The Old Money-and-Happiness Riddle

Photo: Candie_N

I sat down last week for a good chat with the smart folks who run the Planet Money podcast. The topic: Money and happiness.

You can listen to it, here (fast forward to the 3:34 mark):

I don’t remember saying the following disclaimer, but it sounds right — it’s definitely my voice! — and it’s a useful statement about the role economists play in the well-being literature:

I should absolutely say that I have no idea what makes people happy.  I’m an economist.  I’m no more than that. I’m not going to tell you that you should get married, or that you should attend church, or that you should read more books, or that you should attend the gym more often. Because frankly I don’t know the secret to happiness…

But I may be able to tell your economic policy makers the sorts of policies that are more likely to yield happiness.

Adam Davidson is a terrific interviewer, and did a great job in keeping our twenty-minute conversation lively and fun. And he even managed to get me off talking about data, and asking deeper questions about what these data “mean.” (Reminder: re-read the disclaimer above.)

If you are interested in more, Mike Masnick over at TechDirt did a nice job of summarizing the discussion. And for a somewhat deeper dive, you might be interested in a “wonkast” I did with the good folks at the Center for Global Development.


kirsty

In light of the topic, I thought I'd share this data visualization with you. Entitled "does money bring happiness?" it displays gross income data against a happiness index. You can see that the richest countries are not necessarily the happiest (according to this data set!). Let me know what you think.

Here's the link. http://myfirm.bimeapp.com/players/dashboard/CC994A919D7DE2E2E495EBE5D934D7B61

JJ

you can get the data set here. http://bimeanalytics.com/blog/data-visualization-money-buy-happiness/

bob

Mike Masnick is awesome. He has a lot of insight into the lines where tech and finance cross. Visit techdirt.

Eric M. Jones

The point that the average American could be rich in Mexico yet Mexicans scurry 'cross the border is bogus. If you went to Mexico you couldn't find a job. If Mexicans come north they find work. They don't come here to lolly-gag.

Buddha answered the basic question thousands of years ago, so did King Solomon (in Ecclesiastes), so did the Greek philosophers. There hasn't been much improvement in this thinking.

Send me all your money.

TB

Of course money should increase happiness, as long as there is something that the money can buy which will increase the person's happiness. Does not matter what it is, whether it is an ipod4 instead of "settling for" an ipod2, being able to be with your family instead of traveling off to a foreign land to make a living as a translator, being able to spend your life helping people less fortunate than you, etc. All that matters is that there is something that a person would naturally want that can be satisfied by spending money. Odd that otherwise astute people cannot see that.

Chad

Re: Moving to Mexico - 1) It would be hard to make as much money in Mexico without knowing Spanish. Also, there are plenty of people who move to countries such as Mexico once they retire, but they might also like being close to family, etc. So it is not like moving to Mexico would leave you life exactly the same, except that you would be relatively more wealthy. There would be plenty of other things lost.

2) You say that it is obvious that "people don't have a desire to be relatively wealthy". I agree. But that does not mean that being relatively wealthy does not make people happy. Classic economics assumption. On the other hand, I am a firm believer that people are pretty bad at deciding what decisions will actually make them happy. Yes, people tend to make decisions that they think will make them most happy, but I don't think they (or I) have much of an idea of what they are talking about.

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Caleb B.

My Opinion: Enough money makes you happy, too much or too little can make you miserable. Living paycheck to paycheck stresses you out, but so does the fear of losing your fortune to a Madoff.

My best friend grew up very wealthy (5 vacation homes, summers in Paris), while I grew up very poor (in-and-out of foster care, homeless for a while). We became friends in college where we quickly developed the above theory on Money vs Happiness. Both of our childhoods were miserable. He was forced into a boarding school by his evil stepmother (yes, it doesn’t just happen in movies) and lived under extremely strict rules. I began caring for my drug-addicted mother at an early age. As a kid, I lived hand-to-mouth and was miserable, but my friend’s family lived with the high pressure of constantly trying to maintain their wealth. At least I had the disillusion of thinking that having money would solve my problems.

Years later, my friend’s stepmother manipulated his father into disowning him. Now, he and I are both middle-class and we’re both happy for the same reason. Moving from poverty to middle class obviously made me happier, but him moving down to middle class made him happier because now he is free to choose his own life. I’m going to be the best man in his wedding to a bride his family never would have accepted had he not been disowned. Since we have experienced both ends of the “money” spectrum, we know that money is like a lot of things in life, enough is all you need.

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