It would seem that after ceaseless debate among theologians and scholars we would have some consensus of opinion on whether money, specifically more money, brings us happiness. Alas, such is not the case.
However, though theologians and scholars can’t seem to agree about the happy value of money, economists can. At least many economists believe they know the answer. Unfortunately, it’s not a pretty picture. In summary, money does buy happiness, but only if we have more than our neighbors do. The thrill of wealth diminishes when others have it too.
This is an appropriate time to consider the importance of money as our nation begins its long climb out of recession. Many lives have been disrupted by recent economic turmoil and many a financial plan has been shattered like a broken plate. How important is money and financial security to our well being?
Though any analysis of happiness is a “soft” subject, economists have attempted to quantify the issue by using hard numbers. The question of money and happiness was discussed several months ago at the American Economics Association annual convention. But in typical economist fashion, the answers to the happiness puzzle are complex and ambiguous.
“There is a very strong link between money and happiness,” according to Andrew Oswald, a British economist at the University of Warwick. “Human beings also care about their relative income. You can make people richer, but they just look over their shoulders all of the time.”
A California economist named Richard Easterlin pioneered the involvement of economists in happiness research more than 25 years ago. He noticed that even though American society was getting richer, surveys of individuals suggested that people were not becoming any more content with their lot in life. Originally other economists, who viewed the research as too subjective, shrugged off his work. Later he achieved a measure of credibility as more and more economists addressed the subject.
Economists are interested in happiness because it seems to offer some insight into one of the fundamental precepts of economic theory: that people act to maximize their well being in fairly rational ways. If true, then people should be getting happier and happier all the time as the American standard of living grows steadily.
Oswald has researched the impact of people who have gotten a big financial windfall from inheritance or winning the lottery. He found that people receiving large amounts of cash unexpectedly reported an increased sense of well being during the year following the event. It is unclear whether this giddy feeling continued beyond a year.
Further research by Oswald indicates that the relationship between income and happiness is not so simple. People are an envious bunch. Oswald found that even if a person’s income is rising, he or she tends to become less happy if the incomes of others are rising even more.
“Inequality reduces happiness,” says Mr. Oswald. So society might be getting wealthier, but it won’t translate into happiness for individuals unless they are becoming wealthier faster than everybody else is.
Other economists take issue with Mr. Oswald as to the universality of his theories. They find his concept much more applicable in Europe than in the U.S. They believe that Americans are less focused on the income of others because we have such a mobile society. We believe that we can catch and overtake our neighbors whereas Europeans don’t view themselves as having so much opportunity for upward financial mobility.
Another authority on the subject is Daniel Kahneman, a Princeton University professor who is well respected in the fields of psychology and economics. He says individuals often find themselves on a “satisfaction treadmill.” The more they earn, the more they can indulge themselves, and then the more they want. “People find that their demands from life keep pace with their increases in income,” says Mr. Kahneman.
So, there you have it — the more we have the more we want.
The answer to the riddle is really pretty simple. As man searches for meaning and happiness, our old sin nature tries to lead us astray in the direction of greed. It is man’s nature to worship something. If we don’t have strong spiritual beliefs, we are left to judge our importance by comparing ourselves with others. We then worship the wealth that proves our significance. A real pity.
Will electronic media replace newspapers? Some say yes, others say no. For the next several weeks I will offer some spiffy ways to use the newspaper that you may not have thought of. These tidbits are courtesy of the Mississippi Press Association.
1. Cover your head when it rains
2. Line your bird cage
3. Use as an apron
4. Use as a bib
5. Cut into pieces and make a puzzle
6. Shade the sun from your eyes
7. Make mulch for your garden
8. Potty train pets
9. Wrap fish in it
10. Clean fish on it.
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at email@example.com.