Chicago Booth Review Podcast Will We Recover from the ‘Happiness Crash’?

Sam Peltzman: But the general pattern is that the people who were least happy before have the smallest hit from the COVID crash, and the people who were most happy have the bigger hit.

Hal Weitzman: American self-reported rates of happiness plummeted during COVID and haven't recovered since. Will they ever? Welcome to the Chicago Booth Review Podcast, where we bring you groundbreaking academic research in a clear and straightforward way. I'm Hal Weitzman, and today I'm talking with Chicago Booth's Sam Peltzman about his research on happiness. Before 2020, Peltzman says the US was a reasonably happy country for nearly 50 years, but in the past six years, everything has changed. So are we in a permanent happiness slump? Sam Peltzman, welcome back to the Chicago Booth Review Podcast.

Sam Peltzman: It's my pleasure.

Hal Weitzman: Great to have you back. So we're going to talk about happiness, and not in a good way either, because you have a happiness crash that you've charted starting in 2020. What's a happiness crash?

Sam Peltzman: We have a continual series of data going back to the early 1970s in which a random sample of the population is asked exactly the same question, "Are you happy? Are you okay or are you sad?" just to be short about it. And I then just take the difference between the people who say they're happy and the people who say they're sad. That's always been a positive number.

Hal Weitzman: When you say always, how far back?

Sam Peltzman: Back 50 years. We have a little data before then and it's comparable.

Hal Weitzman: But this is back to the early '70s.

Sam Peltzman: Early '70s, yes. Remember the exact same question. That's important because the stakes in answering aren't all that great. So you're getting an attitudinal read on a random sample of the population over and over again.

Hal Weitzman: And they ask them once a year or how often are they asked?

Sam Peltzman: The sample is once every year at the beginning, every two years these days. It got disrupted by COVID in a big way, which we might get to, but it's exactly the same question, and it's always a random sample of the population. So you're getting a read on attitudes which has some history to it. And it's always been positive. 20 more people say they're very happy compared to this sad. It went down a little bit in the early 2000s.

So maybe by the time we're at 2018, which is the last survey before COVID hits, we're at 18, 19, something like that. COVID comes here, and they couldn't do a survey, but they did one the next year, and it drops to unprecedented negative. It becomes negative in one year. You never had changes more than five, six points in that from year to year. Now you got 20.

That's understandable. COVID was a big, big shock to our social and political and cultural system. What's striking is that we now have a couple of surveys that are after COVID. There's one in 2022, which still has a lingering maybe COVID effect, and '24, which has already passed. And it came up, but not much. On net, the crash persisted, the COVID crash persisted. So we're now 5 instead of 20.

That's just unprecedented. And again, it is across the board. I'm able to identify tiny slices of the demography, but for 95% of the population, there's no real exception. It's across partisanship, it's across age, it's across gender, even race where the only important exceptions really occur all crashed and haven't come back. That's the ominous part of it.

Hal Weitzman: Well, we'll get to that. But just to remind people, we've had you on the podcast several times talking about your research about the general social survey. So this goes back to the early '70s, and this is where they ask people, "Are you happy?" And just remind us, the question is, "Are you happy or not?"

Sam Peltzman: Yes. It's phrased differently, but it's not yes or no. It's, "Are you happy? Are you okay? Are you sad?" So you have three choices and about half the people take the middle, which is what you're being guided to. But again, the important thing is it's exactly the same question since the early 1970s.

Hal Weitzman: Yeah, which is great for you. I mean, for all of us, but for you as a researcher. What's driving this? Is it that fewer people are saying I'm happy? Or is it that more people are saying I'm sad?

Sam Peltzman: It's both. It's both. And equally, that's interesting too. There's a little reduction in doubt, the middle one, that can feed, in principle, into either you go from being okay to either being sad or happy. But the bottom line is fewer people saying they're happy and more people saying they're sad in roughly equal proportions.

Hal Weitzman: Okay. But when they go from being happy, they typically go into the middle?

Sam Peltzman: Yes. So the middle is an absorbing kind of category.

Hal Weitzman: So the middle is swollen?

Sam Peltzman: No, that's the point. It's probably declined.

Hal Weitzman: The same number of people...

Sam Peltzman: So the people who are on-

Hal Weitzman: I see.

Sam Peltzman: If you think of them as a cohort, which they're really not, but think of the people who were on the margin of either sad or happy, the ones that were on the margin become sad on that margin, and they're replaced a little bit by people who used to be happy.

Hal Weitzman: Okay. So as you said, the crashes spread across all demographics, but you did hint that there were some groups that managed to escape the decline here.

Sam Peltzman: Yes.

Hal Weitzman: What were those groups?

Sam Peltzman: Yes. So let me back up a little bit. There's a general pattern in the data. It has exceptions, one of which we may get to because it's an important exception. But the general pattern is that the people who were least happy before have the smallest hit from the COVID crash. And the people who were most happy have the bigger hit. So before COVID, there was a racial division: Blacks and other. There's a big now growing group of others who are basically Hispanics who don't identify-

Hal Weitzman: Neither white nor Black, you mean?

Sam Peltzman: Yes. They don't identify as either. So you have Asians, you have Hispanics who are mixed blood. Those people tended to be less happy than whites. The gap was closing, but it closed much more sharply during this crash. And now you have a situation in which the least happy group is whites. The ranking just reversed. And the most happy is the other, this growing group of others. If you take other, combine it with low education, there's another group, tended to be less happy before the COVID hit. The most educated tend to be the most happy.

That difference has narrowed. It's not equal, but it's narrowed. So if you have somebody who's an other race, less educated, we can come to income. Low income was conducive to unhappiness, it still is, but the gap is closed. The gap between low and high income is closed. So you can define it's an odd group of other race, low education, low income. If you add it all up, they've escaped. That little group has escaped.

Hal Weitzman: They've escaped in the sense that they were always unhappy and they-

Sam Peltzman: No, no, no. They didn't get a hit from COVID.

Hal Weitzman: But they tend to be happy or they tend to be unhappy?

Sam Peltzman: The differences remain. They would tend to be less happy than the average.

Hal Weitzman: On average, they're less happy. Yeah.

Sam Peltzman: Yes. But when the average drops 20 points in one year-

Hal Weitzman: They haven't declined.

Sam Peltzman: They haven't declined.

Hal Weitzman: So that's what I'm saying. They're still as unhappy as they would've-

Sam Peltzman: They're unhappy historically compared to their historic... But compared to white, upper income, well-educated, they're not.

Hal Weitzman: They are no more unhappy than they were.

Sam Peltzman: No more or less. Yes.

Hal Weitzman: Right. Okay. Got it. And so then conversely, the happiest pre-pandemic were people who had high incomes-

Sam Peltzman: High incomes.

Hal Weitzman: ... who are well-educated.

Sam Peltzman: Yes.

Hal Weitzman: These are exactly the people who did have the big crash, right?

Sam Peltzman: Yes.

Hal Weitzman: They saw the largest reductions in happiness.

Sam Peltzman: Yes.

Hal Weitzman: Just tell us about that.

Sam Peltzman: Yes. So demographically, the demographic markers would be white people, high income, high education took the biggest hit. Politically, you have an interesting situation where there's a long historical political difference. People on the right tended to be happier than people on the left. The right took the biggest hit.

You're talking 2018, the vile Trump was the Republican, and then you get 2020 and a Democrat comes in. So it's a little bit understandable, but that doesn't explain any big part of this. There was a big closing of the gap on the partisan level, but demographically, it would be white, high income, high education.

Hal Weitzman: Do you have any sense of why that would be or are you just watching what's happening?

Sam Peltzman: I like to leave the why questions for my younger colleagues who should pursue this.

Hal Weitzman: Well, talk about your-

Sam Peltzman: This is an underappreciated area for research.

Hal Weitzman: Sure. Absolutely. Well, I know we have a lot of researchers at Booth who are looking at happiness, but maybe not exactly in this way. So there is a lot of talk, isn't there, about mental health, the young people? And we can speculate for hours about the role of social media and all this other stuff.

Sam Peltzman: Yes.

Hal Weitzman: So I'm just wondering-

Sam Peltzman: It's not in these data.

Hal Weitzman: ... you're not seeing any of that?

Sam Peltzman: No, no. Well, I exclude the 18 to 25-year-olds because a lot of them are still in school. But no, there's no big age difference. Let's say 25 to 35 as opposed to people my age, there are hardly any left. But say 65 and up, there's no big difference.

Hal Weitzman: If you're enjoying this podcast, there's another University of Chicago Podcast Network show that you should check out. It's called Nine Questions. Join Professor Eric Oliver as he poses the nine most essential questions for knowing yourself to some of humanity's wisest, the most interesting people. Nine Questions with Eric Oliver, part of the University of Chicago Podcast Network.

Sam, in the first half, we talked about your research on the happiness crash and how most people, their reported happiness dropped precipitously during COVID and hasn't recovered. So you did refer to marriage, and actually last time you were on talking about this topic, we talked about the marital premium, right? The fact that those of us who are married are, on average, much happier. So what happened to married people during the happiness crash?

Sam Peltzman: Okay, let's go back a little bit to the first half of this where I said that in general, the people who were happiest got hit with the crash more than the people who were least. There's one big, big exception, and that's right here in marriage. There was a big marital premium. In fact, all the happiness in the population at large was concentrated in married people. The unmarried people were breakeven.

That hasn't narrowed at all. So you had a big hit to the married. You had an equally big hit to the unmarried. So we take the married people were plus 30 and the unmarried zero, breakeven. The unmarried population now is really unhappy, minus 15 or so. And the married population is plus 15. So you still have a 30-point differential, but the hit was equal to married.

Hal Weitzman: And when you say marriage, they have to be legally married? So if you're cohabiting-

Sam Peltzman: Yes. The unmarried would include cohabitation, yes. And I haven't broken this down.

Hal Weitzman: I was going to say, can we get data on...

Sam Peltzman: Well, we know that before the crash, cohabitation was similar to marriage, but pale similarity. They were plus 10 compared to plus 30 for the married people. There isn't really enough cohabitation in the population to draw much from a couple of surveys. There is married and unmarried. They're big populations. I would be very surprised if the cohabitating population wasn't solidly negative now of a little bit the unmarried, non-cohabitating population that's single people, divorced people and so on, but not much. But that's to be determined.

Hal Weitzman: So the marriage premium, it's maintained?

Sam Peltzman: It's maintained, yes.

Hal Weitzman: But it hasn't grown?

Sam Peltzman: Depending on how you measure it, it also has grown a little bit. I don't want to emphasize that. But if I had to say, has it widened? I would have to say yes, a little bit.

Hal Weitzman: Okay. But it's widened a little bit because the crash was so significant. Is that what you'd say?

Sam Peltzman: It's made the statement that the unmarried people are unhappy even more.

Hal Weitzman: They're even more unhappy.

Sam Peltzman: Yeah.

Hal Weitzman: I see. Okay. So beyond personal happiness, you also looked at social capital. And so I'm interested what happened to the average American's belief in the fairness of others. Explain those terms, please.

Sam Peltzman: Well, again, this is a question that's been asked the same way for 50-plus years. There's a bunch of general trust kind of questions. Do you trust other people? Do you think they're fair to you or are they just looking out for themselves? This kind of thing. And they are more or less yes-no kind of questions. And they've been going down just like the happiness. Not as much, but they've been going down.

Hal Weitzman: So what does that mean? We don't think that other people have our own interests at heart or...

Sam Peltzman: Well, the actual question is, "Do you trust other people or you can't ever be too sure?" That's the basic alternative. And the fairness one is, "Do you think other people are fair or do you think they're looking out for their own hide?" or something like that. And you're given, basically, a yes or no choice. So the fraction that say, "You can't be too sure," has been going up.

The fraction that say, "Other people are just looking out for themselves," that's been going up. So there's been a decline in this kind of social capital. But just like happiness, one of them, just one of them fell off the table during COVID in a historically unprecedented way. We went from positive fairness perception to negative overnight. Not trust.

The trust just declined a little bit. There are other measures of this kind, "Do you trust the government? Do you trust religion?" All of those measures have declined in perceptible ways over this COVID happiness crash. The only one that resembles the happiness crash in magnitude is the trust crash, which I think is interesting that-

Hal Weitzman: Are they related?

Sam Peltzman: They must be. I don't want to say anything other than I just said. The facts are that they're related in the aggregate. I don't want to get into how they're related on a person-to-person level, because there's so much variation at that level in the data that it gets complicated. You're talking about correlation coefficients. I don't want to get into second order of importance, but the important fact is-

Hal Weitzman: But the headline is we've lost trust in other people and we're less happy.

Sam Peltzman: We've lost trust in other people and we're unhappy.

Hal Weitzman: Okay. But it sounds like there will be-

Sam Peltzman: On average. So lots of exceptions.

Hal Weitzman: Of course. So I can imagine that someone listening to this, Sam, will be saying, "Is this permanent?"

Sam Peltzman: That is the big question going forward. What's striking is that the recovery has been so weak out as far as we can take it, which is 2024. Now we got a couple of years. They're doing another one. If these numbers do not turn up in some significant way pretty soon, I think you have to say that there's been a big change in our society in terms of its social capital, in terms of how connected people feel to themselves and to each other. Who knows what the implications are? They're going to be for your generation, not for mine.

Hal Weitzman: Or for the generation after me. Anyway, let's not worry about that right now.

Sam Peltzman: Yeah.

Hal Weitzman: Thank you. It's been a great conversation anyway. So wonderful chatting with you, Sam Peltzman. Thanks again for coming on the Chicago Booth Review Podcast.

Sam Peltzman: I'm always pleased to do it.

Hal Weitzman: That's it for this episode of the Chicago Booth Review Podcast, part of the University of Chicago Podcast Network. For more research, analysis and insights, visit our website at chicagobooth.edu/review. When you're there, sign up for our weekly newsletter so you never miss the latest in business-focused academic research. This episode was produced by Josh Stunkel. If you enjoyed it, please subscribe, and please do leave us a five-star review. Until next time, I'm Hal Weitzman. Thanks for listening.