Looks like No Impact Man and I, were both wrong. This whole business of declining happiness past a certain level of consumption, may be a fallacy after all. Chrystia Freeland, from the Financial Times just featured a forthcoming research paper by two bright and up-coming economists from the Wharton School. According to Justin Wolfers and Betsey Stevenson, the Easterlin Paradox does not exist. It is not true that there is a limit to how much happiness money can buy.:
They conclude that we do, in fact, become happier overall as our country becomes richer. This is true over time – as generations get richer they get happier; and over space – people living in rich countries are happier than people in poor countries. They also refute the concept of a “satiation point” or the belief that, beyond a certain income threshold, further increases in national wealth cease to increase national happiness.
Controversy is brewing on the happiness front . . . So I need to ask you a personal question. Is there a point at which you have felt- or think you will feel – satiated with material things? I know I have ceased to get pleasure from buying and owning more stuff. But that’s a recent phenomenon. Will it stand the test of time?
The paper has to be published and read before we can debate its conclusions. You’ve been around long enough to know that a paper may say, “given X, Y and Z, we find that often A is true; still, B is often true, and may always be true if any of X, Y and Z are bad assumptions,” but some media outlet will report it as, “wow, A is the way!”
Let’s see the paper published, read it, then we can discuss it. Because the media enjoy publishing a story on something first, nowadays we find that they even publish stories on things before they happen. It’s premature speculation, and I think I got a spam email offering me a pill for that…
I smell total BS. Don’t trust this.
I think I can deconstruct this.
Thanks for the pointer.
First of all, the Easterlin paradox is a nice starting point for discussion and further research, but being a pattern found in such a general statistic, doesn’t say anything much about the interplay between GDP, wealth, material consumption, and happiness, however one might define those, because they aren’t real quantities.
“They conclude that we do, in fact, become happier overall as our country becomes richer. This is true over time – as generations get richer they get happier; and over space – people living in rich countries are happier than people in poor countries.”
I believe the finding, but it doesn’t say much.
Maybe the found relation comes forth out of increased military spending, or how about increased investments in space travel? Or does it come forth out of the all new barbies and toy robots that parents are now able to buy for the kids? Or maybe – just maybe – countries with a a higher GDP tend to spend much on public infrastructure. Maybe we’re all so happy because we don’t get a sore ass from riding over a bumpy road! Or would it be that we’re a little happier because we could go to school as kids instead of working a sweatshop. We had those too in America and Europe at the beginning of industrialization. Or maybe we just like cities better than our rural past?
Finally, it could just be that happier people are more productive in general. That would easily be translated by businesspeople in more innovative, better products, valued highly by consumers because of all the advertising. And voila, what do we get? GDP growth not because we want to, not because it makes us happier, but just because we’re more productive cause we’re happier. Isn’t life great?
“Stevenson and Wolfers’ research is a big deal.”
No.
“Personally, I hope it stands up to the intense scrutiny I am sure it will attract.”
Ofcourse, because she likes all research findings that fit your world view. Finally some “scholars” on her side!
“After all, if getting richer over time didn’t make people happier why would so many of us set, as one of our life’s principal objects, the goal of ensuring that our children are richer than we are?”
Asking a rhetoric question like this is really suggestive.
I have one obvious explanation ready, consisting of two parts. First, Daniel Gilbert’s finding that we’re unable to predict our future happiness, second because getting richer is the old American Dream. It’s all people can think of. If getting more stuff isn’t the goal in life, then what would it be?
“why have so many millions of immigrants flocked from poorer countries to richer ones, very often sacrificing their relative social status in the process?”
Better education? Better protection of human rights? Less crime? To live that old American Dream we’re selling to them through satellite television? You can’t blame those people for not having adopted post-materialistic values yet. They haven’t had the chance (that is, the time) to explore the ins and outs of material prosperity.
“This is not to say that I won’t miss the Easterlin Paradox. For ordinary folks living in an era of plutocracy, the notion that money doesn’t always buy happiness has a certain charm.”
Here she is confusing the macro observation that is the ground of the Easterlin Paradox with a micro observation, based on age-old wisdom, and recently objectively verified through all kinds of scientific experiments.
“Perhaps the real significance of the debunking of the Easterlin Paradox is to remind us that these are the kinds of judgments we shouldn’t expect economists, or happiness researchers, to be making for the rest of us.”
Economist’s really have nothing to say about this subject. They should stick to their field. I wouldn’t have a clue which psychologist would counter the saying “that money doesn’t always buy happiness “.
By the way, if you want to buy happiness, try Heroin. It’s better than sex, I’m told.
I agree with Kyle but to answer your question, I don’t think my happiness level changes if I’m richer or poorer. I’ve been poor, I’ve never been rich (well, rich by our society’s standard, not by world standard). I’m happy anyway.
I don’t think the unhappy poor people would get happier if they were wealthy. They may be happy briefly but as they get used to their situation, they probably would go back to their previous low level of happiness. But I’m sure the happy poor people would remain happy if they were rich.
I think comparing the results of this study to No Impact Man’s graph is comparing apples and oranges. NIM’s graph is about personal happiness and riches/consumption. The study is about national riches/consumption and average happiness. It makes perfect sense to me that a richer country is happier on average, because there would presumably be more money spent on infrastructure, healthcare, and helping the poor. Rising above the poverty line (where money really does buy happiness) would be easier in a richer country. So I don’t see a contradiction.
if the acquisition of money equates a precept of happiness, and the prescribed poverty guidelines carry a concept of unhappiness…then i have been one socio-pathological yo-yo.
cultural differences engender reactions to the ebb and flow of money. a person raised under financial constraints will adopt attitudes from the family environment. the poor have poor attitudes…unless a significant member of the group carries a happy gene, and transfers the happiness factor which will survive or even overcome any circumstance.
a rich origin does not necessarily guarantee a positive reaction to growing wealth. expectation is a flexible variable, i attribute my relative happiness in dire situations to a sense of adaptation. having survived entire segments far under the so-called poverty line, i can attest to the spiritual enrichment one derives from self-sufficiency.
however again, the floating expectations rose and sank with whatever the means were. to make do or to do a lot is an option of the intellectually and psychologically resourceful.
what i have observed is that endemic poverty is exacerbated by advertising and television, different ethnic groups carry degrees of perception, happy about anything or wanting everything, there lies the yard stick.
it’s all about the ‘green-back” psychology. Marguerite.
Well . . . at least this post got things stirred up! and I thank you all for giving more depth to this discussion. Nothing like the group to get at a more nuanced and complete rendition of the truth.
I will try to keep an eye for the actual paper when it does come out.
Thanks to Meryn, this very timely blog post just landed in my mailbox:
‘The 3 Reasons Money Brings Satisfaction But Not Happiness’
http://www.spring.org.uk/2008/04/3-reasons-money-brings-satisfaction-but.php
I highly recommend that you read it, as it does a great job at clarifying some common misunderstandings about the psychology of happiness. It is especially good at explaining the paradox of why people continue to behave as though money does bring happiness, although some behavioral research clearly proves otherwise.
I especially resonated with the concept of ‘focusing illusion’, i.e, ‘When people think about earning more money they probably imagine they would use the money on recreation activities. In fact, to earn the money, they have to spend more time at work, and commuting to and from work.’
Also, reference to Daniel Kahneman’s idea that ‘the reason people continue to think money makes them happier is that chasing it leads to conventional achievements.’
Lastly, ‘the question that Professor Barry Schwartz asks is why people focus on money to the exclusion of those things that are proven to increase happiness (Schwartz, 2007). Things like doing work that is meaningful to us or improving our social relations. The sad answer that Schwartz gives is that people do not see any alternatives. Everyone knows that it all comes down to money, and to say otherwise is to announce your naivety.’
What this says to me, is that for the majority of people, their notion of what happiness ought to be, does not come from deep within themselves, but instead from societal norms that may be perverted, as demonstrated by the manic consumerism being encouraged by advertising and the media. In other words we are all victims of a collective delusion. I can buy that.
Malva, there was a study recently which found that individuals have a certain level of happiness they gravitate to; winning the lottery, getting married, or getting divorced or breaking your neck will push you away from that level for a bit, but you’ll drift back to your own natural level of happiness. And this natural level differs from person to person.
The question, why would we do it if it doesn’t make us happy, this shows an incredible ignorance of human nature. Compulsive gamblers, alcoholics, drug addicts and people who seek out abusive relationships are generally miserable. But they pursue these things because they feel comfortable with them, it matches something within them.
And there’s also culture: part of culture is what is valued or esteemed. People seek the esteem of their community. A study in the UK found that how happy people were with their wealth depended on their neighbours and friends. If you’re in a smallish apartment with old furniture, but so are all your friends, you’re happy with your wealth. If you have a friend with a large, newly-built and well-furnished home, when they visit you feel embarassed, and start to think about getting a raise, or maxing out that credit card. That’s because in our Western consumerist culture, conspicuous consumption and waste are esteemed.
But this is not true of all cultures in all places and throughout history.
The article also contains other confusions. For example, the Easterlin study found that happiness maxed at around $10-20,000 in per capita GDP. That is, countries like India and Romania fall below this, countries like France and Denmark above it. So when the article says, if money doesn’t matter why do poor people migrate to rich countries, it’s forgetting that people are not migrating much from $30,000 pc GDP countries to $50,000 ones, but rather from $2,000 pc GDP countries to $40,000 ones. This supports rather than refutes Easterlin. But of course, the article writer probably never read the original paper.
So the article is hopelessly confused and ignorant. About the actual study, we don’t know. As I said originally, it wouldn’t be the first time some article totally misrepresented some study.
I’m amazed of the quality and nuance of the discussion.
Thank you all.
Please note that “Chrystia Freeland is the US Managing Editor of the Financial Times. She leads the editorial development of the paper’s US edition and of US news on FT.com. ”
I’m afraid of the thinking going around there.
http://www.nytimes.com/2008/04/16/business/16leonhardt.html?_r=2&oref=slogin&oref=slogin
The above link should address many of the questions raised earlier in this thread.