Is Happiness for sale?

Mignon McLaughlin once said, “Money is much more exciting than anything it buys.” Well, this may not be so true if you can buy happiness with it. Taking stock of the accumulated subjective evidences on happiness research, behavioral economists (where economists meet psychologists), in recent years, have become increasingly intrigued with the question “Can money possibly buy happiness?” Dating back to the early seventies, Richard Easterlin, a social scientist discovered that within a country, rich people tend to be much happier than the poor, but rich countries tend not to be happier than poor countries (known as Easterlin’s Paradox). What this suggests is, only relative income (compared to others within a country) matters to happiness and the economic growth may not actually be a factor in raising everyone’s well-being.

On the contrary, the University of Chicago’s Allen Sanderson claims that GDP (income of a country) and average income may still be the best measures of well-being as they correlate so strongly with access to basic necessities, better health, and education. Justin Wolfers and Betsey Stevenson (U Penn) reaffirm this by analyzing multiple datasets. Moreover, they find a strong association of economic growth with rising happiness. 

Note: Based on Deaton and Kahneman (2010)

However convincing these outcomes may sound, perhaps a little more attention should be paid on how we measure happiness. Traditionally in surveys, a question like “How satisfied are you with your life as a whole?” evaluates a person’s happiness for life. Going one step further, Daniel Kahneman and Angus Deaton (Princeton) argue that there is another aspect of happiness, the emotional well-being, which refers to the emotional quality of everyday experience such as joy, sadness, anger, etc. Surprisingly, based on the outcome of more than 450K responses surveyed in the US, they conclude high income buys life satisfaction but not emotional well-being.

As it turns out, the Happiness-Gurus are far from reaching a consensus. Meanwhile lets try to be happy for nothing!