061: Carol Graham - The Power of Hope

Carol Graham: Thank you, Jonathan. I’m really happy to be on. And with a title like mindful money and your interest in what kind of things that being mindful about money and how you spend it and how that links to, I think, human behavior and human well being, it seems like it’s great to try and contribute to that discussion or the series of discussions that you have.

Jonathan DeYoe: Thank you so, first of all, where do you call home? Where are you calling in from?

Carol Graham: I work in DC at Brookings, and I live in Maryland, on the Chesapeake Bay, but not the eastern side, the western side, so near Annapolis, Maryland. So my work home is DC, my home is on the bay in Maryland. Uh, we lived in DC for a long time, but we’re now in my parents’old house because the only way I could keep it when my dad died was to move. So I moved me and the kids there. But I actually was born in Peru, so that’s another home place I call home. And I grew up in a kind of a background where my mother was French and Swiss, but born in Peru, and then we moved. My dad was american and peruvian and had an institute for malnourished infants in Peru, which he started the year I was born. I was the last of six kids, so I grew up with sort of public health and know in my orbit from day one. But we moved to Baltimore because he went to Hopkins to join the med school faculty. And we were a bit of fish out of water in Baltimore. My mother, with nobody could figure out what language she spoke, much less where she was from, because English was like her fifth language and nobody knew where Peru was in North Baltimore at the. But. So I feel very lucky to have lived and been exposed to a lot of different, um. So home is a complicated concept.

Jonathan DeYoe: Uh, especially before you moved to Baltimore, what kind of money lessons did you learn growing up? Or how old were you when you moved to Baltimore?

Carol Graham: Three. So probably not a lot of money. When we moved, I didn’t speak English, so I think I learned English in going to nursery school, not being able to speak it, but kids that age. I mean, my dad had spoken to me in English, but I grew up in Spanish. Ah, we still have peruvian food, and my kids speak Spanish, and it’s very much part of our lives. So money has always been something that I’ve thought more about in terms of, for people that don’t have it and how they cope. And over time, I’ve worked much less on poor countries than on the US, precisely because we seem to have a paradox of miserable. Not so much miserable millionaires, but miserable working class. And at the same time, inequality no longer being a sign of opportunity where you can go, but really just being a sign of advantage for the rich and disadvantaged, for the poor. And as we know, our intergenerational liability has dropped a lot in terms of rates. And when I was growing up, I thought of the US as the place as much as I love being in Peru, I used thought of the US as sort of the place of stability, right? The economy seemed on track. We had hyperinflation in Peru, the democracy worked. We had military coups and all kinds of things. And over time, I don’t want to say it’s totally flipped, but there are a lot of big concerns about how unequal our society is and the spillover effects of that, and how rich, the very rich are and how that also makes a lot of things seem out of reach for even normal people, and actually does make certain things out of reach, because the private school tuitions go up, college tuitions go up, and certain people can afford it, and other people can’t even think of it. There are all kinds of spillover effects. And then, more recently, I would say what has been eroding our democracy, in part, is that erosion of our shared cohesiveness as a society and the shared ability of people, or at least the shared belief that people used to have that they could get ahead, that this was a land of opportunity. And it’s really not. And you can measure inequality with money metrics, but I’ve been more recently trying to measure it in terms of different qualities of life, life, different hopes and expectations. It’ll be.

Jonathan DeYoe: Yeah. Uh, just before we dig into the book, I was wondering if you could give us the background of the work, because you’ve written a lot of things. That’s why I want to list all those things, and they’re kind of all in that same space. So what is it that all that stuff together comes to? This idea of hope versus despair, and what leads to that book?

Jonathan DeYoe: Yeah, well, of course, you were not the rational man. Literally, man theory is sort of not at all.

Carol Graham: And actually, people would say, oh, no, your income must be variable, it must be mismeasured or whatever. They just couldn’t accept that maybe m income wasn’t the only thing that mattered.

Jonathan DeYoe: So, uh, how do you end up measuring hope? Like, what is the thing that you measure?

Carol Graham: It’s a bit like. So, the basic measurements that we know the most about, the basic one of all is life satisfaction. How satisfied overall with your life. And that can be on a zero to ten scale in general. Right. Uh, at your life in general, that’s a cognitive assessment. And people think about their life as a whole. Right. So if they’re young, they think ahead, and if they’re old, they look back. And yes, money matters to how people answer that question, because if you have been able to choose what you want to do in life, you’re going to be a lot more satisfied with it. If you want to be an artist or you’re a truck driver. It’s not the great, but really quickly. And that can we also use another scale, uh, called the cantral ladder, which is 11.0 to ten. And people compare their life to the best possible life they can imagine. That’s another way of measuring life satisfaction. So the way you measure hope is a little more messy. There’s a future life satisfaction where. What’s the best possible life you can imagine? Where do you think your life will be in five years? So that’s pretty open ended. And it requires hope to say, your life is going to be better than your current score in five years. But then we’ve tried to. Because measuring hope is a newer dimension of well being, we try and benchmark it against other ways to measure hope. Like, do you feel you control the things that happen to you? Or they just. Is it always circumstances beyond your control? Are you hopeful that you can achieve the things you want to achieve in your future? There’s a whole battery of questions that we use, and then I can talk about how we measure despair, too.

Jonathan DeYoe: Uh, but it’s primary survey results. I mean, I asked because I was wondering how much, like, if I looked at a person and looked at their situation, I might look at their situation and say, that is hopeless. But they may not feel hopeless, they may be hopeful. Right. So I’m wondering how much of it is individual reporting survey results and how much of it is. Here’s the statistics of people who look like they might be hopeless and therefore they’re hopeless.

Carol Graham: It’s a bit of both.

Jonathan DeYoe: Is it? Okay, well, how do you differentiate then? How do you differentiate?

Carol Graham: So it’s a little technical, but it works a lot better when we have surveys on the same people over time. Uh, and we ask these questions in large end surveys, so that, first of all, people don’t really. We’re not asking people whether it’s for life satisfaction or stress or anger or hope. All questions we ask about, we aren’t saying, do these things make you happy or unhappy? Right. We ask them how satisfied they are with their life in general. We ask them if they had stress frequently yesterday. Yes or no? We ask them also, as in the british statistics now, do they have meaning and purpose in life? Which is really cool and part of hope, actually, but they don’t know that then the way we measure their hope is to also take, get, uh, data on their age, their income, their gender, their job status, their marital status, whole range of what we call control variables. So, controlling for the factors that are unique to the individual person, we can isolate just how they’ve answered the question. Independent of that, if we have the same data or, uh, data for the same people over time, what we call panel surveys or longitudinal surveys, then we can do something. It sounds really typical economist tricky. We can control for what we call person fixed effects. So what we’re doing with that is, again, we’re holding the person’s traits constant, meaning that those traits don’t change over time. So we can’t really include age in that, but we can, um, include things that will stay pretty gender, race, in general education levels. After people have finished college or grad school, they’re not going to go on and get more, uh, unlikely, okay, they’ll get more education. The things we can sort of hold constant, and then we can see that people’s responses are not, we can see how people’s individual specific traits are not determining the response. It’s not because of their income or their gender or whatever, because we’ve held that constant and that there’s some robustness across time in how they answer these questions. We also do that actually for countries, we can do it for counties we can do it for, you know, we know there’s cultural differences in the way people answer surveys like the US are much more likely to Americans to be at the very top or the very bottom know, or a bit, uh, extreme as a culture. The Japanese are much more likely to be low key and be in the middle and be understated. And so what we do is we can cluster all responses, say it’s a worldwide comparison. So we cluster the japanese responses, the american responses, so that we can take out whatever response bias is common to japanese people or common to Americans. And then with regions we can do that. And for example, Latin America, I mentioned cheerfulness and hope they always score well above their weight in terms of income, in terms of well being and cheerfulness. So the control variable for Latin Americans is pretty important because it’s capturing a lot know cultural differences that determine the way they respond to these surveys, and they still respond high. So what are you going to do? But that’s probably more than you need to know.

Jonathan DeYoe: It’s just a quick comment. It’s interesting to me to note that the Japanese are sort of middle and the US is kind of know we’re extreme in our survey answers. I look at the japanese culture as a very mindful culture and look at the US culture as not a very mindful culture. And I think that we do go extreme and I catch myself saying internally, this is a thought that I have before I say a like, if I downplay this, I won’t get the attention that I want. If I upplay this, I’ll get the attention that I want. So I have to have to get extreme to get noticed. I think that’s something that I noticed in my own consciousness and looking at my own thoughts. Real quick, the big, obvious question, why does hope matter? When you look at the data and look at all the things and you correct for the variables, what does hope affect in outcomes?

Carol Graham: And that also leads me to despair because of the contrast that we find. But, uh, hope is really linked to better future outcomes for people. So people that have hope for the future end up doing better in life. It’s not rocket science. If you believe you have a future, you’re more likely to invest in it. Particularly, like, if you’re young and you’re making decisions about education or about taking risky drugs, or you also don’t want to jeopardize your future. You’re much more reluctant to jeopardize your future if you care about what you’ll be doing in the future. And so we have a number of studies that show that in different domains, like, they’re also hopeful. People are more healthy. Being hopeful probably won’t cure cancer, but it can help you cope with the treatment required to cure cancer if you’re sort of determined. And hope is different from what? Optimism, which is not a bad trait, but it is kind of the belief things will be better. And that could actually be a survival mechanism for people who live in basically hopeless situations is to just be optimistic. And they do. More optimistic people tend to live longer and probably survive the horrible situation they’re in better. But it isn’t linked to sort of agency. It’s not linked to behavioral. Hope has real behavioral links. And so that’s why in, um, particular, I’ve been focusing a lot on it. I mean, it’s clearly related to life satisfaction. But hope is much more about the future, and life satisfaction is much more about, uh, an evaluation of how your life is. I think for younger people, maybe how they think it will be or if they’re confident that it will be a certain way, but that’s much more nebulous. Right? Versus hope is really a question about the future. And, uh, it requires thinking about the future. And then that, in turn, is linked to behaviors to make that future more likely to happen. Meaning a purpose, for example, is linked to that, because I find that having a purpose in life is anchor for people, right? It makes them retain their hope when things are difficult, right? If you want to achieve that purpose, uh, you’re going to keep at it. And what is happening in the US now, this is why I think hope has become a topic. It’s not become more important than it was before, but it’s become more important in our, uh, public discourse. And that’s why not as many people as I thought would told me I was crazy to be an economist writing a book on hope, because people are realizing that we have widespread despair in the US. And so some of that despair is due to deindustrialization and the decline of the white working class, but also other people who are just in deprivation, without the tools to cope with it. But it really started with the decline of the white working class. And it was not just the disappearance of jobs, but in that american dream kind of construct where you had the stable family. The man was a breadwinner. He worked hard, had respect in his community. Maybe it wasn’t a glamorous job. It could be a mining job, car factory job, but it was a respected job. And the institutions that surrounded the jobs, the union, the family, the nuclear family, were sort of sometimes the church, but they were the mainstays, right? And everything, including actually church going, which I don’t recommend as a cure for anything, but it’s just another sign of our kind of civic organizations really declining. But all those things went with the, uh, particularly in more rural places or suburban places, where really built around one firm and then the other structures kind of came with that, that all fell apart. And including the stable family, with the very high levels of labor force, dropout, unemployment, addiction, opioids, lots of things got thrown into a really perfect storm that led to vicious circles in people’s lives and in their hope for the future, because destroyed it. And so it turns out that because the other puzzle at the time, I thought it was a puzzle in the data, because I hadn’t really learned about deaths of despair yet, that it was really the white working class that had the most highest levels of despair. Suicides, opioid addiction, drug poisoning, and minorities, African Americans and Hispanics were much more hopeful about the future, even though materially they were more deprived. And the Latin America thing didn’t surprise me. I’m from Latin America, but I was struck because I found this for the first time around the time of the, uh, know, the Ferguson riots, the Freddie Gray riots in Baltimore. A lot of concern about the african american community. And it was low income African Americans that were the most optimistic. Of all the low income groups I studied, I looked at blacks, Hispanics, and whites because they were the biggest cohorts in my data to have enough observations that I could draw general conclusions. And I, uh, was very puzzled by it at the time. I thought maybe I had a coding error and I’d done the data wrong. But it turns out the more I read about it and learned about it, I realized there were many things that drove it. And one is obviously, resilience developed over time, uh, over time, coping with injustice, with racism, with whatever else, and yet somehow making gradual progress. But the other system that I think is part of the story and certainly is for Latin Americans, too, it’s kind of. Instead of this very individualistic vision, African Americans have much more of a, uh, community vision. It could be Baptist churches, it could be grandmothers, whatever it is that, I think create what I think of as communities of empathy. Because if you context, people fall behind all the time, and they’re dealing with injustice and other stuff, and they may make bad decisions. We all do, right, but a young black kid makes a bad decision and ends up in jail for 20 years. Right. But I think because of that, the idea is to support the people that fall behind the kind of the natural, uh, inclination versus the very individualistic. You work harder, you get ahead culture, there’s no sense of that. I mean, it doesn’t mean people are not good people or whatever, but there is just a very different. There’s less of a social fabric, informal safety nets that you could call them as well, that kind of bully people up at times of difficulty.

Jonathan DeYoe: I know that the original impetus for this conversation was, I read your article, I think it was in the Atlantic, and I started thinking about it, and I think I told you the story that I was those poor whites. When we hear about the quote in the media about the poor whites in South Dakota, that’s how I was raised. We didn’t really have an, uh, income in my household between the ages, between my third and 15th birthday. My dad’s business went under when I was three, and he had od jobs, and we did things to get by, and family supported us. I learned today I was asking my mom, continue to ask questions about where the money came from, what do we did? And my dad refused support. Like, we probably had food stamps and could have had commodities. The government peanut butter, government cheese, those kind of things. We had access to those. And I remember eating it, I remember having it, but I don’t remember where we got it. And it was when people left it at an apartment, that’s the stuff that we got. It wasn’t that we got it from the government. My dad would not get it from the government. The pride wouldn’t allow him to do it anyway. But this whole time, no income. My dad and my mom and dad always said, hey, just what you said. Work hard, get good grades, go to college. I ended up paying for college myself. We had no money for work full time through college. Do this, work really hard, be honest, do the right thing, help people out, uh, and you’ll be successful. I remember, I don’t know if you know Zig Ziglar. He was like an optimism back in the day. The quote I always got was, jonathan, if you help enough other people out, you’ll be successful. Like, you can be successful, but first you have to help other people be. I just, this was drilled into me, and I always think that that’s why my brother and I were successful, was because we were given hope. We weren’t given stuff. We weren’t given. But you can do this. We were told, you can do it. And I think that there’s something huge in that. And that’s what I really was resonating for me in your work is it sounds like that’s part of it.

Jonathan DeYoe: Right.

Carol Graham: Anyway, so there’s kind of a whole kind of community level component to all this.

Jonathan DeYoe: I’m wondering about the struggle of dispersing hope. So if we know hope requires something internal, something from community, maybe something from greater culture, how do we from the outside, manage for hope?

Jonathan DeYoe: Yeah, it’s interesting. I think about my rotary programs. I’m in Rotary, and we have scholarships, and we have this whole program for coaching and mentoring scholars that are going to college, but we have nothing for kids that don’t go to college. And that’s, what, 50% of the. 40% of the population, that’s a lot of kids.

Carol Graham: It’s a lot. They need to train in, uh, some direction.

Jonathan DeYoe: This is a gigantic question. So, uh, the four pieces that I want to just kind of put out there and just ask if. I wonder if there’s something bigger going on with despair. Like you mentioned, know, Kahneman was won the Nobel first prospect theory, right? This general negativity bias, right? We have millions of years of evolution, whereas a species, we’re rewarded for our increased awareness or hyper awareness of risk. Like, early on here on the savannah, you see the lion, you don’t see the lion. Person that doesn’t see the lion, isn’t aware, doesn’t see the lion dies, right? So that person is no longer in the gene pool. In the last, say, 20 years, our access to information has just skyrocketed. Like our cell phones, social media. Last five to ten years, that information has actually kind of become weaponized. I wonder, and this is the big kind of question, given all it shouldn’t we expect despair? I mean, isn’t that baked in to our hyper awareness, our negativity bias, and then this crazy amount of information that’s now being used against us by Twitter, social media, uh, all this kind of stuff.

Jonathan DeYoe: If you could wave a magic wand and just change one thing, add one thing to the system, that would make a difference, what will it be?

Carol Graham: I think getting the metrics into official statistics, it sounds like a boring wish, but honestly, what gets measured is what official. When it’s in official statistics, people start to be aware of. So. And at first, it’s a transition. I remember Gus O’Donnell, who was the mastermind behind the UK effort. He was, I had been chair of cabinet for, in three separate administrations, Blair, Cameron and Brown. So, not small. And he was an econometrician by training, but he was a brilliant politician. Is. And he said at first it was a nightmare trying to introduce it, trying to explain this. Isn’t the government telling you how to be happy? But then people didn’t understand the scales. Like, what does a ten versus a five mean? And blah, blah, blah. But how many people know how we calculate the unemployment rate? Really not many. But the average Joe on the street or Jane knows that a, uh, 1% increase in unemployment is bad and a 0.1% increase in so what? Right? That’s all they need to know. But that took some time to develop, right? So part of it is getting it into people’s language and into understanding it. And then they’re like, oh, wow. And the other thing that seems to work with well being metrics is people want to know how their well being is, how their community’s well being is, what they can do to improve societal well being, or maybe their family’s well being. But it’s something that’s closer to home than saying, okay, we need to reduce income inequality as measured by the genie coefficient. And nobody knows what it is because it’s bad for society. Well, the average person goes, yeah, right. But, uh, if you say to them, do you know that the poor and the rich in the US have a bigger gap in happiness than the poor in Latin America? Which is true, they don’t like that, right? They. Wait a minute, how’s that?

Jonathan DeYoe: How could that, uh, something’s not right. There’s a guy I interviewed, actually, his name is guy. I think he’s in the UK and he’s an economist. I can’t remember his last name off the top of my head, but he was hopeful because he said, you know what? The thing that’s going to save us is the generation coming up, they’ve already changed how labor force works because they’re like, I am not doing this. Grind, grind, grind to. And the, uh, companies have to now change. And well being is becoming something that’s important. And it’s talked about at the company level. I’m in the Bay Area, so, San Francisco Bay area. So the companies are Apple and Google, and they have a firm level lead over everybody else, which is obviously they’re going to add well being and they’re going to talk about it. And that doesn’t really affect somebody that has a small manufacturing company in Kentucky or in South Dakota, right? It doesn’t leak down, but it does eventually, maybe 15 years from now.

Carol Graham: Hey, uh, the other thing really quick is the union movement now in the US is the one that’s like Starbucks and Amazon and all these. It’s driven by young people who want change, right? They don’t want what’s going on. Now. I agree with guy, whoever he is.

Jonathan DeYoe: Guy, uh, what’s his last name? Anyway, so just two final things. And that is just really, I want to get back to the personal side a little bit. You’ve written so much. You’ve been very public about what you’ve done and struggled in a time when this wasn’t really accepted from the economics profession. But personally, is there anything that people don’t know about you or something you’ve said and people don’t remember that you really want them to know?

Carol Graham: Gosh, that’s tough. I guess I, uh, say this a lot to my students. Like, I have people that say they want, they don’t know what they want to do their phd on. And I’m like, well, what do you care about? What are you passionate about? What are you interested in? Well, they’re like, especially if you’re in economics. So I need an instrument or experiment. So the topic doesn’t matter. It’s all about the method, right? And I’m like, you can come up with that somehow. But if you care about what you’re doing, if you’re passionate about it, you’re going to be prolific. You’re going to publish you’re going to succeed because you care about it, not just as a grind. Right. You care about it because you’re actually working on things that matter to you and hopefully others.

Jonathan DeYoe: So are you saying that you’re doing something you love and it’s not a grind?

Carol Graham: Yes. I mean, reviewer number three on journal article number 72 can be a pain.

Jonathan DeYoe: But in general, if you could get the truth about one single question, what would the question be? If you knew the answer you’d get would be the truth.

Carol Graham: Goodness, there’s so many. Because one of the things I’m m really involved in now is trying to understand science, denial, and the opposite of the truth. How we’ve managed to come up with alternative facts in our country, which I find very worrisome. But I think it would be kind of with all the explanations I’ve tried to give you and I tried to give in my book, and that there are so parts of this story about human behavior, about human well being, about hope, right. That really we don’t fully understand because we can’t observe it. There are things we can’t observe about people, and we know there are people who are just naturally more optimistic and happier than others. Some are more hopeful than others, others are more carudgeonly, and we don’t really have the answer to that other than, well, people are different, right? Yeah.

Jonathan DeYoe: Uh, so last thing is, how can people connect with you if they want to say, hey, I want to hear more about your research, or where do they find you?

Carol Graham: They can just email me cgram at brookings.edu.

Jonathan DeYoe: There’s so many more questions. I said this before we started that I had 3 hours of questions, and I have a whole stack of things I want to ask, but we do have to wrap. I just want to say thank you so much for coming on and answering some questions and talking to us. I appreciate it, and our audience appreciates it as well.

Carol Graham: Thank you so much. Really fun to talk. Enjoyed it a lot.

Jonathan DeYoe: Thank you.