Can money buy you happiness? The short answer: YES.
Justin Wolfers, a frequent guest blogger on Freakonomics and an Assistant Professor of Business and Public Policy at The Wharton School of the University of Pennsylvania, recently wrote a series of posts on The Economics of Happiness:
UPDATED 5/1/2008: I’ve added parts 5 and 6 to the list.
- Reassessing the Easterlin Paradox
- Are Rich Countries Happier than Poor Countries?
- Historical Evidence
- Are Rich People Happier than Poor People?
- Will Raising the Incomes of All Raise the Happiness of All?
- Delving Into Subjective Well-Being
In these posts, he provides statistical evidence that:
- Rich people are happier than poor people.
- Richer countries are happier than poorer countries.
- As countries get richer, they tend to get happier.
In this CNBC video with Wolfers and Betsey Stevenson (also an Assistant Professor of Business and Public Policy at Wharton), Wolfers explains that the survey questions included, “Did you smile a lot yesterday?” and “Did you laugh a lot, yesterday?” – which can offer more absolute measures of happiness than simply asking, “How happy are you?”
As it turns out, richer people smile and laugh more often than poorer people.
This all comes in stark contrast to the Easterlin Paradox, which postulates that relative income – the amount you make compared with others around you – is more important than absolute income. In the CNBC video, Stevenson states that relative income is still important, but it may not be as important as the Easterlin Paradox suggests.
In the NY Times article, “Maybe Money Does Buy Happiness After All“, Richard Easterlin (a Professor of Economics at University of Southern California) agrees that people in richer countries are more satisfied, but isn’t sure that their wealth is causing their satisfaction—their survey answers may be reflecting cultural differences and offering skewed data.
Still, the data Wolfers and Stevenson have amassed is pretty compelling. They combed through reams and reams of post-war surveys and research to come up with their conclusions. Take this chart from the 2006 General Social Survey, for instance. The survey asked: “Taken all together, how would you say things are these days?”
Looks like money is sure buying happiness for the rich here.