The Origins of Happiness

Chapter 3

it is larger than the total of positive effects. In the other

countries it is also substantial.

So what is happening here? Are people just going to

higher education because their friends go and it would

therefore hurt not to go? We investigate this hypothesis in

the second column for each country. We do indeed find

some evidence that the more other people are going to fur-

ther education, the more you gain in happiness by going

yourself.

To sum up, extra education brings considerable benefits

(direct and mediated) to the individual. But these are sub-

stantially offset by the negative effect of one person’s edu-

cation on others in the peer group. However that is not the

end of the story: there are other external effects.

Most important may be the development of a better in-

formed and more rational set of citizens and voters. Sec-

ond, there are the tax externalities. More education leads to

higher incomes and therefore higher taxes, which can be

used to provide better public services or higher disposable

income to other families. If the latter, this could add at most

Table 3.4. How life- satisfaction (0– 10) is affected by years of education

(household panel data) (pooled cross- section)

Education Britain Germany Australia USA

Own 0.03
(.00)

−0.16

(.07)

0.05

(.00)

0.07

(.05)

−0.01

(.00)

−0.13

(.05)

0.03

(.00)

−0.02

(.01)

Others’ −0.09
(.02)

−0.27

(.07)

−0.05

(.01)

−0.02

(.06)

−0.03

(.01)

−0.14

(.05)

−0.01

(.01)

−0.06

(.02)

Own ×
others’

0.01

(.01)

−0.00

(.00)

0.01

(.00)

0.01

(.00)