Maybe Money Can Buy Happiness, After All - Spear's Magazine

Maybe Money Can Buy Happiness, After All

I’m not quite sure what to make of some new research that claims that money really can buy you happiness.

I’m not quite sure what to make of some new research that claims that money really can buy you happiness.

On the one hand, it seems to present a rebuttal of Richard Easterlin’s 1974 contention that high levels of income don’t increase well being. On the other hand, it suffers from a rather simplistic conception of happiness.

In 1974 Richard Easterlin, a Professor of Economics at the University of Southern California, put forward what became known as the Easterlin Paradox: namely, that people with higher incomes were not, on average, happier than those with lower incomes.

Subsequent bolt-ons to his research seemed to ratify this, and developed the idea of a ‘satiation point’, beyond which there seemed to be no direct correlation between income levels and well-being, or happiness.

New research by Justin Wolfers and Betsey Stevenson – two economists at the University of Michigan – claims to refute the Easterlin Paradox.

The idea of a ‘satiation point’ – a point at which basic needs are met and beyond which increased income doesn’t enhance well being, said to be anywhere between $8000 and $25000 per year – is not supported by their findings, they claim.

They polled people of differing income levels in a range of countries and found that well-being levels increased steadily in line with income levels, up to and beyond the so called ‘satiation point.’

Money can buy the Hilton heiresses champagne and party hats, but does it buy happiness too?

But what you want to know about any survey or report that attempts to measure happiness or well being – whichever name you want to give it – is how they’re defining it. Wolfers and Stevenson asked people the following question:

‘Please imagine a ladder with steps numbered from zero at the bottom to ten at the top. Suppose we say that the top of the ladder represents the best possible life for you, and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?’

I wouldn’t want to argue that this doesn’t capture something of what we all think about when we try to assess how happy we are with our lot at any given time. The problem is, though, that it is, by definition, incomplete.

Happiness, well-being, contentment, satisfaction with how one’s life is going – whatever you wish to call it – is far more complex, subjective and nuanced than this question suggests. So while the Michigan duo’s research raises an interesting talking point, ultimately it fails by trying to quantify the unquantifiable. 

Read more by Mark Nayler

Read more from Wealth Wednesday

 
 
 

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