Correlation does not equal causation!

Liberal economics is making us depressed claims clinical psychologist Oliver James in his book Affluenza. James’s main thesis is that it is the system’s inequalities that drive us mad. For evidence, he compares the US - where 26.4% of the population has suffered mental illness over the past year -with countries like Nigeria and China, where the prevalence is six times lower.

It seems not to matter that China spends 5.5% of its GDP on healthcare, compared with 16% in the US; or that in Nigeria the life expectancy of 47 years, so there’s not a lot of people around to get depressed in the first place. Economists measure inequality using the “Gini coefficient“: 0 corresponds to perfect income equality (i.e. everyone has the same income) and 1 corresponds to perfect income inequality (i.e. one person has all the income, while everyone else has zero income).

While most developed European nations tend to have Gini coefficients between 0.24 and 0.36, the United States Gini coefficient is above 0.4, indicating that the United States has greater inequality. However, the Gini coefficient in China hit 0.45 and has been held up as a “yellow alert” and Nigeria reached 0.50, according to the World Bank. So it appears that the more unequal a country is, according to his theory, the greater its chance of happiness. This is clearly a case of correlation being used to imply causation: a basic logical fallacy.

But, none of this should make us too depressed. Prof Martin Seligman argues that the gloomy are simply “unduly passive” about their future. However, as even Seligman concedes, it might not be wise to staff a business with chirpy optimists in every senior post. You might want them in sales and marketing, but personnel in finance should be sober realists, and quite possibly pessimists.

A good six sigma practitioner will combine both traits, in an echo of Antonio Gramsci’s “Pessimism of the Intellect, Optimism of the Will“: one to spur to action, the other the resilience to believe that such action will result in meaningful change even in the face of adversity.