] in those stores their whole careers.”

Mackey and Whole Foods are already having a profound impact on how Americans eat. No less a giant than Dole Food now sells organic bananas — bananas are the number-one produce item in the nation — to Whole Foods and will soon sell organic pineapples. Much to Dole's surprise, half the demand for its organic bananas comes from conventional supermarkets.

Organic Valley cooperative, a large national supplier of organic milk, grew up alongside Mackey and Whole Foods — “When they would open a single store, we would increase our production,” says Organic Valley's marketing chief, Theresa Marquez. And Whole Foods' markets are still 16% of Organic Valley's business, but no longer its number-one customer. Organic Valley's biggest account is Publix, a classy regional supermarket chain in the Southeast that is five times the size of Whole Foods — and thoroughly mainstream. “Sixty percent of our business is the mass markets,” says Organic Valley CEO George Siemon.

It's unlikely there would be organic milk in every supermarket coast to coast, and it's hard to believe Dole would be busy scouring Central America for farmland to convert to organic production if Whole Foods' sales hadn't tripled, and tripled again, since 1994. Says Doug Greene, founder and former editor of Natural Foods Merchandiser , the 25-year-old trade bible of the organic- and natural-foods business: “If you look back 100 years from now, history will show that Whole Foods will be in the top-five companies that changed the world.”

Still, for all of Whole Foods' success and influence — one meat supplier uses the un-hippielike word “juggernaut” — the organic- and natural-foods business remains a pretty small niche. True, production and sales are growing at more than 20% a year in an industry that, overall, is stagnant or drifting up at only the glacial rate of population growth. But the total U.S. market for organic and natural foods is now estimated at about $13.5 billion, between 1% and 2% of all foods sold in the United States, and less than the sales at any of the top-11 grocery chains in America. Cropland and grazing land is rapidly being converted to organic production, but for all the talk, right now less than half of 1% of U.S. land is certified for organic growing or grazing. “Wal-Mart spills more milk than we sell every year,” says Organic Valley's Siemon.

But here's the funny thing. The production of natural and organic foods is a virtuous cycle: You have to start off with clean land to grow grain for your clean breakfast cereal, or to feed to your clean chickens. The baby-boom demographic trends are all surging in Whole Foods' direction; the Columbus Circle store is already filled with little old ladies loading their grocery carts. Americans are on hair-trigger alert to issues such as mad cow disease. It's hard to envision the market doing anything but growing.
Mackey believes we will shun factory farms that treat animals like products.

Mackey's new determination to raise Whole Foods' standards for animal care — a command decision to which there has been nothing but assent internally — may rock the cattle, pork, and poultry industries. After six months of meetings, Whole Foods settled on rules for ducks, and this summer will begin setting standards for pig raising. And Mackey believes Americans will soon shun factory farms that raise and slaughter 9 billion animals a year as if they were protein products, not creatures. “Right now,” he says, “Americans have to pretend factory farms don't exist. They turn their eyes away, because there's no alternative, there's no choice.” Once there is a choice, he says, we will allow ourselves to be outraged. Equally dramatic transformations have happened in the past 25 years. Consider the revolution in attitudes about drunk driving and smoking in the United States.

In 20 years of making predictions about his company and his business, Mackey has never missed a bet, except for underestimating the market for organic and natural foods. (At one point in the early 1990s, he said there were only 100 good sites for Whole Foods markets in the entire country.) Sitting in his office in 2004, he says without hesitation, “Twenty years from now, factory farms will be illegal in the United States.”

As bold, and even outrageous, as that prediction is, Mackey is nothing if not a hardheaded realist. And he hears regularly from counterculture critics who complain about the corporatization of their stores. “People write me letters, they send me emails. They say, 'You've forgotten the people who made you.' They say, 'How can you let people who drive SUVs shop at the stores?' “

Mackey says they simply don't get it. “The stores are larger, nicer, prettier — they are more inviting to the mainstream shopper,” he says. “Whole Foods is not a business for a clique, or for the elite. We wanted the philosophy of the stores to spread throughout the culture. We wanted to change the world.”

Mackey is a persistently puzzling fellow: self-effacing, but with a hint that he senses his own legacy. During 2002, in the heart of the recession, he took four months off to hike the Appalachian Trail, fulfilling a longtime dream.

People who hike the whole trail end up with “trail names,” a moniker that acknowledges that the Appalachian Trail is a universe unto itself, a place where the roles of the outside world are set aside. Mackey had been warned in advance to pick his own trail name, lest he be tagged with something derisive, as is the custom.

“My trail name is Strider,” he says. For someone tall, lanky, and energetic, it seems an innocuous enough choice. “I'm a great admirer of Tolkien's Lord of the Rings ,” Mackey says. “Before I was in high school, I had read it five times. And one of the characters I admired was Strider.”

But as with much about Mackey, that nickname is not quite what it seems. “Strider isn't his real name; it's his nickname on the trail. He is really Aragorn, the king. But he wasn't a king on the trail. In 2002, when I was hiking, I was certainly the richest guy hiking the Appalachian Trail. I was a kind of secret king. But that wasn't my identity, or my role, on the trail.”

Fast Take: Management Whole Foods Style

Imagine if every new hire had to win a two-thirds yes vote from employees before being permitted to join the staff permanently. And imagine if a list of everyone's pay was posted publicly, with names attached. Those are just two of the distinctive elements at Whole Foods, management ideas born back in the 1980s when CEO John Mackey and his colleagues were looking to scale up the work culture of the corner health-food store. Japanese management ideas were in vogue back then, and Japanese principles of team-based management are infused throughout Whole Foods' structure.

“Empowered” teams

Stores, and even individual grocery departments within stores, such as seafood or produce, still have a lot of say about what gets stocked, based on local products and local tastes. Regional managers design their own new stores rather than take blueprints from headquarters.

“No secrets” management

Whole Foods releases a flood of financial data, far more than most companies. It's aimed not at the public or the press, but really toward employees, in order to help them understand how their company is doing. The information starts with the most basic: Every store contains a binder with the previous year's gross pay for every company employee, including executives.

“Shared fate” from the front lines up

Mackey feels strongly that dramatic pay differences between the front lines of companies and the executive suites are corrosive over time: Executives and the employees who do the day-to-day work end up with completely different perspectives. At Whole Foods, executive pay is limited to 14 times the average pay of frontline workers. Frontline employees qualify for stock options, and the company says 94% of options go to nonexecutive staff.

“Shared fate,” part two

Whole Foods has a distinctive profit-sharing feedback loop. Every four weeks, individual work teams (there are roughly 10 per store) are assessed for productivity, and profit sharing is awarded in every other paycheck. That's one reason staff members are careful about who they vote onto teams: Your closest colleagues have a direct impact on your paycheck.

“Team-member happiness”

Whole Foods has always been clear that customers, and their needs, are the number-one priority. Employees aren't far behind. Whole Foods has a liberal dress code, pays 100% of health insurance for full-time employees, and provides full-timers with 20 hours a year of paid time to do volunteer work.

Fast Take: You Decide

John Mackey runs a large coast-to-coast grocery-store chain with a uniquely decentralized style. The key is a single question, says Mackey. “I often ask, Whose decision is this?”

That's why employees voted last year to pick their health-insurance plan, rather than having it imposed from headquarters in Austin. Health insurance is the decision that frontline employees care most about, and whose elements they can most effectively judge.

The fundamental operating unit of Whole Foods is not in Austin, or in one of the regional offices, or even the 157 individual stores. The basic unit at Whole Foods is the team — the produce, seafood, or bakery team at a particular store. Decisions, from hiring employees to what products to carry, are often made at that level, by a few dozen employees. That reflects the core decision-making philosophy at Whole Foods: Decisions should be made closest to the place they'll be carried out, should directly involve the people affected, and should leave out people who aren't involved. Simple ideas, but not the way most bosses think about their prerogatives. Here's Mackey's matrix for thinking about decision making.

Command-and-control decisions

These are the ones that Mackey makes himself — or the “boss” in a particular setting makes. They happen when timing doesn't permit wide consultation, or when Mackey thinks the stakes are so high that he feels that he has to decide. “I almost never make a command-and-control decision,” he says.

Consultative decisions

These are decisions that Mackey, the senior leadership team, or the appropriate group of people make — but only after wide conversation and consultation with those involved. It's the most common form of decision making at Whole Foods. “I make a ton of decisions where I consult with people I trust, with the people involved,” Mackey says.

Consensus decisions

These occur when the team involved strives for general agreement. Each team at each store meets monthly to provide a forum for this kind of decision making; among the decisions reached by consensus are hiring decisions: Every new employee must be voted onto the staff after a tryout; it takes a two-thirds yes vote from the team to stay. Even Mackey's National Leadership Team of 24 people routinely votes on decisions. “I don't overrule the National Leadership Team,” says Mackey. “I've done it maybe once or twice in all these years.”

“I will make a decision about what kind of decision something is,” says Mackey. The most common decisions, he says, are also his favorites: “decisions that are not my decision.”

Charles Fishman , Fast Company 's southeast bureau chief, first wrote about Whole Foods in 1996, for issue number two.

Via :

http://mitpress.mit.edu/catalog/item/default.asp?ttype=6&tid=14403

Daedulus, Vol. 133, Issue 2 – on happiness

How not to buy happiness
Robert H. Frank

pp. 69 – 79  

An enduring paradox in the literature on human happiness is that although the rich are significantly happier than the poor within any country at any moment, average happiness levels change very little as people’s incomes rise in tandem over time.1 Richard Easterlin and others have interpreted these observations to mean that happiness depends on relative rather than absolute income.2

In this essay I offer a slightly different interpretation of the evidence–namely, that gains in happiness that might have been expected to result from growth in absolute income have not materialized because of the ways in which people in affluent societies have generally spent their incomes.

In effect, I wish to propose two different answers to the question “Does money buy happiness?” Considerable evidence suggests that if we use an increase in our incomes, as many of us do, simply to buy bigger houses and more expensive cars, then we do not end up any happier than before. But if we use an increase in our incomes to buy more of certain inconspicuous goods–such as freedom from a long commute or a stressful job–then the evidence paints a very different picture. The less we spend on conspicuous consumption goods, the better we can afford to alleviate congestion; and the more time we can devote to family and friends, to exercise, sleep, travel, and other restorative activities. On the best available evidence, reallocating our time and money in these and similar ways would result in healthier, longer– and happier–lives.

The main method that psychologists have used to measure human well-being has been to conduct surveys in which they ask people whether they are: a) very happy; b) fairly happy; or c) not happy.3 Most respondents are willing to answer the question, and not all of them respond “very happy,” even in the United States, where one might think it advantageous to portray oneself as being very happy. Many people describe themselves as fairly happy, and others confess to being not happy. A given person’s response tends to be consistent from one survey to the next.

Happiness surveys and a variety of other measures employed by psychologists are strongly correlated with observable behaviors that we associate with well-being.4 If you’re happy, for example, you’re more likely to initiate social contact with friends. You’re more likely to respond positively when others ask you for help. You’re less likely to suffer from psychosomatic illnesses–digestive disorders, other stress disorders, headaches, vascular stress. You’re less likely to be absent from work or to get involved in disputes at work. And you’re less likely to attempt suicide–the ultimate behavioral measure of unhappiness. In sum, it appears that human happiness is a real phenomenon that we can measure.5

How does happiness vary with income? As noted earlier, studies show that when incomes rise for everybody, well-being doesn’t change much. Consider the example of Japan, which was a very poor country in 1960. Between then and the late 1980s, its per capita income rose almost four-fold, placing it among the highest in the industrialized world. Yet the average happiness level reported by the Japanese was no higher in 1987 than in 1960.6 They had many more washing machines, cars, cameras, and other things than they used to, but they did not register significant gains on the happiness scale.

The same pattern consistently shows up in other countries as well, and that’s a puzzle for economists. If getting more income doesn’t make people happier, why do they go to such lengths to get more income? Why, for example, do tobacco company CEOs endure the public humiliation of testifying before Congress that there’s no evidence that smoking causes serious illnesses?

It turns out that if we measure the income-happiness relationship in another way, we get just what the economists suspected all along. When we plot average happiness versus average income for clusters of people in a given country at a given time, we see that rich people are in fact much happier than poor people. In one study based on U.S. data, for example, people in the top decile of the income distribution averaged more than five points higher on a ten-point happiness scale than people in the bottom decile.7

The evidence thus suggests that if income affects happiness, it is relative, not absolute, income that matters. Some social scientists who have pondered the significance of these patterns have concluded that, at least for people in the world’s richest countries, no useful purpose is served by further accumulations of wealth.8

On its face, this should be a surprising conclusion, since there are so many seemingly useful things that having additional wealth would enable us to do. Would we really not be any happier if, say, the environment were a little cleaner, or if we could take a little more time off, or even just eliminate a few of the hassles of everyday life? In principle at least, people in wealthier countries have these additional options, and it should surprise us that this seems to have no measurable effect on their overall wellbeing.

There is indeed independent evidence that having more wealth would be a good thing, provided it were spent in certain ways. The key insight supported by this evidence is that even though we appear to adapt quickly to across-the-board increases in our stocks of most material goods, there are specific categories in which our capacity to adapt is more limited. Additional spending in these categories appears to have the greatest capacity to produce significant improvements in well-being.

The human capacity to adapt to dramatic changes in life circumstances is impressive. Asked to choose, most people state confidently that they would rather be killed in an automobile accident than to survive as a quadriplegic. And so we are not surprised to learn that severely disabled people experience a period of devastating depression and disorientation in the wake of their accidents. What we do not expect, however, are the speed and extent to which many of these victims accommodate to their new circumstances. Within a year’s time, many quadriplegics report roughly the same mix of moods and emotions as able-bodied people do.9 There is also evidence that the blind, the retarded, and the malformed are far better adapted to the limitations imposed by their conditions than most of us might imagine.10

We adapt swiftly not just to losses but also to gains. Ads for the New York State Lottery show participants fantasizing about how their lives would change if they won. (“I’d buy the company and fire my boss.”) People who actually win the lottery typically report the anticipated rush of euphoria in the weeks after their good fortune. Follow-up studies done after several years, however, indicate that these people are often no happier –and indeed, are in some ways less happy–than before.11

In short, our extraordinary powers of adaptation appear to help explain why absolute living standards simply may not matter much once we escape the physical deprivations of abject poverty. This interpretation is consistent with the impressions of people who have lived or traveled extensively abroad, who report that the struggle to get ahead seems to play out with much the same psychological effects in rich societies as in those with more modest levels of wealth.12

These observations provide grist for the mills of social critics who are offended by the apparent wastefulness of the recent luxury-consumption boom in the United States. What many of these critics typically overlook, however, is that the power to adapt is a two-edged sword. It may indeed explain why having bigger houses and faster cars doesn’t make us any happier; but if we can also adapt fully to the seemingly unpleasant things we often have to endure to get more money, then what’s the problem? Perhaps social critics are simply barking up the wrong tree.

I believe, however, that to conclude that absolute living standards do not matter is a serious misreading of the evidence. What the data seem to say is that as national income grows, people do not spend their extra money in ways that yield significant and lasting increases in measured satisfaction. But this still leaves two possible ways that absolute income might matter. One is that people might have been able to spend their money in other ways that would have made them happier, yet for various reasons they did not, or could not, do so. I will describe presently some evidence that strongly supports this possibility.

The second possibility is that although measures of subjective well-being may do a reasonably good job of tracking our experiences as we are consciously aware of them, that may not be all that matters to us. For example, imagine two parallel universes, one just like the one we live in now and another in which everyone’s income is twice what it is now. Suppose that in both cases you would be the median earner, with an annual income of $100,000 in one case and $200,000 in the other. Suppose further that you would feel equally happy in the two universes –an assumption that is consistent with the evidence discussed thus far. And suppose, finally, that you know that people in the richer universe would spend more to protect the environment from toxic waste, and that this would result in healthier and longer, even if not happier, lives for all. Can there be any question that it would be better to live in the richer universe?

My point is that although the emerging science of subjective well-being has much to tell us about the factors that contribute to human satisfaction, not even its most ardent practitioners would insist that it offers the final word. Whether growth in national income is, or could be, a generally good thing is a question that will have to be settled by the evidence.

And there is in fact a rich body of evidence that bears on this question. One clear message of this evidence is that, beyond some point, across-the-board increases in spending on many types of material goods do not produce any lasting increment in subjective well-being. Sticking with the parallel-universes metaphor, let us imagine people from two societies, identical in every respect save one: in society A everyone lives in a house with 4,000 square feet of floor space, whereas in society B each house has only 3,000 square feet. If the two societies were completely isolated from one another, there is no evidence to suggest that psychologists and neuroscientists would be able to discern any significant difference in their respective average levels of subjective well-being. Rather, we would expect each society to have developed its own local norm for what constitutes adequate housing, and that people in each society would therefore be equally satisfied with their houses and other aspects of their lives.

Moreover, we have no reason to suppose that there would be other important respects in which it might be preferable to be a member of society A rather than society B. Thus the larger houses in society A would not contribute to longer lives, more freedom from illness, or indeed any other significant advantage over the members of society B. Once house size achieves a given threshold, the human capacity to adapt to further across-the-board changes in house size would appear to be virtually complete.

Of course, it takes real resources to build larger houses. A society that built 4,000-square-foot houses for everyone could have built 3,000-square-foot houses instead, freeing up considerable resources that could have been used to produce something else. Hence this central question: Are there alternative ways of spending these resources that could have produced lasting gains in human welfare?

An affirmative answer would be logically impossible if our capacity to adapt to every other possible change were as great as our capacity to adapt to larger houses. As it turns out, however, our capacity to adapt varies considerably across domains. There are some stimuli, such as environmental noise, to which we may adapt relatively quickly at a conscious level, yet to which our bodies continue to respond in measurable ways even after many years of exposure. And there are stimuli to which we never adapt over time but rather become sensitized; various biochemical allergens are examples, but we also see instances on a more macro scale. Thus, after several months’ exposure, the office boor who initially took two weeks to annoy you can accomplish the same feat in only seconds.

The observation that we adapt more fully to some stimuli than to others opens the possibility that moving resources from one category to another might yield lasting changes in well-being. Considerable evidence bears on this possibility.

A convenient way to examine this evidence is to consider a sequence of thought experiments in which you must choose between two hypothetical societies. The two societies have equal wealth levels but different spending patterns. In each case, let us again suppose that residents of society A live in 4,000- square-foot houses while those of society B live in 3,000-square-foot houses.

In each case, the residents of society B use the resources saved by building smaller houses to bring about some other specific change in their living conditions. In the first thought experiment, I will review in detail what the evidence says about how that change would affect the quality of their lives. In the succeeding examples, I will simply state the relevant conclusions and refer to supporting evidence published elsewhere.

Which would you choose: society A, whose residents have 4,000-square-foot houses and a one-hour automobile commute to work through heavy traffic; or society B, whose residents have-3,000 square-foot houses and a fifteen-minute commute by rapid transit?

Let us suppose that the cost savings from building smaller houses are sufficient to fund not only the construction of high-speed public transit, but also to make the added flexibility of the automobile available on an as-needed basis. Thus, as a resident of society B, you need not give up your car. You can drive it to work on those days when you need extra flexibility, or you can come and go when needed by taxi. The only thing you and others must sacrifice to achieve the shorter daily commute of society B is additional floor space in your houses.

A rational person faced with this choice will want to consider the available evidence on the costs and benefits of each alternative. As concerns the psychological cost of living in smaller houses, the evidence provides no reason to believe that if you and all others live in 3,000-square-foot houses, your subjective well-being will be any lower than if you and all others live in 4,000-square-foot houses. Of course, if you moved from society B to society A, you might be pleased, even excited, at first to experience the additional living space. But we can predict that in time you would adapt and simply consider the larger house the norm.

Someone who moved from society B to society A would also initially experience stress from the extended commute through heavy traffic. Over time, his consciousness of this stress might diminish. But there is an important distinction: unlike his essentially complete adaptation to the larger house, his adaptation to his new commuting pattern will be only partial. Available evidence clearly shows that, even after long periods of adjustment, most people experience the task of navigating through heavy commuter traffic as stressful.13

In this respect, the effect of exposure to heavy traffic is similar to the effect of exposure to noise and other irritants. Thus, even though a large increase in background noise at a constant, steady level is experienced as less intrusive as time passes, prolonged exposure nonetheless produces lasting elevations in blood pressure.14 If the noise is not only loud but intermittent, people remain conscious of their heightened irritability even after extended periods of adaptation, and their symptoms of central nervous system distress become more pronounced.15 This pattern was seen, for example, in a study of people living next to a newly opened noisy highway. Four months after the highway opened, 21 percent of residents interviewed said they were not annoyed by the noise, but that figure dropped to 16 percent when the same residents were interviewed a year later.16

Among the various types of noise exposure, worst of all is exposure to sounds that are not only loud and intermittent, but also unpredictably so. Subjects exposed to such noise in the laboratory experience not only physiological symptoms of stress, but also behavioral symptoms. They become less persistent in their attempts to cope with frustrating tasks, and suffer measurable impairments in performing tasks requiring care and attention.17

Unpredictable noise may be particularly stressful because it confronts the subject with a loss of control. David Glass and his collaborators confirmed this hypothesis in an ingenious experiment that exposed two groups of subjects to a recording of loud unpredictable noises. Whereas subjects in one group had no control over the recording, subjects in the other group could stop the tape at any time by flipping a switch. These subjects were told, however, that the experimenters would prefer that they not stop the tape, and most subjects honored this preference. Following exposure to the noise, subjects with access to the control switch made almost 60 percent fewer errors than the other subjects on a proofreading task and made more than four times as many attempts to solve a difficult puzzle.18

Commuting through heavy traffic is in many ways more like exposure to loud unpredictable noise than to constant background noise. Delays are difficult to predict, much less control, and one never quite gets used to being cut off by drivers who think their time is more valuable than anyone else’s. A large scientific literature documents a multitude of stress symptoms that result from protracted driving through heavy traffic.

One strand in this literature focuses on the experience of urban bus drivers, whose exposure to the stresses of heavy traffic is higher than that of most commuters, but who have also had greater opportunity to adapt to those stresses. A disproportionate share of the absenteeism of urban bus drivers stems from stress-related illnesses such as gastrointestinal problems, headaches, and anxiety.19 Many studies have found sharply elevated rates of hypertension among bus drivers relative to those of a variety of control groups, including a control group of bus drivers pre-employment.20 Additional studies have found elevations of stress hormones such as adrenaline, noradrenaline, and cortisol in urban bus drivers.21 And one study found elevations of adrenaline and noradrenaline to be strongly positively correlated with the density of the traffic with which the bus drivers had to contend.22 More than half of all urban bus drivers retire prematurely with some form of medical disability.23

A one-hour daily commute through heavy traffic is presumably less stressful than operating a bus all day in an urban area. Yet this difference is one of degree rather than of kind. Studies have shown that the demands of commuting through heavy traffic often result in emotional and behavioral deficits upon arrival at home or work.24 Compared to drivers who commute through low-density traffic, those who commute through heavy traffic are more likely to report feelings of annoyance.25 And higher levels of commuting distance, time, and speed are significantly positively correlated with increased systolic and diastolic blood pressure.26

The prolonged experience of commuting stress is also known to suppress immune function and shorten longevity.27 Even daily spells in traffic as brief as fifteen minutes have been linked to significant elevations of blood glucose and cholesterol, and to declines in blood coagulation time–all factors that are positively associated with cardiovascular disease. Commuting by automobile is also positively linked with the incidence of various cancers, especially cancer of the lung, possibly because of heavier exposure to exhaust fumes.28 The incidence of these and other illnesses rises with the length of commute,29 and is significantly lower among those who commute by bus or rail,30 and lower still among noncommuters. 31 Finally, the risk of death and injury from accidents varies positively with the length of commute and is higher for those who commute by car than for those who commute by public transport.

In sum, there appear to be persistent and significant costs associated with a long commute through heavy traffic. We can be confident that neurophysiologists would find higher levels of cortisol, norepinephrine, adrenaline, noradrenaline, and other stress hormones in the residents of society A. No one has done the experiment to discover whether people from society A would report lower levels of life satisfaction than people from society B, but since we know that drivers often report being consciously aware of the frustration and stress they experience during commuting, it is a plausible conjecture that subjective well-being, as conventionally measured, would be lower in society A. Even if the negative effects of commuting stress never broke through into conscious awareness, however, we would still have powerful reasons for wishing to escape them.

On the strength of the available evidence, then, it appears that a rational person would have powerful reasons to choose society B, and no reasons to avoid it. And yet, despite this evidence, the United States is moving steadily in the direction of society A. Even as our houses continue to grow in size, the average length of our commute to work continues to grow longer. Between 1982 and 2000, for example, the time penalty for peak-period travelers increased from 16 to 62 hours per year; the daily window of time during which travelers might experience congestion increased from 4.5 to 7 hours; and the volume of roadways where travel is congested grew from 34 to 58 percent.32 The Federal Highway Administration predicts that the extra time spent driving because of delays will rise from 2.7 billion vehicle hours in 1985 to 11.9 billion in 2005.33

Table 1

Four thought experiments: the conspicuous consumption of society A versus the inconspicuous consumption of society B

Society A
Society B

1
Everyone lives in 4,000-square-foot houses and has no free time for exercise each day.
1
Everyone lives in 3,000-square-foot houses and has 45 minutes available for exercise each day.

2
Everyone lives in 4,000-square-foot houses and has time to get together with friends one evening each month.
2
Everyone lives in 3,000-square-foot houses and has time to get together with friends four evenings each month.

3
Everyone lives in 4,000-square-foot houses and has one week of vacation each year.
3
Everyone lives in 3,000-square-foot houses and has four weeks of vacation each year.

4
Everyone lives in 4,000-square-foot houses and has a relatively low level of personal autonomy in the workplace.
4
Everyone lives in 3,000-square-foot houses and has a relatively high level of personal autonomy in the workplace.

Table 1 lists four similar thought experiments that ask you to choose between societies that offer different combinations of material goods and free time to pursue other activities. Each case assumes a specific use of the free time and asks that you imagine it to be one that appeals to you (if not, feel free to substitute some other activity that does).

The choice in each of these thought experiments is one between conspicuous consumption (in the form of larger houses) and what, for want of a better term, I shall call inconspicuous consumption –freedom from traffic congestion, time with family and friends, vacation time, and a variety of favorable job characteristics. In each case the evidence suggests that subjective well-being will be higher in the society with a greater balance of inconspicuous consumption. 34 And yet in each case the actual trend in U.S. consumption patterns has been in the reverse direction.

The list of inconspicuous consumption items could be extended considerably. Thus we could ask whether living in slightly smaller houses would be a reasonable price to pay for higher air quality, for more urban parkland, for cleaner drinking water, for a reduction in violent crime, or for medical research that would reduce premature death. And in each case the answer would be the same as in the cases we have considered thus far.

My point in the thought experiments is not that inconspicuous consumption is always preferable to conspicuous consumption. Indeed, in each case we might envision a minority of rational individuals who might choose society A over society B. Some people may simply dislike autonomy on the job, or dislike exercise, or dislike spending time with family and friends. But if we accept that there is little sacrifice in subjective well-being when all have slightly smaller houses, the real question is whether a rational person could find some more productive use for the resources thus saved. Given the absolute sizes of the houses involved in the thought experiments, the answer to this question would seem to be yes.

It might seem natural to suppose that when per capita income rises sharply, as it has in most countries since at least the end of World War II, most people would spend more on both conspicuous and inconspicuous consumption. In many instances, this is in fact what seems to have happened. Thus the cars we buy today are not only faster and more luxuriously equipped, but also safer and more reliable. If both forms of consumption have been rising, however, and if inconspicuous consumption boosts subjective well-being, then why has subjective well-being not increased during the last several decades?

A plausible answer is that whereas some forms of inconspicuous consumption have been rising, others have been declining, often sharply. There have been increases in the annual number of hours spent at work in the United States during the last two decades; traffic has grown considerably more congested; savings rates have fallen precipitously; personal bankruptcy filings are at an alltime high; and there is at least a widespread perception that employment security and autonomy have fallen sharply. Declines in these and other forms of inconspicuous consumption may well have offset the effects of increases in others.

The more troubling question is why we have not used our resources more wisely. If we could all live healthier, longer, and more satisfying lives by simply changing our spending patterns, why haven’t we done that?

As even the most ardent free-market economists have long recognized, the invisible hand cannot be expected to deliver the greatest good for all in cases in which each individual’s well-being depends on the actions taken by others with whom he does not interact directly. This qualification was once thought important in only a limited number of arenas –most importantly, activities that generate environmental pollution. We now recognize, however, that the interdependencies among us are considerably more pervasive. For present purposes, chief among them are the ways in which the spending decisions of some individuals affect the frames of reference within which others make important choices.

Many important rewards in life–access to the best schools, to the most desirable mates, and even, in times of famine, to the food needed for survival– depend critically on how the choices we make compare to the choices made by others. In most cases, the person who stays at the office two hours longer each day to be able to afford a house in a better school district has no conscious intention to make it more difficult for others to achieve the same goal. Yet that is an inescapable consequence of his action. The best response available to others may be to work longer hours as well, thereby to preserve their current positions. Yet the ineluctable mathematical logic of musical chairs assures that only 10 percent of all children can occupy top-decile school seats, no matter how many hours their parents work.

That many purchases become more attractive to us when others make them means that consumption spending has much in common with a military arms race. A family can choose how much of its own money to spend, but it cannot choose how much others spend. Buying a smaller-than-average vehicle means greater risk of dying in an accident. Spending less on an interview suit means a greater risk of not landing the best job. Yet when all spend more on heavier cars and more finely tailored suits, the results tend to be mutually offsetting, just as when all nations spend more on armaments. Spending less– on bombs or on personal consumption– frees up money for other pressing uses, but only if everyone does it.

What, exactly, is the incentive problem that leads nations to spend too much on armaments? It is not sufficient merely that each nation’s payoff from spending on arms depends on how its spending compares with that of rival nations. Suppose, for example, that each nation’s payoff from spending on nonmilitary goods also depended, to the same extent as for military goods, on the amounts spent on nonmilitary goods by other nations. The tendency of military spending to siphon off resources from other spending categories would then be offset by an equal tendency in the opposite direction. That is, if each nation had a fixed amount of national income to allocate between military and nonmilitary goods, and if the payoffs in each category were equally context sensitive, then we would expect no imbalance across the categories.

For an imbalance to occur in favor of armaments, the reward from armaments spending must be more context sensitive than the reward from nonmilitary spending. And since this is precisely the case, the generally assumed imbalance occurs. After all, to be second best in a military arms race often means a loss of political autonomy–clearly a much higher cost than the discomfort of having toasters with fewer slots.

In brief, we expect an imbalance in the choice between two activities if the individual rewards from one are more context sensitive than the individual rewards from the other. The evidence described earlier suggests that the satisfaction provided by many conspicuous forms of consumption is more context sensitive than the satisfaction provided by many less conspicuous forms of consumption. If so, this would help explain why the absolute income and consumption increases of recent decades have failed to translate into corresponding increases in measured well-being.

1 This paper draws heavily on chapters 5 and 6 of my book Luxury Fever (New York: The Free Press, 1999). BACK

2 Richard Easterlin, “Does Economic Growth Improve the Human Lot?” in Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz, ed. Paul David and Melvin Reder (New York: Academic Press, 1974), and Richard Easterlin, “Will Raising the Incomes of All Increase the Happiness of All?” Journal of Economic Behavior and Organization 27 (1995): 35–47. BACK

3 See Easterlin, “Does Economic Growth Improve the Human Lot?” BACK

4 For surveys of this evidence, see chapter 2 of Robert H. Frank, Choosing the Right Pond (New York: Oxford University Press, 1985) and Andrew Clark and Andrew Oswald, “Satisfaction and Comparison Income,” Journal of Public Economics 61 (1996): 359–381. BACK

5 Ed Diener and Richard E. Lucas, “Personality and Subjective Well-Being,” in Understanding Well-Being: Scientific Perspectives on Enjoyment and Suffering, ed. Daniel Kahneman, Ed Diener, and Norbert Schwartz (New York: The Russell Sage Foundation, 1998). BACK

6 Ruut Veenhoven, Happiness in Nations (Rotterdam: Erasmus University, 1993). BACK

7 Ed Diener, Ed Sandvik, Larry Seidlitz, and Marissa Diener, “The Relationship Between Income and Subjective Well-Being: Relative or Absolute?” Social Indicators Research 28 (1993): 195–223. BACK

8 See, for example, Peter Townsend, “The Development of Research on Poverty,” in Social Security Research: The Definition and Measurement of Poverty (London: hmso, 1979). BACK

9 R. J. Bulman and C. B. Wortman, “Attributes of Blame and ‘Coping’ in the ‘Real World’: Severe Accident Victims React to Their Lot,” Journal of Personality and Social Psychology 35 (May 1977): 351–363. BACK

10 P. Cameron, “Stereotypes About Generational Fun and Happiness vs. Self-Appraised Fun and Happiness,” The Gerontologist 12 (Summer 1972): 120–123. BACK

11 P. Brickman, D. Coates, and R. Janoff-Bulman, “Lottery Winners and Accident Victims: Is Happiness Relative?” Journal of Personality and Social Psychology 36 (August 1978): 917–927. BACK

12 David G. Myers, The Pursuit of Happiness: Who is Happy and Why? (New York: Avon, 1993). BACK

13 Meni Koslowsky, Avraham N. Kluger, and Mordechai Reich, Commuting Stress (New York: Plenum, 1995). BACK

14 David C. Glass, Jerome Singer, and James Pennegaker, “Behavioral and Physiological Effects of Uncontrollable Environmental Events,” in Perspectives on Environment and Behavior, ed. Daniel Stokols (New York: Plenum, 1977). BACK

15 Ibid. BACK

16 N. D. Weinstein, “Community Noise Problems: Evidence Against Adaptation,” Journal of Environmental Psychology 2 (1982): 82–97. BACK

17 Glass et al., “Behavioral and Physiological Effects of Uncontrollable Environmental Events.” BACK

18 Ibid., figures 5 and 6. BACK

19 L. Long and J. Perry, “Economic and Occupational Causes of Transit Operator Absenteeism: A Review of Research,” Transport Reviews 5 (1985): 247–267. BACK

20 D. Ragland, M. Winkleby, J. Schwalbe, B. Holman, L. Morse, L. Syme, and J. Fisher, “Prevalence of Hypertension in Bus Drivers,” International Journal of Epidemiology 16 (1987): 208–214; W. Pikus and W. Tarranikova, “The Frequency of Hypertensive Diseases in Public Transportation,” Terapevischeskii Archives 47 (1975): 135–137; and G. Evans, M. Palsane, and S. Carrere, “Type A Behavior and Occupational Stress: A Cross-Cultural Study of Blue-Collar Workers,” Journal of Personality and Social Psychology 52 (1987): 1002–1007. BACK

21 Ibid. BACK

22 G. Evans and S. Carrere, “Traffic Congestion, Perceived Control, and Psychophysiological Stress Among Urban Bus Drivers,” Journal of Applied Psychology 76 (1991): 658–663. BACK

23 Gary W. Evans, “Working on the Hot Seat: Urban Bus Drivers,” Accident Analysis and Prevention 26 (1994): 181–193. BACK

24 David C. Glass and Jerome Singer, Urban Stressors: Experiments on Noise and Social Stressors (New York: Academic Press, 1972); D. R. Sherrod, “Crowding, Perceived Control, and Behavioral Aftereffects,” Journal of Applied Social Psychology 4 (1974): 171–186. BACK

25 Daniel Stokols, Raymond W. Novaco, Jeannette Stokols, and Joan Campbell, “Traffic Congestion, Type A Behavior, and Stress,” Journal of Applied Psychology 63 (1978): 467– 480. BACK

26 Ibid., table 3. BACK

27 Anita DeLongis, Susan Folkman, and Richard S. Lazarus, “The Impact of Daily Stress on Health and Mood: Psychological and Social Resources as Mediators,” Journal of Personality and Social Psychology 54 (1988): 486–495. BACK

28 Koslowsky et al., Commuting Stress, chap. 4. BACK

29 Koslowsky et al., Commuting Stress. BACK

30 P. Taylor and C. Pocock, “Commuter Travel and Sickness: Absence of London Office Workers,” British Journal of Preventive and Social Medicine 26 (1972): 165–172; Meni Koslowsky and Moshe Krausz, “On the Relationship Between Commuting, Stress Symptoms, and Attitudinal Measures,” Journal of Applied Behavioral Sciences (December 1993): 485–492. BACK

31 European Foundation for the Improvement of Living and Working Conditions, “The Journey from Home to the Workplace: The Impact on the Safety and Health of the Community/ Workers” (Dublin: European Foundation for the Improvement of Living and Working Conditions, 1984). BACK

32 David Schrank and Tim Lomax, The 2002 Urban Mobility Report, Texas Transportation Institute, . BACK

33 Charles S. Clark, “Traffic Congestion,” The CQ Researcher, 6 May 1994, 387–404. BACK

34 For a detailed survey of the supporting studies, see Frank, Luxury Fever, chap. 6. BACK

© 2004 by the American Academy of Arts & Sciences

[Forwarded message from Ralph Merkle]

Support Cryonics Rights!

In early 2004 cryonicists in Arizona narrowly averted hasty legislation
harmful to cryonics:

http://www.alcor.org/Library/html/legislation.html

Positive changes to the bill, and the eventual realization that
withdrawal of the bill would be best for all concerned, only
happened because certain Arizona legislators were able to see
through hostile rhetoric and allegations against cryonics.
They were able to see cryonics as a matter of personal choice,
and that the nature and scope of the proposed cryonics legislation
was not justified.

The hundreds of letters legislators received from people inside
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constituency. In an election year, supporting candidates
responsive to your concerns is an even more effective demonstration
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Please financially support these candidates who support individuals'
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