Thought Control in Economics

Fulfillment Paradox

We consume three times more than our grandparents – why aren't we happier?
Happiness

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On a Tuesday morning in June, a Vancouver man named Salim and his beloved decided to get married. They tracked down a minister and a few hours later in Choklit Park, realized they needed a witness. I was crossing the street when I saw three people waving me over. “Sorry, I’ve got a meeting,” I said, when they asked me to help. “It will take five minutes,” the minister assured me. “We’ll say the vows, you’ll sign the registrar and then you’ll be off.” So in Choklit Park – overlooking Yaletown’s office towers and million-dollar condos – Salim and his bride made their solemn oaths. I joined these strangers in a bubble of unexpected, collective happiness.

What can this bubble tell us about happiness and economics? Quite a lot.

For hundreds of years we have believed that increased material wealth makes us happier, and we have shaped our world accordingly. We have built big box stores along highways that can only be reached by car. We have built larger and larger vehicles that isolate us from others and emit dangerous levels of carbon. We work 40 hours a week – or more – to maintain this lifestyle. Why do we believe that making a lot of money makes us happy? “We didn’t evolve with iPods and fancy cars,” explains Christopher Barrington-Leigh, an economist at the University of British Columbia. “How could we possibly have a preset level of satisfaction that relates material things to how happy we are?”

For hundreds of years we have believed that increased material wealth makes us happier, and we have shaped our world accordingly.

While the world has certainly grown richer in the last 50 years, most happiness economists agree that happiness and life satisfaction levels have remained constant. The United States, for example, has failed to see higher happiness levels since the end of the Second World War, despite a quadrupling of their gdp. The New York Times recently reported that while incomes in China grew by 250 percent between 1994 and 2007, life satisfaction levels shrank drastically. The Easterlin Paradox, a theory developed in 1974, explains this phenomena: Money makes us happier until average incomes are achieved. After that, money’s affect on happiness is greatly reduced.

So if Hummers and iPods won’t make us happier, what will? Instead of concentrating on the accumulation of wealth, we should be concentrating on the quality of our human relationships. Social scientists and economists have shown that groups with strong social networks usually have lower crime rates, better child welfare and public health, and less political corruption ... all of which translate into greater happiness and life satisfaction. Societies that are democratic, supportive of gender equality and more accepting of marginalized groups such as immigrants and homosexuals tend to be happier societies as well.

Back in Choklit Park, the minister handed me the marriage papers to sign. I was going to be late for my meeting, but something more important was going on. Salim and his new wife were trusting me to sign the document that could chart the course of their lives for many years to come. Married people generally report greater life satisfaction than unmarried people: One study suggests that this marriage could produce the same happiness as a quadrupling of Salim’s annual income. (Although if Salim’s proposal was as whimsical as he said it was, the effect of his marriage could be similar to that of winning the lottery: a sudden spike in happiness that quickly diminishes.)

The United States has failed to see higher happiness levels since the end of the Second World War.

In the distance the downtown sector shimmered with economic productivity, but in Choklit Park we had enacted a microcosm of pro-social, financially neutral, happiness-inducing activity that would slip below the radar of mainstream economics. As Senator Bobby Kennedy famously said to a group of Kansas students: “[gdp] measures everything, in short, except that which makes life worthwhile.” Will happinomics actually free us from the big box stores and the never-ending mutations of the iPod? Probably not. But people are paying attention. The government of Bhutan has been following a policy of Gross National Happiness since 1972, and French President Nicolas Sarkozy recently announced that happiness levels would be taken into account when measuring the country’s economic performance. In the coming years, we can expect to find these ideas beginning to influence our government policies. In the meantime, we can open ourselves to our communities and reap the dividends of a rich social life.

Ian Bullock is a Vancouver freelance writer who is at work on his first novel.

Comments on the article “Fulfillment Paradox”

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Anonymous

The Easterlin paradox has been revisited more recently, e.g. by Stevenson and Wolfers (2008), who used a bigger data set and claimed to show that the Easterlin paradox didn't actually exist- i.e. that the more money you have, the happier you are. The plots of their data do show fairly linear correlations between income and happiness, although there is a lot of scatter, and it doesn't work in some notable cases (e.g. the USA, where happiness has remained fairly static despite increasing incomes).

However what hasn't been pointed out much is that Stevenson and Wolfers' plots are all done on logarithmic income scales. So it seems to me what they actually show is that increasing income has rapidly diminishing returns- to keep increasing your happiness by a certain amount, you have to keep doubling your income. That is not so different from the plateau that Easterlin saw in his data.

And there are obviously other factors at work besides income, to explain the scatter in the data, and the anomaly of the USA.

Anonymous

The Easterlin paradox has been revisited more recently, e.g. by Stevenson and Wolfers (2008), who used a bigger data set and claimed to show that the Easterlin paradox didn't actually exist- i.e. that the more money you have, the happier you are. The plots of their data do show fairly linear correlations between income and happiness, although there is a lot of scatter, and it doesn't work in some notable cases (e.g. the USA, where happiness has remained fairly static despite increasing incomes).

However what hasn't been pointed out much is that Stevenson and Wolfers' plots are all done on logarithmic income scales. So it seems to me what they actually show is that increasing income has rapidly diminishing returns- to keep increasing your happiness by a certain amount, you have to keep doubling your income. That is not so different from the plateau that Easterlin saw in his data.

And there are obviously other factors at work besides income, to explain the scatter in the data, and the anomaly of the USA.

Anonymous

Happy people tend to be more desirable, hence more marraigeable. Therefore, to say married people are happier is a moot point. A level of happiness may be innate to some personalities, or maybe as Abraham Lincoln once said, most people are about as happy as they make up their minds to be. In any case, marraige as an indicator of happiness is a faulty barometer. Which is not to say consumerism makes people happy either.

International studies have shown that more money doesn't raise a rate of happiness, however people do tend to be happier when their level of monetary status resembles those around them. In other words, poor people don't care so much about being poor if everyone else is poor. It's when they are reminded of wealth that they become unhappy about it. Made all the more pervasive with TV and advertising? It would be interesting if research could compare a society's prevalence of advertising and level of happiness.

In any case, I tend to think Mihaly Csikszentmihalyi got it right in his book, "Flow: The Psychology of Optimal Experience." We are happiest when lost in absorption with a task, something for which we have enough talent or achievement to be confident, yet challenged. It could be an art, rock-climbing, surgery (if you're the surgeon), accounting (if you're good at math.) Compared to the absorption experience of "flow", recreation, entertainment and consumption experiences fall flat. I would also say to depend on human relationships for happiness is tenuous and potentially co-dependent. True happiness comes from within.

Anonymous

Happy people tend to be more desirable, hence more marraigeable. Therefore, to say married people are happier is a moot point. A level of happiness may be innate to some personalities, or maybe as Abraham Lincoln once said, most people are about as happy as they make up their minds to be. In any case, marraige as an indicator of happiness is a faulty barometer. Which is not to say consumerism makes people happy either.

International studies have shown that more money doesn't raise a rate of happiness, however people do tend to be happier when their level of monetary status resembles those around them. In other words, poor people don't care so much about being poor if everyone else is poor. It's when they are reminded of wealth that they become unhappy about it. Made all the more pervasive with TV and advertising? It would be interesting if research could compare a society's prevalence of advertising and level of happiness.

In any case, I tend to think Mihaly Csikszentmihalyi got it right in his book, "Flow: The Psychology of Optimal Experience." We are happiest when lost in absorption with a task, something for which we have enough talent or achievement to be confident, yet challenged. It could be an art, rock-climbing, surgery (if you're the surgeon), accounting (if you're good at math.) Compared to the absorption experience of "flow", recreation, entertainment and consumption experiences fall flat. I would also say to depend on human relationships for happiness is tenuous and potentially co-dependent. True happiness comes from within.

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