“Good decisions depend on good measurement. Economic measurement, accordingly, must encompass measures of well-being.”

— Ben Bernanke, chairman, U.S. Federal Reserve

The researchers at Gallup set off a tempest in our teapot several weeks ago when they released findings that Maine was the most “pessimistic” of the 50 states.

From January 2011 through June 2012, Gallup conducted a telephone survey of over 530,000 adult residents of the U.S., covering all the states and the District of Columbia. The question, “Is your standard of living getting better?” gave Maine a score at the bottom of the barrel.

How, many pundits mused, could we be so pessimistic, when not a week goes by without another national magazine putting us in the top 10 places for eating, or retiring or bicycling or some other measure of our standard of living?

Is there some flaw in our character? Does our tradition of “making do” mask some deep-seated depression?

I think not. I think, rather, that we need to dig a little deeper into what we mean by “standard of living” and how that does or does not jibe with what we think the researchers from Gallup want to hear.

It is interesting to note that in response to the question, “Is your city/area getting better?” we jump from 50th to 30th. In response to the question, “Did you learn something new yesterday?” we jump to 22nd, and in response to the question, “Does your manager treat you like a partner rather than a subordinate?” we jump to 8th.

Unless our learning consists solely of more bad news and our only manager (because we’re so old) is a spouse or responsible child, we seem to be doing fairly well in the “specific things to do” arena compared to the “overall feeling” arena.

It is interesting, in this regard, to look at the relationship between answers to the question, “Is your standard of living getting better?” and “Are you optimistic about how your life will be in five years?”

On the strength-of-relationship scale, where +1.00 means perfect positive relationship (both variables go up and down together) and -1.00 means perfect negative relationship (when one goes up, the other goes down), the relationship between “rising standard of living” and “future life optimism” gets a score of +0.10.

In short, these survey results show virtually no relationship between assessment of changing standard of living and assessment of general life optimism.

The relationship between life optimism and current economic confidence is even less, at +0.06.

Consider some of the other “pessimistic” states.

Number 49 is our “tax free” neighbor, New Hampshire, which is equally dour in overall life optimism, ranking 45th by that metric. Number 48 is West Virginia which, paradoxically (or maybe not) ranks 23rd in the life-optimism metric.

At the other end of the scale, Hawaii ranks No. 1 in standard-of-living improvement, but 7th in life optimism and 8th in economic confidence. North Dakota ranks 2nd in standard of living improvement, but 37th in life optimism.

Conversely, Mississippi ranks No. 1 in life optimism, but 23rd in standard-of-living improvement and 47th in economic confidence.

So if there is a conclusion in all these survey results, the most important seems to be, “Proceed cautiously before jumping to any conclusions.”

Chairman Bernanke is right in saying that good decisions depend on good measurement.

But even more important is the interpretation of just what those measurements mean.

And in a state like Maine, where quality of life has become virtually a motto for our economic development efforts, we need to tease out all the insight possible from the interconnections between ideas like “standard of living,” “economic confidence” and “life optimism” before rushing to explain an isolated ranking.

Charles Lawton is senior economist for Planning Decisions, a public-policy research firm. He can be reached at:

clawton@maine.rr.com

 

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