The pursuit of wealth far in excess of need is a powerful and pervasive aspect of (most) human societies. But it is unhealthy, damaging, sick. One fairly influential book has gone so far as to describe the love of money as the root of all evil. So why do we do it? Does money make us happy? You can find plenty of people arguing yes, and plenty arguing no. Possibly because both are half right. A couple of recent good popular science articles explain. From Time:
People say money doesn’t buy happiness. Except, according to a new study from Princeton University’s Woodrow Wilson School, it sort of does — up to about $75,000 a year. The lower a person’s annual income falls below that benchmark, the unhappier he or she feels. But no matter how much more than $75,000 people make, they don’t report any greater degree of happiness.
From Newsweek:
“Psychologists have spent decades studying the relation between wealth and happiness,” writes Harvard University psychologist Daniel Gilbert in his best-selling “Stumbling on Happiness,” “and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter.”
… The nonlinear nature of how much happiness money can buy—lots more happiness when it moves you out of penury and into middle-class comfort, hardly any more when it lifts you from millionaire to decamillionaire—comes through clearly in global surveys that ask people how content they feel with their lives …
Some researchers get a bit more sophisticated, and distinguish between different kinds of happiness. From the Time article again:
Before employers rush to hold — or raise — everyone’s salary to $75,000, the study points out that there are actually two types of happiness. There’s your changeable, day-to-day mood: whether you’re stressed or blue or feeling emotionally sound. Then there’s the deeper satisfaction you feel about the way your life is going — the kind of thing Tony Robbins tries to teach you. While having an income above the magic $75,000 cutoff doesn’t seem to have an impact on the former (emotional well-being), it definitely improves people’s Robbins-like life satisfaction. In other words, the more people make above $75,000, the more they feel their life is working out on the whole. But it doesn’t make them any more jovial in the mornings.
I’m a bit dubious about the claimed effect of money on this second, long term “happiness”. If it was true we would expect to see a correlation between the wealth of countries and their happiness, and we don’t (see the Newsweek piece, and other sources such as The Spirit Level).
Being the social creatures that we are, a lot of our assessment of happiness (after we reach the middle class plateau) are probably tied up with our perception of rank / status. For example:
Statistics consistently show that we care less about our actual pay level than we do about earning more than our colleagues and neighbours. Andrew Oswald, professor of economics at Warwick University, conducted a major study that revealed we would rather be the second-best-paid person in a firm or department than the second-worst-paid – even if, in the latter case, the salary is actually higher. Rank is what really matters, not cash.
This is probably the underlying reason for the very damaging effects that great disparities in wealth have on society (once again see The Spirit Level).
Anyway, put it all together. How do we improve a society’s happiness most effectively? By lifting the poor out of poverty. By increasing wealth where we get more happiness bang for our income buck. By reducing disparity not (as some hysterical alarmists would have it) by cutting down the top end, but by lifting up the bottom. (Coincidentally we also improve health, educational outcomes, productivity, and a range of other social indicators of course.) It all seems pretty obvious. And yet culturally, and in practice, most “Western” countries, including New Zealand, are currently moving in the opposite direction.
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