by Daniel Yankelovich

In the past few years, scholars studying values in advanced industrial democracies, such as Germany, France, Britain, Italy, Japan, Belgium, Holland, and Switzerland, have noted a striking similarity in their own countries to the value changes taking place in the United States, with a five- to ten-year time lag separating these countries from the United States. These researchers see an extensive transformation of values in Western Europe and Japan as well as in the United States.

Rapid advances in technology, the end of the great struggle between Soviet-style command economies and democratic capitalism, the troubled outcomes of various national experiments with the role of government in the welfare state, and many other changes contribute to the transformation. But one cause, especially important to the interplay of values and economic thinking, stands out above all others. It is the reaction of people in the industrial democracies to the experience of affluence during the half century since the end of World War II.

After the war, each nation gradually recovered from the Great Depression of the 1930s. For several decades all enjoyed unprecedented economic growth and mounting affluence, which in more recent years has begun to slacken off, imperceptibly in some nations and more obviously in others.

The impact of affluence on peoples' values has proved powerful but curiously indirect. Economic changes do not by themselves transform values; what does is people's perceptions of their own, and their nation's, affluence (referred to throughout this paper as "the affluence effect"). There is, of course, a link between perceptions and reality. But the link is distorted. People often feel poor when they are objectively well-off, and well-off when they are actually growing poorer. In some nations, people who are relatively well-off feel poorer than their neighbors in other nations, and vice versa. Except at the extremes of the economic spectrum among the very rich and the very poor, value changes are mediated by people's interpretations of their own economic condition and its future prospects, interpretations that lag behind objective economic reality as an economist might describe it.

To explore the impact on values of the affluence effect, this paper is organized into three parts. The "Overview" develops the hypothesis that the affluence effect is a powerful driver of changing cultural values, especially when seen in the context of America's most stable and enduring values. "Truth and Relevance" discusses how the hypothesis of the affluence effect bears on the purpose of this book, namely, to consider whether formal economic analysis ought to expand its scope to take values into account in its search for solutions to America's social and economic problems. "Major Changes in Values" draws on the large body of survey research findings to identify six areas of value changes influenced by the affluence effect: greater tolerance and acceptance of pluralism; sweeping changes in family-related values; the changing meaning of success; a new relationship between work and leisure; changes in social morality; and new values in relation to health and physical well-being.

Overview • Truth and Relevance • Major Changes in Values • Conclusion

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