Published by EH.NET (January 2007)

Avner Offer, The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950. Oxford: Oxford University Press, 2006. xviii + 454 pp. $45 (cloth), ISBN: 0-19-820853-2

Reviewed for EH.NET by John F. Helliwell, Department of Economics, University of British Columbia.

This insightful book provides a fresh and refreshing new look at life in the United States and Britain over the past half century. Many of the chapters have appeared previously, but in all cases the work has been carefully chosen and revised to support the venture at hand. By shrewdly combining reviews of the scientific well-being literature with detailed analysis of particular industries (especially autos, advertising, and consumer appliances) and aspects of personal behavior (driving, obesity, mating and family commitment), Offer shows how much more of human behavior becomes explicable, and open to fresh policy perspectives, when the well-springs of human behavior and the determinants of individual decisions are treated as objects of research rather than dismissed by assumption.

With more than 1400 items in the bibliography, Offer’s survey of a vast and varied literature tracking well-being and its determinants over the past fifty years provides many guideposts for scholars wishing to find out what has been going on in this important domain. He is particularly good at weaving diverse strands of evidence together, and using their combined weight to support his conclusions.

Offer’s review of how people actually make decisions — often myopically, and paying much heed to family, friends, neighbors and the media (sometimes through genuine altruism and regard for others, but sometimes with an envious peek at what the Joneses are driving these days), provides just the right background for his very detailed histories of eating habits, household appliances, and the origin of fins and the Edsel in the 1950s U.S. auto industry. By combining psychological evidence with historical case studies and statistical analysis from several sectors and decades, Offer effectively explains what is often called the “Easterlin Paradox,” that average measures of life satisfaction in Britain and the United States have remained flat over the past half century while average real per capita GDP has soared. From Offer’s review, there are several elements to the answer. It is partly distribution, with much of the income gains accruing at the top end, where they are often dissipated in the negative-sum game of status pursuit, partly the increased commercial exploitation of consumer myopia (credit card approvals in every day’s mail), partly an overload of the wrong sorts of information about how life is and should be lived (TV being a principal culprit here) and partly a decline in the extent to which individuals are connected and committed to each other, as friends, spouses, parents, children, schoolmates, workmates, neighbors and society writ large. All of these trends have been noted and documented before. The contribution of Offer’s book, and the literature he surveys, is to show how these various developments have played out, to estimate their consequences for well-being, and to relate these well-being effects to those that might plausibly be expected to flow from higher incomes. This is a refreshingly far cry from the more usual economic histories of advanced economies, driven mainly by the measurement and analysis of the determinants of factor accumulation, output and productivity.

When Offer tries at the end of the book to draw out the implications of his analysis, he finds it easier to conclude that the challenge of affluence has been mishandled than to think of specific policy changes that might have produced higher levels of well-being in Britain and the United States. He argues, I think correctly, that individuals, families and governments are all likely to do better jobs of supporting and improving the well-being of themselves and others if they understand more clearly the consequences of what they are doing. The hedonic treadmill is wasteful, but it is best abandoned by choice rather than fiat, since well-being is most improved when individuals and communities can set challenges for themselves, and take credit for achieving their objectives. Many government policies, by emphasizing the accumulation of incomes rather than the value of strong and resilient families and communities, may have contributed to welfare loss through unintended consequences.

Once the well-being literature, which Offer surveys so well, is taken seriously, then every public and private decision takes on a different cast. Re-thinking is required of instruments and objectives, and especially recognition of the benefits of community structures in which individuals and families feel themselves to be effectively engaged in the pursuit of their joint destinies. As Offer puts it, well-being “… is a balance between our own needs and those of others, on whose goodwill and approbation our own well-being depends.” His book provides invaluable insights to illuminate, but not simplify, decisions that could improve well-being.

John F Helliwell is Research Fellow and Program Co-Director of the Canadian Institute of Advanced Research Program in “Social Interactions, Identity and Well-Being.” He is also Research Associate of the National Bureau of Economic Research and Professor Emeritus of Economics at the University of British Columbia. Recent books include Globalization and Well-Being (UBC Press 2002).