Over the past two decades, Carol Graham, the Leo Pasvolsky Senior Fellow at the Brookings Institution and College Park Professor at the School of Public Policy at the University of Maryland, has helped shape the field of well-being economics. Growing its influence required a fortuitous combination of innovative thinking, academic rigor, and being in the right place at the right time, says Graham.
With support from the Charles Koch Foundation, she plans to expand her research, focusing especially on “the role of hope and aspirations, and how that can be incredibly important in driving effort and investment in the future.” She is also looking to “build a broader network of well-being scholars that are interested in a range of topics around these issues.”
Her interest in the subject of well-being economics began in the late 1990s, while studying poverty, income mobility, and respondents’ perceptions of their situation in Latin America. That work benefitted from the insights and suggestions of Nobel Laureate George Akerlof, who was visiting Brookings at the time, and introduced her to “what was then a very small group of economists and psychologists who were collaborating on this very nascent field of well-being.” In the intervening years, that field gained influence among scholars and policymakers alike.
My interest in economics is: How do we improve people’s lives? If I have to go against mainstream thinking, I don’t care.
In 2002, Daniel Kahneman became the first psychologist to win the Nobel Prize in economics, motivating more scholars to become interested in the intersection between psychology and economics. That same year, Graham published her first book on the subject, Happiness and Hardship: Opportunity and Insecurity in New Market Economies (with Stefano Pettinato). By the time her next book (Happiness around the World: The Paradox of Happy Peasants and Miserable Millionaires) was released in 2009, “the financial crisis had just happened, and there was a lot of questioning of traditional economic models,” says Graham. This allowed her work to fill a gap in knowledge about how to best address issues of poverty and economic downturns.
“If we want to understand our divisions, implications of very high levels of inequality,” says Graham, “we need to understand the relationships between income trends … and behavioral channels.” In other words, what are the behaviors and beliefs shared by people who are falling behind? What makes someone more or less willing to invest in the future? Why are certain safety net programs more effective than others?
“My interest in economics is: How do we improve people’s lives?” she says. “If I have to go against mainstream thinking, I don’t care.” It was this openness to new solutions that recently allowed Graham to notice counterintuitive trends occurring in her data. One surprising discovery was “increasing mortality rates—driven by preventable deaths—among middle aged, uneducated whites” in America, she wrote in a report for the Brookings Institution. “That stands in sharp contrast to gradual improvements in health and well-being of blacks and Hispanics over the past decades, and high levels of optimism about the future among these same groups.”
Graham’s newest book, Happiness for All? Unequal Lives and Hopes in Pursuit of the American Dream—scheduled to be released in March 2017—explores some of the implications of this research.