Monday, April 21, 2008

More money - Happy/Sad: Three views over time

Below are three views on whether more money equals more happiness. It is interesting to note that the views have been downgraded from no correlation between the two to lots of.
I am not too sure if the latest finding (released this month) that bolsters the correlation between the two is an unconscious or conscious bias introduced by the institute that put out the paper: An institute that is famous for churning out fresh MBAs who typically start at over $100K a year - Wharton.

View I from about 30 years ago: Economic growth did not necessarily lead to more satisfaction:

People in poor countries, not surprisingly, did become happier once they could afford basic necessities. But beyond that, further gains simply seemed to reset the bar. To put it in today’s terms, owning an iPod doesn’t make you happier, because you then want an iPod Touch. Relative income — how much you make compared with others around you — mattered far more than absolute income, Mr. Easterlin wrote.

View II: From a couple of years back which states that more money may not equate to more happiness.

Once a country has filled its larders there is no point in that nation becoming richer. The hippies, the Greens, the road protesters, the down-shifters, the slow-food movement – all are having their quiet revenge. Surveys show that the industrialized nations have not become happier over time. Random samples of UK citizens today report the same degree of psychological wellbeing and satisfaction with their lives as did their (poorer) parents and grandparents. In the US, happiness has fallen over time. White American females are markedly less happy than were their mothers.

View III: Prevailing view (published last week in the Times quoting a paper published at Wharton): More money does indeed make one more happier.

The “Easterlin Paradox” suggests that there is no link between the level of economic development of a society and average levels of happiness. We establish a clear positive link between GDP and average levels of subjective well-being across countries with no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. Moreover, we show that this relationship is consistent with the relationship between income and happiness within countries, suggesting a minimal role for relative income comparisons as drivers of happiness.

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