

The OECD's metrics are not inscribed by the Almighty on stone tablets. They're just educated guesses about what makes for strong communities a decent environment and so on. But they help to tell an important story: If you want to measure what makes people satisfied, you have to understand what they value. And that is really, really hard work.

DOES HAPPY-ECONOMICS SKEW LIBERAL OR CONSERVATIVE?

The most commonly cited statistic in happiness economics is the rule that somewhere between $40,000 and $110,000, a higher salary doesn't buy much more joy or satisfaction. Many people draw the bright white line at $70,000. This provides a strong utilitarian impulse to raise taxes on the rich, who apparently can't buy much happiness with their extra millions, and to funnel the money to the poor to bring them closer to $70,000.

But that's an awfully blunt instrument for maximizing happiness. But one reason why incomes differ is that some people care more about making money than others.

Take, for example, two equally capable students graduating from the University of Michigan. Student A goes into Acting, because he likes the stage and doesn't mind being poor. Student B goes into Banking, because he likes money and he doesn't mind working 100 hours a week. The federal income tax code will implicitly punish Student B's decision with higher rates and reward Student A with maybe even a net tax credit, even though Student A didn't care about money in the first place. If you nationalize this lesson, it suggests that, in our imprecise efforts to funnel money from the top to the middle, we wind up taking money from people who care overwhelmingly about having a high income and distribute it among people who don't.

"Differences in preferences, not merely ability, play a role in driving the variation in income across individuals," Benjamin Lockwood Matthew Weinzierl write in a fascinating 2012 paper. Some people are rich because they really want to be.