Data Says Money Might Buy Happiness, But Happiness Might Not Be What You Want

Studies

from the or-we've-just-defined-happiness-incorrectly dept

Another excellent podcast from the folks at Planet Money, this time an interview with economist Justin Wolfers, who’s been studying the data on money and happiness. First up, he debunks the previously held notion concerning money and happiness. A much older study had found that, within countries, people generally were happier with more money, but oddly that didn’t translate across borders: so people in “rich” countries weren’t any happier than people in “poor countries.” The classic explanation for this was that it’s all relative. People in poor countries are happy knowing that, relatively, they’re better off than their neighbors. It turns out, that’s simply not true — at all. The data (and Wolfers has a lot of it) doesn’t support that in any way and he offered a key experiment to prove it: if that were the case, wouldn’t those who were doing just okay in the US move to Mexico where they could be — relatively speaking — super wealthy compared to everyone around them… and wouldn’t those doing okay in Mexico not want to move to the US where, at least initially, they were likely to be much poorer than others? And yet, the reality doesn’t match up with that theory.

Instead, the aggregate data suggests that there’s a very strong correlation between wealth and happiness. People in wealthier countries are happier. People in poorer countries are less happy. Of course, this appears to be aggregate data and aggregate data can hide all sorts of important details. On top of that, this appears to be based on self-reporting levels of happiness, and some could question how accurate that is. Also, obviously, correlation does not mean causation, but it certainly can provide some fairly interesting tidbits of information. At the very least, there does appear to be some connection, at the macro level, between money and happiness. That said, the data does seem to show this across different levels of income as well. So, as he said, the data absolutely appears to debunk that once people hit a certain level of wealth their happiness stops increasing as their wealth increases.

However, as the interview continues, you realize that it’s a lot more complicated than just “money causes happiness.” Of course, when it comes to money and happiness, it should be no surprise that there’s a fair bit of complications. I won’t necessarily go through all of the details, but Wolfers points out that happiness might not really be the way people judge things — and even people, who are generally wealthy and consider themselves happy, might not be content in other areas of their lives. He notes that the specific question asked makes a really big difference. All of the data discussed above is about how people respond to surveys about their general level of satisfaction. Different questions — such as asking people how much they smiled the day before may result in different answers. In that case, the numbers of smiles increased with wealth, but plateaued at a certain level, beyond which people were smiled out.

But what the rest of the report suggests is the classic situation where correlation may be misleading: because there may be other variables that have impact. He notes that wealth can mean less worry, pain and stress — and that can lead to greater satisfaction. Towards the end, the interviewer, Adam Davidson, points out that for some people, personal happiness might not be that important. Instead, he points to examples of people he’s known from less-developed countries who put more value on family connections (and highlights two examples of translators who have worked with him — one in Iraq and one in Haiti — who came to NYC, and rather than be impressed by the city, were upset that “the people seem so lonely.”). Wolfers then asks: “is happiness what we really care about?” He then uses the widely discussed studies that have said that parents tend to be less happy than non-parents — and yet most parents say they would absolutely have their kids again if they were to do it all over again. He points out that many people find other important values, beyond happiness, in something like being a parent. For example, some people “find meaning” in it, even if it doesn’t make them “happier.” In other words, as Davidson suggests, perhaps people value things outside of just straight happiness.

I’m reminded of a fascinating article from last summer in New York Magazine that explored that relationship between happiness and parenting. It goes through all of the same data that Wolfers is clearly discussing, and for much of the article, leaves you thinking that being a parent is a pretty depressing experience. But towards the end, it notes that when you change the question around a bit, things become quite different. Parents in studies tend to say that their lives were more “rewarding” overall. That’s different than the “moment-to-moment” happiness that is often surveyed. At the very end, it notes some key significant findings that parents actually tend to be less depressed than non-parents — but that single fathers, who are often away from their children — can be the most depressed. As they note, if being a parent really makes you unhappy, being spared of that duty should make you happier, but it does not.

That article concludes, then, with a point similar to what Wolfers states above:

But for many of us, purpose is happiness–particularly those of us who find moment-to-moment happiness a bit elusive to begin with. Martin Seligman, the positive-psychology pioneer who is, famously, not a natural optimist, has always taken the view that happiness is best defined in the ancient Greek sense: leading a productive, purposeful life. And the way we take stock of that life, in the end, isn’t by how much fun we had, but what we did with it.

[…] “I think this boils down to a philosophical question, rather than a psychological one,” says Gilovich. “Should you value moment-to-moment happiness more than retrospective evaluations of your life?” He says he has no answer for this, but the example he offers suggests a bias. He recalls watching TV with his children at three in the morning when they were sick. “I wouldn’t have said it was too fun at the time,” he says. “But now I look back on it and say, ‘Ah, remember the time we used to wake up and watch cartoons?'” The very things that in the moment dampen our moods can later be sources of intense gratification, nostalgia, delight.

And, I think this highlights the key to the original question about the relationship between money and happiness. It almost certainly drives some element of happiness, which is important. But it — alone — may not be enough to drive a different kind of happiness. Wolfers and Davidson suggest these other things — meaning, spirituality, connectedness, altruism, etc. — are not happiness, but I’m not sure I agree. To some extent, going back to the economics of things, we define things in terms of marginal benefit, which is too often denominated solely in terms of currency. And that leads people to equate the monetary value to the “benefit.” But happiness lives at a variety of levels. There is the immediate forms of happiness, and there are deeper levels of contentment, including what Wolfers suggests above, as well as many other areas of life. I would argue that all of that — anything that creates long term benefit for the person — is a form of happiness, even if they might not judge it as such at the moment.

So, in the end, there still isn’t a good answer to the initial question: “does money buy happiness?” The answer is, in some ways, both yes and no. It may buy certain forms of happiness, but not others. And, in the end, it depends on what you measure in terms of what comes out in these studies and economists’ reports. Happiness itself is so vaguely defined that a slight change in the question will give you different answers. But, I think that most people — implicitly — have a measure of overall contentment that they consider, and while that might not equate to day-to-day happiness, perhaps people are starting to realize that the important things in life are not short-term happiness, but longer-term contentment.

Filed Under: contentment, happiness, money, philosophy