Money can buy happiness

The income scale is logarithmic, so the apparently linear lines that you see are actually curved. The returns in happiness per $ earned fall off significantly towards the top of the scale (which incidentally is capped at a fairly low $128,000). I don't really see how this new data contradicts the generally accepted view (mentioned in the article) that money increases happiness up to a point.

This poll is bullshit.<p>They are asking people to imagine what their life would be if they have more money. Of <i>course</i> they say they would be satisfied (up to a point).<p>However, what people say they want are not necessarily what they need or feel. Contentedness doesn&#x27;t come from having everything you need, it&#x27;s a feeling that can be generated from within and rested upon, <i>whatever</i> the situation you are in.<p>What generates a lot of confusion and suffering comes from the difference between the <i>imagined</i> happiness (&quot;If only ...&quot;) and the ability to be content in the present moment. (And sure! &quot;Present moment&quot; can be anything from sitting quietly outside and listening to skydiving). As long as you have an <i>imagined</i> happiness, that &quot;if only X, Y, and Z happens&quot;, then you will <i>never</i> be satisfied.<p>It&#x27;s totally crazy. People can just be happy right now, and go on with their lives, instead of twisting themselves up inside.

People become acclimatised to &#x27;new wealth&#x27;. One thing I learned from life experience, and then actually understood after studying Buddhist philosophy, is that it&#x27;s very easy to enter a repetitive cycle of desire, some achievement, then more desire ... one yearns to make more money, makes it (via payrise or other successful project), gets used to having that money, wants more, makes more, and so on. The trick is to be satisfied &#x2F; happy with what you have; it&#x27;s not practical or very likely that your income will keep increasing &#x27;forever&#x27;.<p>I can honestly state that I&#x27;m happier now making less money, not owning a house, nor having many of the trappings of &#x27;success&#x27; that I had 10 years ago. I admit, however, some ill-placed desire to see if I might be happier now &#x27;making money&#x27; than I was in the past; my healthier (IMO) life outlook might be simply as a result of more wisdom rather than less money.

The Economist article actually conflates two happiness metrics, happiness as measured by emotional well-being and happiness as measured by life evaluation. Money buys happiness as measured by emotional well-being up to a point (that point being $75K for US residents), but higher income continues to increase life evaluation.<p>More details can be found in Daniel Kahneman&#x27;s 2010 study, &quot;High income improves evaluation of life but not emotional well-being&quot;(<a href="http://www.pnas.org/content/107/38/16489.full" rel="nofollow">http:&#x2F;&#x2F;www.pnas.org&#x2F;content&#x2F;107&#x2F;38&#x2F;16489.full</a>), where he uses the results of 450,000 Gallup poll responses to analyze the effects of income on both happiness metrics.<p>Kahneman defines emotional well-being as &quot;the emotional quality of an individual&#x27;s everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one&#x27;s life pleasant or unpleasant.&quot; Life evaluation, on the other hand, refers to the thoughts that people have about their life when they think about it.&quot;<p>In the study, emotional well-being is captured via series of yes&#x2F;no questions of the form &quot;Did you experience a lot of stress yesterday?&quot; or &quot;Did you smile or laugh a lot yesterday?&quot; The goal is to assess their emotional well-being on the previous day. Life evaluation is measured by asking respondents to rate their lives on a ladder scale from 0-10, where 0 is “the worst possible life for you” and 10 is “the best possible life for you.”<p>The data showed that for individuals earning below $75K, logarithmic increases in income (i.e. doubling one&#x27;s income) positively correlate with scores for happiness, enjoyment, and smiling and negatively correlate with scores for sadness, worry, and stress. At $75K, you have enough to pay life&#x27;s bills and still have discretionary money to go out and spend time with friends. The effects of income on emotional measures saturate at $75K because money no longer becomes the limiting resource for achieving more happiness, even though life satisfaction continues to rise when plotted against log income. &quot;We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being,&quot; Kahneman writes.

The participants were <i>not</i> asked how happy they were, they were asked where they stood on a &#x27;satisfaction ladder&#x27; with the best life they could imagine at the top. Many people may be perfectly happy, but they know their position on the wealth scale and <i>imagine</i> that they would feel more satisfied at the top of that scale.

This appears on HN coincidentally after the discussion on rating differences between cultures[1], so that different countries may have different views about what a scale of 1-10 means.<p>A 7 in Brazil might not be a 7 in India, for example.<p>[1] <a href="https://news.ycombinator.com/item?id=7044833" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=7044833</a>

Money can buy security and that security increases your happiness. Not having money can make you unhappy. Sustainable happiness is recognizing what is truly valuable in life and appreciating it.<p>For me this is:<p>1) No debt<p>2) Full stomach&#x2F;quenched thirst<p>3) A warm place to sleep<p>3) Meaningful intimate loving relationships<p>4) A sense that I am valuable (adding value to the world or some subset)<p>5) Freedom to indulge my curiosities through exploration&#x2F;experimentation&#x2F;participation.<p>6) And in its most abstract definition, freedom to experience a spiritual life.

The richest in India are less happy than Brazil&#x27;s poorest.<p>But leave it to the economist to find that money makes you happy while ignoring that some countries seem much happier.<p>If you were to pick a country where you could randomly end up anywhere on the income scale, which would you pick? Of the countries listed, I&#x27;d pick the United States, followed by Brazil, Britain and Mexico.

Abstract of the cited article (<a href="http://www.nber.org/papers/w18992?utm_campaign=ntw&amp;utm_medium=email&amp;utm_source=ntw" rel="nofollow">http:&#x2F;&#x2F;www.nber.org&#x2F;papers&#x2F;w18992?utm_campaign=ntw&amp;utm_mediu...</a>):<p>Many scholars have argued that once “basic needs” have been met, higher income is no longer associated with higher in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of “basic needs” and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise. If there is a satiation point, we are yet to reach it.

This seems obvious. Having no money is very stressful. Stress not only makes you generally very unhappy - it actually damages your brain (<a href="http://www.ncbi.nlm.nih.gov/pubmed/15511597" rel="nofollow">http:&#x2F;&#x2F;www.ncbi.nlm.nih.gov&#x2F;pubmed&#x2F;15511597</a>). Stress is an unhealthy thing to experience, especially when it is constant and your mind and body do not have time to recover. In small doses, a little stress keeps you moving, but its benefits drop off pretty quickly the more stress you experience. Thus it stands to reason that if a major source of stress is removed (a lack of financial stability) that your overall happiness level goes up.

I may sound like a conspiracy theorist but oh well:<p>The cynic in me says such graphs are (figuratively) propaganda by the 1% (of 1% in wealth, not income), in that now we can define what the masses are &quot;ok&quot; with while we, the 1% of the 1%, can accelerate our gains further. Let the rest of them have crumbs and be content.

The study uses an odd and rather dubious measure of &quot;happiness&quot;:<p><i>Gallup asked respondents [...] to imagine a &quot;satisfaction ladder&quot; in which the top step represents a respondent&#x27;s best possible life. Those being polled are then asked where on the ladder they stand</i><p>What the results may show is that fantasies about happiness, such as &quot;if only I had more money&quot;, lose power as one gets more money. If you run out of fantasies about how you might be happier, it does not follow that you are happy. It could be the opposite! Perhaps the article should be titled, &quot;Money weakens the imagination&quot;.<p>In any case, studies that define &quot;happiness&quot; very differently should not be described as &quot;casting doubt&quot; on one another.<p>Edit: looking at the paper itself, the &quot;imaginary ladder&quot; was one of two questions asked; the other was (paraphrased) &quot;how satisfied are you on a scale of 1 to 10?&quot; I don&#x27;t know how the data differs between those two questions.

There appears to be a single main diagonal that includes China, Russia, Italy, France, and Germany.<p>Above that diagonal are countries where it takes less money to achieve that same satisfaction as those on the main diagonal. Apparently, Brazil, Mexico, India, and Nigeria get more satisfaction for the same level of income. That leaves Japan and Iran as the outliers where you get far less satisfaction for a given income level.<p>The slope of the lines is also interesting. Nigeria and Brazil stand-out as two places where income matters less it does others. The US and UK are also flatter (less income elastic) than the main diagonal.

Money is like engine oil. An engine without enough runs poorly, but it doesn&#x27;t take all that much to get it to run smoothly. More than that doesn&#x27;t help or hurt, it just sits in a reservoir somewhere. You can get a bigger engine that uses more oil, but beyond some point it just doesn&#x27;t matter much.

<i>&quot;Even more striking, the relationship between income and happiness hardly changes as incomes rise. Moving from rich to richer seems to raise happiness just as much as moving from poor to less poor.&quot;</i><p>That&#x27;s misleading (to be charitable...). <i>Doubling your income</i> seems to raise happiness as much, whether you&#x27;re moving form poor to less poor or rich to more rich, within the ranges looked at. Adding $5000 means a <i>lot</i> more happiness for the poor than the wealthy.

This is one of the big controversies in happiness economics.<p>I wonder if this effect (which directly contradicts Easterlin&#x27;s findings that money has <i>no</i> effect on happiness past a certain point; here, they contend that there is no saturation point and that happiness evolves with the logarithm of income) could be somewhat due to the way they framed the question: &quot;assume you are on a ladder of happiness with 10 steps, which one would you say you are on; then tell us how much you earn&quot;. It is widely known in behavioral economics that framing effects can have a huge effect on the way people respond ([1] [2], and so on), so I wouldn&#x27;t be surprised than the way you ask people to evaluate their own happiness could explain at least part of the difference.<p>One of the conclusions of the Easterlin Paradox is that people care more about how much they earn compared to their neighbors than the actual amount. I feel like asking the question this way (imagining their happiness as a ladder with 10 steps, then thinking about their income) would directly lead to people implicitly internalizing this comparison in some kind of mental model where higher wealth = more happiness because they&#x27;re trying to imagine what the best life possible could be: &quot;ah I&#x27;m pretty happy right now, but if I had a twice as much money I think I would be happier though, so surely I can&#x27;t be at the last step at the ladder. Actually, people who have twice as much than that should be even happier, so I&#x27;ll add some steps on top and say I&#x27;m a 6 right now&quot;.<p>This sounds plausible to me because while the authors conclude there is no saturation point where income doesn&#x27;t bring more happiness, this is a scale from 1 to 10 so surely some people must rate themselves a 10. What would those who earn twice as much as them think then? This solution could be that &quot;being on top of the ladder&quot; in people&#x27;s mind is somehow conflated with &quot;being on top of the income distribution&quot;, with all the other levels being computed relatively to that. In other terms, this framing may incite people to evaluate their happiness on a cross-sectional level, with Easterlin&#x27;s Paradox being precisely that the income-happiness relationship exists only at the cross-sectional level but not at the longitudinal level.<p>The debate between the two models (Easterlin vs. Stevenson and Wolfers) has been a longstanding debate in happiness economics, with both sides having confirmed their findings with multiple data sets [3]. Maybe they&#x27;re both right in a sense and the answer just depends on which definition of happiness you&#x27;re asking people to evaluate themselves with (relative vs. on an absolute level)?<p>[1] <a href="http://economistsview.typepad.com/economistsview/2006/08/the_framing_eff.html" rel="nofollow">http:&#x2F;&#x2F;economistsview.typepad.com&#x2F;economistsview&#x2F;2006&#x2F;08&#x2F;the...</a><p>[2] <a href="http://www.adsavvy.org/the-power-of-framing-effects-and-other-cognitive-biases/" rel="nofollow">http:&#x2F;&#x2F;www.adsavvy.org&#x2F;the-power-of-framing-effects-and-othe...</a><p>[3] <a href="http://en.wikipedia.org/wiki/Easterlin_paradox" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Easterlin_paradox</a>

I think it&#x27;s less that &quot;money buys happiness&quot; as it is that &quot;poverty causes unhappiness&quot;.

In regards to subjective happiness and income, I like to pose the question:<p>Would you rather earn $80,000 and live in a neighbourhood of those earning $100,000, or would you rather earn $100,000 and live in a neighbourhood of those earning $80,000. Money and happiness is entirely subjective according to your environment.

It&#x27;s really impossible to rate your life numerically in relation to a &quot;best possible life&quot;, so in order to give some kind of answer to this vague question, respondents fall back on some quantifiable measure like money.<p>A separate issue is that the question &quot;How satisfied are you WITH your life?&quot; is not the same as &quot;How satisfied are you IN your life?&quot;. It&#x27;s possible to have high moment-to-moment happiness, but have a negative view of one&#x27;s life; or vice versa. Daniel Kahnemann explains this in this TED talk (13:30):<p><a href="http://www.ted.com/talks/daniel_kahneman_the_riddle_of_experience_vs_memory.html" rel="nofollow">http:&#x2F;&#x2F;www.ted.com&#x2F;talks&#x2F;daniel_kahneman_the_riddle_of_exper...</a><p>He even mentions the Gallup World Poll.

I think the evidence they show is actually very compelling. Even though there are clearly country fixed effects, the graph shows that both within and across countries.<p>Of course what self reported happiness really measures is another matter...

The distinction between INCOME and WEALTH here is important, a distinction which the title&#x2F;thesis of this article ignores.<p>The title implies that simply POSSESSING money (wealth) is positively related to happiness, whereas the survey could only support the claim that EARNING money (income) is positively related to happiness.<p>I would argue that income is a much better proxy for the value a person creates in the world than is wealth (though both are deeply, deeply imperfect). I would much more readily believe a survey which implies &#x27;people who believe they create more value in the world are more likely to be happy&#x27;.

Maybe it can&#x27;t buy happiness, but it can definitely rent it.

Only as means to provide <i>changes</i> in people&#x27;s lives, not necessarily only your own. It has nothing to do with possessions or consumption, and especially this exhibitionistic, public consumption which is pushed by the media.<p>Giving a new pair of boots or a new jacket to some poor school children in Nepal or India will definitely buy some happiness. New iPad for oneself, of course, won&#x27;t. A long journey to different lands as a CBT for an addict will buy some happiness, while visiting the most distant and expensive to reach island in Pacific won&#x27;t. Traveling remote Indian&#x2F;Nepali&#x2F;Tibetan villages will buy some happiness, while stupid yoga course won&#x27;t.<p>I&#x27;m mountaineering guide and ex-addict, that&#x27;s why I know.

I&#x27;m curious what the result show if you did not have to work for your money? While money does not make you happier when you work for it I wonder what portion of that is due to the additional stress, long hours, and responsibility that comes with high income jobs.

Another peculiar interpretation of the same data: People segregate strongly by income, and you&#x27;re happier if your neighbors are wealthy rather than poor. Not just crime but schools and parks and services.

People should know that Rotschild owns part of the magazine The Economist. <a href="http://en.wikipedia.org/wiki/The_Economist" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_Economist</a>

The slope of the lines indicates how big an impact different incomes have. Contrast India and Nigeria, for example. A Nigerian needs a lot more to have the same incremental in increase in satisfaction as an Indian. Interestingly, Germany, Russia and India seem to be about parallel, even though the income ranges are different. Is that just coincidence? Or is there an underlying cause? Also, how well does the question itself translate among different languages and societies? Can the same concept be put across effectively?

Maybe it can&#x27;t buy happiness but it can definitely buy off unhappiness, some of it anyhow (adapted from a line in &quot;Psycho&quot;).

Some alternative titles: &quot;People with a bitter taste for life are not making money&quot; or &quot;People who make a lot of money tend to be pretty pleased with themselves&quot; or probably most accurately &quot;People with a lot of money are pleased because it turns out our economic structure favours their particular skills or interests&quot;

Correlation ≠ causation.<p>If you live in a society where the propaganda tells you that wealth = success &amp; value &amp; esteem, then of course there&#x27;s some connection. Maybe if we really lived in a culture where hoarding wealth was considered shameful, it would make people less happy to do so.

Bypass paywall (maybe the paywall only starts after 1 day?):<p><a href="http://www.google.com/url?q=http://www.economist.com/blogs/graphicdetail/2013/05/daily-chart-0" rel="nofollow">http:&#x2F;&#x2F;www.google.com&#x2F;url?q=http:&#x2F;&#x2F;www.economist.com&#x2F;blogs&#x2F;g...</a>

I find the conclusion that there is no cap where more money won&#x27;t buy you more happiness a bit funny, when there&#x27;s an explicitly defined cap in the question itself. No amount of money will make you any happier when you&#x27;ve already reached level 10.

Money can buy the appearance of happiness, but happiness comes from inside, not from outside. It&#x27;s a skill one can develop.<p>Recommended reading: Matthieu Ricard&#x27;s book &quot;Happiness: A Guide to Developing Life&#x27;s Most Important Skill&quot;

Obligatory: <a href="https://www.youtube.com/watch?v=S63kIH96Bi0" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=S63kIH96Bi0</a><p><i>&quot;They say money can&#x27;t buy happiness? Look at the fucking smile on my face&quot;</i>.

Am I wrong to dismiss just about anything that depends on <i>asking</i> people? I don&#x27;t have good ideas on how to measure happiness, but even the worst of them seems better than asking and leaving it at that.

The survey measures people&#x27;s <i>self-perceived</i> satisfaction. I have no difficulty believing that richer people think they&#x27;re happier, but the survey tells little about whether they actually are.

One could maintain the manipulative fiction that money is unrelated to happiness above some nominal level (around $75,000) as a pretext to keep wages low for only so long.

Whenever I see rich people, they don&#x27;t see to smile a lot.

The Economist needs to understand the difference experiencing happiness and remembering happiness. Behavioral economists have done years of research differentiating the two. It makes no sense to talk about happiness otherwise.<p>The incomes in the range of 60k - 70k (in US) beyond which happiness plateaus out is valid in the context of experiencing happiness. Its fair to say that middle income people would be unhappy when they think about the fact that they are not millionaires&#x2F;billionaires, but they are not thinking about that most of the time, and during that time, they are just as happy as millionaires&#x2F;billionaires.

I know that if I had just £1,000 that I&#x27;d be a lot happier. I&#x27;d be able to focus on recovery rather than all the nonsense that I worry on at the moment.

What is happiness? It&#x27;s pretty subjective, therefore the title isn&#x27;t even proper, since it assumes a generalization.

Notice Japan - they work too damn much to be satisfied with their lives.

Now chart the medication of psychotropic drugs in those countries.

satisfaction != happiness

...It buys a WaveRunner

I hope so.

This is actually true at some point but there are really genuine happiness that money can&#x27;t buy like love, friendship, loyalty and trust.