Aug 16, 2006

money & happiness

Interesting article on money and happiness in the Wall Street Journal today (sub required).

It points out a 2004 survey that shows 43% of people with family incomes greater than $90K reported being very happy, but only 22% of people with family incomes below $20K were very happy. This would make you think that money does in fact make you happier. But in fact other studies add two new aspects to this information. First, after you are sheltered, fed, warm, and safe, more money doesn't really add to your happiness. Second, even though people who make more money say they are very happy, they don't feel happy most of the time. It just when they are asked if they are happy that they feel happy. In general higher income earners weren't happier but were more anxious and angry. Even worse, high income earners spend more time working, commuting, and doing obligatory non-work activities (e.g., maintaining their nice green lawns) which is a leading indicator of unhappiness. So higher income earners say they are happy but aren't really.

This led researchers to believe that it's not absolute wealth or income power that makes you say you are happy when asked, it's relative. Do you make more than your friends or neighbors or the average person? So in general high income earners are miserable but when asked if they are happy with their lot in life they feel they are doing better than most people and so they answer they are happy. Fascinating.

This effect should show up most clearly with women who now spend more time in the workplace and earn more money than they did, say, 30 years ago. And that's exactly what the data shows. 29% of women described themselves as happy in the 1990s down from 36% in the 1970s. Numbers for the men over that time period didn't move.

So what makes people happy? Researchers suggest the following:


  • Short commute times. Apparently we don't adapt well to this type of hardship because it is unpredictable. It's a constant source of unhappiness. My commute time is the same as with my previous job but much more predictable. It's also more productive since I'm not doing the driving. I agree this adds tremendously to happiness. I love not driving.
  • Choosing time over money. There apparently is no time decay to the happiness that more time brings. But there is a quick time decay to the unhappiness brought on by not having the money to buy things like a new car. A new car brings satisfaction and happiness for a short period of time. This is called 'hedonic adaptation' in the article which merely points out that researchers probably spend more time on naming things than studying them. I was lucky to find a job that gave me more leisure time and more money so I don't think I can comment on this one. Although I had a great car once and after a year it became a worry more than anything else.
  • Spend money on experiences. Experiences are better than durable goods. The experiences are short-lived but the memories aren't. I think my first post on this blog had to do with all the junk I'd accumulated. I ended up throwing it all out. I have very few possessions to my name now.
  • Use your leisure time wisely. Passive activities bring no enjoyment (e.g., TV). Socializing with friends over food brings the highest satisfaction which proves the French are onto something. I can easily get sucked into passive activities. I probably don't need to tell anyone I don't watch TV because of a vicious TV addiction I used to have. I'm much better off for it. I just hope reading is active because I do an awful lot of that and it brings me a huge amount of happiness.
A colleague brought the article to my attention stating that after he read it, he checked the byline to make sure I wasn't the author. That's the best compliment I've ever received.

No comments: