Before a trip to Phila., Bernanke mulls 'economics of happiness'

Federal Reserve chairman Ben S. Bernanke will travel to Philadelphia Thursday to participate in a conference on reinventing older communities.

The three-day conference, which is being sponsored by the Federal Reserve Bank of Philadelphia, will be a deep dive into all things real estate aimed at policymakers, community development professionals, and bankers.

Lots of sessions carry titles such as “Rethinking Who Should be a Homeowner” and “Reclaiming Distressed Properties.”

Gosh, that sounds like a real downer compared with Bernanke’s most recent appearance giving the commencement address at the University of South Carolina. His topic was the “economics of happiness,” and in a nutshell he cited lots of research that proves what your parents always told you: Money can’t buy happiness.

Now I’m sure most college graduates would rather hear from Patti LaBelle (Temple University, May 24) or Oprah Winfrey (Duke University, 2009) than an economist.

Indeed, Bernanke himself told the crowd that “people in a celebratory frame of mind are usually not that interested in an economics lecture. (I can’t quite understand why not.)”

But while what Bernanke delivered certainly was an economics lecture, it drew on lots of psychological research about what makes us happy (the short-term condition) or satisfied with our lives (the long-term condition).

He didn’t quote Dr. Phil or Joyce Brothers, but cited the work of economist Richard Easterlin. His research found that as a nation’s wealth increases beyond the level where the people’s basic needs of food and shelter are met, people in rich countries don’t say they’re much happier than those in poor countries.

And that’s because everything is relative. When you try to keep up with the Joneses, you may feel inadequate when your neighbor drives up in his new Mercedes, passing the 3-year-old Cadillac in your driveway. You’re “poor” only in the perception of your status.

Bernanke’s speech, worth reading here, points out that the pursuit of an ever-higher gross domestic product is not the final objective of public policy. And, he cautions, happiness should not be the only goal we pursue, but a broader feeling of satisfaction with our lives.

Class dismissed.

No Way on Pay

I erred in Monday’s column in describing a vote last week by Motorola Inc.’s shareholders.

Motorola adopted a “say on pay” proposal based in 2008, giving its shareholders a non-binding advisory vote over its executive compensation practices.

In 2009, a majority of shareholders approved those pay practices. But last week, they rejected them.

Proxy advisory firm RiskMetrics Group said the vote marked the “first time that a U.S. company has failed to earn majority support” for its compensation practices. The vote doesn’t mean anything will change, but it is a clear message to the board’s compensation committee that something should.

We didn’t have to wait long for the second instance. RiskMetrics said Occidental Petroleum Corp. shareholders rejected the Los Angeles oil company’s executive pay policies on Friday.

Who’ll be No. 3?