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Tuesday, January 21, 2014

"Does Money Make You Happy?" by Stephen Evans (BBC World Service)

BBC NEWS
Does Money Make You Happy?
By Stephen Evans 
Business Daily presenter, BBC World Service 

The unhappy answer to whether or not your happiness expands in line with your wealth is "yes, but - no, but".
It seems it does if your riches rise relative to that of the Joneses, but not if you all rise together.
"What we actually care about is our income compared with other people," says Lord Layard, one of the founders of "happiness studies".
"But if over time everybody is becoming richer then people don't on average feel any better than they did before."
It is all relative
Lord Layard bases the conclusion on studies and surveys that have been conducted over the past half a century or so in the world's richer countries - the conclusions do not apply to countries so poor that the basic necessities are absent.
What the studies reveal is a paradox, sometimes known as the Easterlin Paradox after the man who noticed it.
The apparent contradiction is that:
  • People in the richer countries don't seem to be any happier now than they were then, despite their enrichment through economic growth, but that
  • people who are richer at any one time are happier on average than people who are poorer.
Conclusion: happiness depends on relative incomes and wealth.

Rising aspirations
We like to look out at the neighbours' drive and see a smaller car.
It is all a bit like the old New Yorker cartoon where the employee says to the boss: "OK, if I can't have a pay rise, can Bloggins have a pay cut?"
This is partly because aspirations rise with incomes. In this we are like a donkey with a carrot on a stick tied to its head: as the donkey moves forward, so does the potential reward.
"You rather quickly get adapted to more money so you don't get the pleasure out of it that you expected to get," explains Derek Bok, a former president of Harvard University and author of The Politics of Happiness.
"People's aspirations tend to rise as their incomes rise, so rather quickly they start to think of a lot of additional things that they need to buy. So they end up no happier than they were before."

Unknown cause
Happiness academics do accept that richer people are, by and large, happier than their poorer neighbours.
But they are not even certain that it is the money that does it.
"Happier people on the whole tend to be richer, but we're not quite sure why that is so," says Mr Bok.
"It may not be the money. It may be that richer people command more respect or they have the freedom to do more things. Or they are more likely to hold jobs in which people defer to them. Or they have more autonomy in what they do.
"So it doesn't always follow that giving more money if you don't change those other things is really going to improve their happiness."

Unachievable goals
So if money is not all it is cracked up to be, then what should people and governments do?
For starters, believes Lord Layard, a break-neck chase after economic growth is misplaced.
"This competition to get richer than other people; it can't be achieved at the level of society," he says.
"It's a zero-sum game.
"What we should do is have a positive sum. Increase the total amount of happiness, which means enabling people to have better human relationships."
Rather than going for high growth, smoother growth might produce more happiness by producing less disruption and the uncertainty that comes with the ups and down of the economy, according to Lord Layard.
"I certainly think that the relief of poverty is an incredibly important objective, but it shouldn't be done at any cost.
"We shouldn't just go for economic development even if it leads to the complete fragmentation of society... and a decline in happiness."


Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8594400.stm

Published: 2010/04/06 23:06:42 GMT

© BBC 2014

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