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Richer countries are happier than poorer ones. Richer families are happier too (theatlantic.com)
90 points by MikeCapone 1632 days ago | hide | past | web | 49 comments | favorite

This research says nothing of the sort.

It identifies a correlation between income levels and life satisfaction. It is by no means trivial to assume the causal direction. People with high incomes are far more likely to be in satisfying careers, far more likely to have had a stable childhood and a good education. With the exception of the oil-rich Arab states, high income tends to be a result of a long period of good governance.

This data could indicate that money does indeed buy happiness, or it could indicate that the factors that create life satisfaction also tend to increase earning power. It would be reasonable to assume that it's probably a bit of both.

The data also literally doesn't say it. Sneaky of them to plot income on a log scale so you don't see diminishing returns.

Wow, that's sneaky indeed. The writer of the article doesn't seem to realize.

"If extra income didn't matter for well-being, you'd expect the line to flatten. Instead, it steepens."

Yeah, a log scale on the x axis will do that...

Yeah, they clearly don't realize that, that's why the article says, "Statistical note: This graph is logarithmic. That means doubling your income from $1,000 to $2,000 raises satisfaction by the same amount as doubling your income from $10,000 to $20,000."

Sorry, I read too quickly and missed that. In that case, I suppose the writer does realize that it's a log scale, but proceeds to make incorrect inferences from the slope of the line anyway, which is even more baffling.

What kind of correct inference could possibly be drawn? The data is arbitrarily scaled to begin with. By criticizing the interpretation of the log graph, it seems to me you've implicitly accepted that the authors' quantification of happiness is a meaningful measure, that it makes sense to say that one level of happiness is twice as much as another and that asking someone to imagine a ladder can establish that.

Tucked away in a footnote in the paper: "We should add a caveat, that this inference of 'diminishing marginal well-being' requires taking a stronger stand on the appropriate cardinalization of subjective well-being (Oswald 2008)." You say caveat, I say giant ontological turd hitting the fan...

Yes, exactly. However it does seem to shatter the myth that "people are happy about their lives in poor countries", which is the rhetoric we tend to hear every time someone wants to make a case against materialism in developed world.


But to push my own biased opinion, I've often found that people who have positive attitudes, despite adversity, often do better in life-- both in happiness and relationships and career success.

Indeed. Another likely link is that income is often interpreted as status/standing in society. So the happiness might just as well be due to respect/esteem.

The whole article is really poor in my opinion. It ostensibly tries to disprove (or get you to believe that some research disproves) previous research that earnings beyond $75K per annum in 1st world countries does not make people happier. To do this, it shows 2 graphs where 99% (my approximation) of the data points are for 2nd world countries or 1st world countries with earnings below 64K.

To prove their thesis (and disprove the previous research), they would've needed straight lines for 1st world countries that continue straight up between 64K and 128K. There is only one that I would say looks statistically significant (USA), but it is balanced by one that definitely looks like its not straight (could be Japan).

In the second graph, I am very skeptical of how they determine where that line bends. If you ignore their lines, you could draw a straight line through the data points. By what statistical method did they determine that a bent line approximated the data better and that this particular bent line was the best. Essentially, saying that this data should be represent by a bent line instead of a straight one seems like an economist's trick.

And in the end, the author trots out the 75K figure and pretty much agrees with it. The income redistribution statement is odd but further proof: taxing the rich (above 64K) and "giving" it to the those below 64K would have the biggest happinss effect.

About all I take away from this article is that Brazil and Mexico have the happiest inhabitants on very low wages.

> And in the end, the author trots out the 75K figure and pretty much agrees with it. The income redistribution statement is odd but further proof: taxing the rich (above 64K) and "giving" it to the those below 64K would have the biggest happinss effect.

Only if the taxation and re-distribution wouldn't have big feedback effects.

Actual paper: http://www.brookings.edu/~/media/research/files/papers/2013/...

Things to note: their "very rich household of >500k" sample size is very small: 8 households, most of the other data seems to max out at 64k.

Also according to them: In an interesting recent contribution, Kahneman and Deaton (2010) have shown that in the United States, people earning above $75,000 do not appear to enjoy either more positive affect nor less negative affect than those earning just below that. We are intrigued by these findings, although we conclude by noting that they are based on very different measures of well-being, and so they are not necessarily in tension with our results.

The difference between a country where everyone makes 60k and 30k means everyone is better off this residually more happy. They don't say anything about the happiness level improving after a single household goes from one income to another.

>Gallup question wording: “Please imagine a ladder with steps numbered from zero at the bottom to ten at the top. Suppose we say that the top of the ladder represents the best possible life for you, and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time, assuming that the higher the step the better you feel about your life, and the lower the step the worse you feel about it? Which step comes closest to the way you feel?”

This doesn't seem to me like a good measure of well-being, but rather a measure of how well people can tell what their income is relative to their peers.

If I see much richer people than myself all the time I'll assume I'm halfway down the ladder. That doesn't mean I'm actually unhappy, just that when I look around, I think I could probably be happier.

I had that experience living abroad.

I lived in a city, Tokyo, (though I believe Shanghai, HK and SG are all similar) where the majority of foreigners are "expats" where expat = Person sent to foreign country by their homeland company and given a benefit package that includes reproducing their homeland lifestyle in the foreign country.

I was not an expat by the definition above. I was paying $1k a month for studio apt, sleeping on the floor. No complaints. But, 95% of all services directed at foreigners in those countries are targeting the expats so anytime I'd pick up a magazine or browsed a website targeted at foreigners I'd see ads for tons of things 5x to 10x out of my reach. Lots of companies pushing apartments starting at $4k a month and up. Companies for investing. Dating services that expected their clients to have a salary of $200k+. Etc...

The point being, I was not unhappy until seeing all these ads made me feel like I was at the bottom of the heap instead of above average as I had felt before I came.

And even if you only see a few people richer than you, in a place with a high Gini coefficient, they're probably much richer than you. Human brains like to linearly extrapolate, so you probably assume that that non-linear explosion in growth doesn't mean you're 98 to their 99, but that you must be 80 or so.

I'm at the point where a bit more money wouldn't really increase my happiness or fulfillment. For that to happen, I'd need a lot more money.

I was just thinking about this the other day. If you've ever read Pride and Prejudice, it says that Mr. Darcy makes about 10,000 pounds a year in passive income from land he owns. Today, it turns out that's a bit over $800,000. Mr. Darcy derived a passive income of $800k. That's how rich he was.

That sort of wealth would definitely increase my happiness and fulfillment. I'd probably transition into philanthropy, something I simply couldn't do right now on any large, meaningful scale.

That seems about right. I make decent money, I buy what I want, and I can't imagine that I'd change my life significantly if I made 2x or 10x what I do now. Big house, fancy car? Meh, who cares.

But give me 100x or 1000x my current income, and things start to get interesting. There are plenty of things I'd like to invest in and make happen, if I could easily throw around a few million here and there.

I'm going to guess (with no evidence what-so-ever except personal experience) that the older people are the more money they wish they had. Why? Because the older you are the closer you are to the age were you will have a hard time making money (companies will not hire you) and you will need money (bills, especially medical)

So yea, I'm with you. A little more money isn't going to make me happier. A LOT MORE will ;-)

It is worth repeating that the original paper, by Kahneman and Deaton--the one everyone likes to cite to support the opinion that happiness doesn't increase with salary above $75k--said nothing of the sort, unless you accept a very peculiar understanding of the word "happiness". The paper introduces two concepts, "Emotional Well Being = the quality of a person’s everyday experience such as joy, fascination, anxiety, sadness, anger, and affection", and "Life Evaluation = a person’s thoughts about his or her life (on a longer time scale)." The first one, K&D found, is only affected by money up to $75k a year. The second is improved with more money at all levels. http://wws.princeton.edu/news/Income_Happiness/Happiness_Mon...

So unless you're going to insist that the word "happiness" only pertains to temporary feelings, as opposed to how you feel about your life overall in the long-term, the claim about $75k and happiness never had any basis in data.

While I do kinda-sorta believe that wealth increases the odds of happiness I -really- don't get the question. For all we know richer people are conditioned to say they are content because of the social stigma of being a depressed-rich individual.

I always thought that the trick to getting to the truth of the matter was to ask a question that couldn't have a negative consequence. The more neutral a question feels the more likely you are going to get an honest answer. "Are you happy" isn't as good as "What's the funniest movie you saw this year".

The ladder question, as I read it, says more about where you think others would see you. It isn't a question I'd answer honestly. I'd think about my wife, kids, house, and all my privileges before even thinking "am I actually happy".

When I used to work for a company that did personality inventory testing the neutral sounding questions (True|False I enjoy dressing up to work) were always the ones that carried weight, and the over-the-top questions (True|False I've thrown a punch at my boss) were just a coarse filter.

So... does enjoying dressing up for work count as a personality plus or minus?

Honestly it depends on what the goals of the test are.

Ask 10,000 people in <x position> the same generic question. So ask 10,000 Sales Managers if they like dressing up for work , look for a correlation, compare the correlation to performance, get your answer.

Out of 10,000 sales managers, 3,000 said they enjoy dressing up for work. Of those three thousand managers 2,600 are top performers and get high marks from their coworkers. From this you can make a very slight up-tick towards someone answering true to them having the possibility of being a top performer. This would just be one question over hundreds of similar questions so it isn't going to be a deal-breaker.

Of course, ask 10,000 programmers and "false" might be the correct answer. That's what makes these questions powerful. There is no correct answer. There's only a relationship.

It's not money (or material possessions), it's freedom. Freedom to pursue your ideas, freedom to have options, freedom to do your own thing, freedom to give, or not to waste time on things you hate.

All these things can definitely make a person happier.

Money can be the limiting constraint on having more options or freedom. Now the study only shows a correlation with between log-income and happiness but it's not crazy to assume that having health insurance, a savings account, money for flexible travel, all increase your freedom and thus happiness.

Honestly, it surprises me when people say money doesn't buy happiness. Obviously I can only speak for one person, myself, but I've absolutely become happier as I've made more and more money.

I'm assuming the saying is because of all the stories about wealthy people not being as happy as you would assume. Stories about unhappy, but rich misers have been around a long time, so I'd guess that there's some truth to them.

Money buys experiences and comfort, but it can't buy true relationships. Money doesn't fix the selfishness or unforgiveness that destroys your marriage. Money doesn't make up for all the time you spent working instead of relating to family and friends.

I've heard some stories about rich men dying unhappy, but I can't find any on Google. Here are some other references: [1] "A Christmas Carol" (Dickens) [2] "Silas Marner" (George Elliot) [3] Misers in art: http://en.wikipedia.org/wiki/Miser [4] Elvis was super-rich and super-popular, but felt extremely lonely http://en.wikipedia.org/wiki/Elvis_presley#Memphis_Mafia (search for "lonely") [5] Concerns of the rich: http://abcnews.go.com/Business/concerns-super-rich-wealth-br...

Are you seriously using A Christmas Carol as evidence? Come on now.

I might be reading that graph wrong, but it looks to me like the chart stops at 128k. Bill Gates has talked about the 5-10 million dollar range of wealth, and saying that buys real lifelong security. Beyond that, "hamburgers taste the same when you're a billionaire"

That said, i bet all the toys are fun, but they're still just toys. We all have our xboxes or Ferraris.

So, i wonder if it's really exponential forever like that graph suggests or if it turns into a natural log at 5 million or so.

That's actually log income that they're comparing to life satisfaction there, so they're clearly indicating that returns will diminish up to the point where their measures aren't sensitive enough to detect it.

So it's a problem of scale. That I can believe. There are dimishing marginal returns, but if we zoom on a flat part of the graph we may not see them properly.

If your money doesn't buy you happiness, you are spending it wrong.

It's a well known fact that GDP per capita is well correlated with other indicators made by organisations with a liberal agenda, such as the HDI - so much that it is problematic both for these organisation, and for a usual neoliberal opinion (with diminishing marginal returns).

Maybe they are diminishing marginal returns with money - just like with human life, after the 1000th year we might get bored, but we don't see them because we look at a too small scale (a mere 75 years of life, with many disabilities in the end)

EDIT : As usual, I don't care for the downvotes down to -1, but instead of a lazy click, could you please take 10 seconds to expose facts if you want to refute my points?

Downvoting means "does not bring anything to the discussion", it does not means "I hate what you think". Facts please. Please bring me shame for how wrong I am, (with references if possible).

Until then, here are my references:

First hits on google : correlation between GDP per capita and HDI : "Human Development Index HDI is advanced as being a better indicator than GDP per capita... BUT look at a plot of the correlation between HDI and GDP/capita or all countries... There is today a very strong correlation"


"The concepts of diminishing marginal returns on money" in simpler terms on a blog: http://www.getrichslowly.org/blog/2010/06/16/the-marginal-ut...

Since you asked about an explanation: I downvoted you because your post makes no sense whatsoever.

>It's a well known fact that GDP per capita is well correlated with other indicators made by organisations with a liberal agenda, such as the HDI - so much that it is problematic both for these organisation, and for a usual neoliberal opinion (with diminishing marginal returns).

Why would that be problematic for those organizations?

Saying "GDP is correlated with happiness" (what you're saying) is a looong way from "Impact on GDP is the best metric for determining policy" (what would refute the 'liberal' GDP replacers).

HDI and others were created because it was said that GDP per capita was not measuring happiness well enough, and was too economic.

But now we realize they are correlated, which begs the questions : are the parts about education, healthcare etc. within the HDI so unimportants ? (ie why did bother creating the HDI if GDP/capita works just as well on most cases)

But if works so well, shouldn't we also see diminishing marginal returns in GDP per capita ? (in neoclassical theory, diminishing marginal returns are everywhere !)

Some studies have added ad-hoc trigger points (up to $75k and you'll be happy, then not so much) but still from what I get it's a weird situation, and we are still learning important facts about the utility of money. It's quite interesting.

EDIT: Marking normative suggestions with regards to GDP per capita - I don't think I would, cause that's quite a bit off my league. There are different models, and many variables - not one simple solution.

>why did bother creating the HDI if GDP/capita works just as well on most cases?

Because using GDP maximization to decide policy in those other cases results in lower overall happiness.

I would have no problem if economic policy-makers were content to merely correlate their decisions with increasing the GDP. Using it as the only end-goal, though, is foolish, and using it in those exceptional cases is, by utility maximization standards, evil.

> If your money doesn't buy you happiness, you are spending it wrong.

One of my all-time favorite papers: "If money doesn't make you happy, then you probably aren't spending it right" http://www.wjh.harvard.edu/~dtg/DUNN%20GILBERT%20&%20WIL...

If your money doesn't buy you happiness, you are spending it wrong.

True, but not everyone, or even everyone with plenty of money, has the opportunity to spend it rightly.

"in a vacuum".

If gaining more money brings stress/fatigue/conflicts/loss-of-time that isn't perceived by the person to be more worthwhile than the input needed to gain the money, then this isn't going to hold.

If he could say "give me $XYZ" and our bank accounts magically increased by that amount, no cost, no questions asked, no nothing, then of course we can't have enough money. It's all about the "cost" we pay to trade for that money.

I wonder what's meant by "income redistribution" in this article. In my experience with my family, giving people money they didn't put effort into earning makes them less happy, and less able to provide for their own needs. Is this anyone else's experience?

The mathematics looks like this, money adds happiness on a log scale. So going from $1K to $2K gives you as much additional happiness as going from $128K to $256K. So if you tax those with $256K at 50% and give $1K to to 128 people who have $1K you create 128 times as much happiness as you destroy.

Your study looks at a different effect than the one they are discussing.

That's following a given theory.

Other theories exist - such as that people resent being taxed, with reduces their utility more than what they paid, or that people resent being given underserved money, which raises their utility less than what they received.

Also, it one admits diminishing marginal returns on money, what about diminishing marginal returns on utility ?

Maybe there comes a point where, instead of finding Kaldor Hicks optimums of Pareto efficiency, one cares more about fairness, and see this redistribution as unfair. And Kaldor Hicks is about redistribution as can be.

I am interested in any study that actually measures the effect of rates of tax on overall happiness.

> Other theories exist - such as that people resent being taxed

That part is a fact in my experience. Some people resent being taxed. I think all people seem to resent some tax or another.

> with reduces their utility more than what they paid, or that people resent being given underserved money, which raises their utility less than what they received.

I inferred that kind of thing from the grandparent comment.

Perhaps the solution to this problem is just in better marketing, rather than in not doing the transfer.

Convincing/structuring payment so that people think they are deserving can't be that hard.

>Maybe there comes a point where, instead of finding Kaldor Hicks optimums of Pareto efficiency, one cares more about fairness, and see this redistribution as unfair. And Kaldor Hicks is about redistribution as can be.

Thanks for this reference. I just looked up Kaldor Hicks and think it is an interesting tool.

giving people money they didn't put effort into earning makes them less happy, and less able to provide for their own needs. Is this anyone else's experience?

Try it with an infant, and you'll find the need to further qualify "people", because as you put it, the theory doesn't work out. So let's call them grown-ups, not referring to just being physically grown up either. Now, where do you draw the line, and how do you assess on which side of it a stranger is?

What I'm asking is, what makes you assume the person you see begging actually did have a fair shot at it? I don't deny that some of them did, but even if it was the majority; what make you assume that about every single one? That it's comfortable? That it couldn't possibly be that it is just LUCK that you weren't raped as kid and ended up as alcoholic with 12, or something like that? Just face it, as much as effort makes a difference, it's still luck to even have a chance. If everybody got what they "earned", all of us would have the same, namely non-existence. It's easy to forget privilege once you have it, and make that the cut-off point.

So personally I like to err on the side of compassion. I don't like drunks, alcohol is a black hole and to be honest, I consider some of them walking dead; I don't like being actively bothered too much, and professional beggers are air to me; but otherwise, giving a bit of change is sometimes just a way of not ignoring a person, and an opportunity to wish them a nice day. That doesn't change their life, but it's at least a tiny ray of light instead of yet another rain drop of being ignored, which is proportional to how little it costs me personally.

There are people who simply fell on hard times, and what the am I expected to ask of them so they can "earn" a few cents, or euros? To prove that it wasn't their fault, to have their papers on hand? To shine my shoes? To ask real nice? Sure, I'll admit, I like it more to give something to someone trying to sell those homeless people newspapers, or someone playing an instrument. But I rarely take the paper (though as far as newspapers go, they beat mainstream ones, they're way more interesting), and the crappier they are at playing the instrument, the more likely I am to give.

I'm not berating you for your choices, but I know why I make mine, and why I feel good about giving.

I agree, I can't walk away from someone in need either. I'll cheerfully pay my nephew's rent and groceries for one month, and he's back the next month. I'm doing well and I love him, I never say no, but I don't know how to put him back in a place where he can be independent. I want to do more for him than just give him a short-term fix.

Are we sure it's wealth that makes them happy or the ability (or willingness) to utilize said wealth? There's something to be said of old-money vs. new-money where often, new-money is self-made and tends to be spendthrift whereas old-money tends to be more cautious (probably the reason they're "old").

There's still a huge difference between "spending" and "buying". Did those economists make a distinction? I haven't seen many people "buy" (as in product or service) into happiness, but some folks seem to become happy by spending. I.E. Parties, charity or some combination of both.


When GDP rises above certain level, nation as a whole does not get any happier. Individuals do get happier when their income rises above their peers, but on the other hand, their peers lose some happiness.

All poorly titled summary articles aside, money may or may not buy happiness, but it can buy some pretty sweet vacations.

Its odd they don't consider the correlation between anti-depressant use and country wealth. Oh sorry I forgot, that's just because were all stressed from working so hard in order to earn more money so we can be happy!

Maybe letting economists dictate the social agenda is the problem in the first place.

Many of these studies try to generalize the subjects too much: the fact of life is that everyone needs more money. That is just how we as humans have chosen to structure the world around us. And happiness cannot be measured in any objective way anyways.

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