Wednesday, September 01, 2004

Where "How Big the House Is" matters not

Wealth and Happiness Don't Necessarily Go Hand in Hand

[The House notes that this is a must- read article for anyone seriously engaged in the long hard pursuit of happiness; unexpectedly found in The Wall Street Journal]

On a scale of 1 to 7, where 1 means "not at all satisfied with my life" and 7 means "completely satisfied," it's no surprise that survey-respondents who make Forbes magazine's list of the 400 richest Americans average 5.8, while homeless pavement dwellers in Calcutta average 2.9. All in all, sleeping on sidewalks and starving can't hold a candle to sleeping on satin and splurging.
Not so fast. In the surveys, taken off and on over the last 20 years, the Inuit people of frigid northern Greenland also average 5.8. So do the cattle-herding Masai of Kenya, who live in dung huts with no electricity or running water. And Calcutta's slum dwellers, for whom being only a single economic rung above the pavement denizens apparently makes a huge difference, come in at 4.6.
Does money buy happiness? In particular, does raising a nation's income or wealth, as measured by gross domestic product, raise the population's overall level of happiness? Intuitively, you'd think the answer is a definite yes. After all, classic economic theory holds that additional income allows people to meet additional needs, and the more needs-or even wants-you satisfy, the happier you are. Also, money buys you choices. With $10 you can buy steak or hot dogs, but with only $1 you better hope you have relish in the fridge. The more choices people have, economists assume, the happier they are.

Psychologists suggest that things are a lot more complicated. An ambitious analysis of more than 150 studies on wealth and happiness shows that "economic indicatiors have glaring shortcomings" as approximations of well-being, write psychology professors Ed Diener of the University of Illinois, Urbana-Champaign, and Martin E.P. Seligman of the University of Pennsylvania, Philadelphia, in a coming issue of the journal Psychological Science in the Publid Interest. The studies show that, in many countries, "although economic output has risen steeply over the past decades, there has been no rise in life satisfaction... and there has been a substantial increase in depression and distrust."
You can sure see that in individuals. To be sure, income is an accurate predictor of well-being when it raises someone from, say, homelessness to a janitorial job, because the jump up the economic ladder brings basic needs like food and shelter. With increasing wealth, however, extra money doesn't buy much extra happiness, according to most of the 150 studies. Instead, happiness comes from social relationships, enjoyable work, fulfillment, a sense that life has meaning, and joining civic and other groups.
"Economic success falls short as a measure of well-being, in part because materialism can negatively influence well-being, and also because it is possible to be happy without living a life of luxury," conclude Profs. Diener and Seligman.
Just to make things interesting, studies that find money and happiness go together often suffer from an inability to tell corelation from causation, or what causes what. People who say they're happy typically go on, years later, to earn higher incomes than people who said they were not. That suggests that a sense of well-being boosts productivity, initiative and other traits leading to a highter income, and not (or not only) that higher income buys extra happiness. Contented people are also more likely to get married and stay that way, and to be healthy, all of which tend to increase happiness. Money may not buy happiness, but happiness can buy money.

Government Policies to promote economic growth seem, at first glance, like an obvious way to give people a greater sense of well-being. Economists find repeatedly that, in general, the higher a nation's GDP the greater its population's happiness. While that seems to support the money-can-buy-happiness idea, though, it ignores one thing. Wealthy nations tend to be democracies that respect human rights and have a fair legal system, good health care, and effective, honest government. All of these contribute to well being. When you account for these variables, the effect of income itself on the the citizenry's happiness practically vanishes.
Just look at the world's wealthiest nations. Since World War II, GDP per capita in the U.S. has tripled, but life satisfaction (measured by surveys that ask something like, "overall, how satisfied are you with your life?") has barely budged. Japan, too, has had a stupendous rise in GDP per capita since 1958, yet measures of national happiness have been flat. The same holds for much of Western Europe, finds social psychologist Ruut Veenhoven of Erasmus University, Rotterdam. One reason may be that a rising economy produces rising aspiration. Luxuries come to seem like necessities, canceling the psychological benefits of economic growth.
If psychologists had a seat on a government's economic team, they would point out that, once a nation reaches a certain level of prosperity, further economic growth is unlikely to buy addittional happiness. Instead, Prof. Veenhoven says, increasing the citizenry's sense of well-being requires "less investment in economic growth and more in policies that promote good governance, liberties, democracy, trust and public safety."

- "Science Journal" by Sharon Begley, published in The Wall Street Journal on Aug. 13 2004.