Money Doesn't Make You Happier.....

N1AK

Generali wrote: »

It's a brilliant paper and well worth reading in full however to summarise they make 2 points:

1. The Easterlin Paradox is wrong.
2. The modified Easterlin Paradox is wrong.

Good eh?


TBH I find the thought of this really quite depressing, that increased happiness is to be found in the ceaseless pursuit of money. Oh well.

Had a read through the report. Not too impressed by some of the data they are basing it on, although to be fair they don't make many categorical statements about the results.

On page 12 where they analyse Americans by income band the top band is 8 people. All 8 people claimed to be very happy so the figure they've used is 100%; however the sampling error will be vast. It's also a poll so there's almost certainly no validation of claimed income and income is known to be a figure that is grossly falsified in polls.

Even ignoring the sample and truth issues the results show that both unhappiness and dissatisfaction effectively ceased around $20-$30k (both reached 4% at that point and actually increase again for higher incomes before 'vanishing' at very high incomes).

By $20-30k 95% of people claimed to be fairly or very happy. It takes another $70-80k for the final 5% to become happy. It could just as easily be the case that for the vast majority of the population a 'reasonable' income is enough to be happy but that a small proportion of the population need high incomes to be happy.

They also didn't look into the variation of satisfaction/happiness within countries of similar wealth, especially at the upper end of the income spectrum which is at odds with their claims.

Finally the majority of their analysis is done by banding countries into 'Rich' and 'Poor' based on a $15,000 or $8,000 boundary; I doubt many people would find it shocking that happiness is higher based on those boundaries but would many people accept the fact that countries with average incomes over $15k are happier than those below as evidence that a country with average incomes of $40k is happier than $35k for example? I know I wouldn't.

the_flying_pig

Generali wrote: »

That's not what the research shows.

Clearly someone who is well is likely to be happier than an unwell person but the outcome is very clear: there is no measurable income point where you cease becoming happier by earning more. They go up to a top income level of $500,000+ pa although admittedly at that point the sample size of 8 is probably not statistically significant.

but the marginal benefits of more income must surely tail off very substantially, e.g. [using width of smile as a light-hearted barometer of psychological well-being]:

(1) starting from zero, your first £10k p.a. probably adds an inch or more to your smile;
(2) starting from £100k p.a., adding another £10k p.a. probably only adds a centimetre or so;
(3) once you're around the £500k p.a. mark, adding £10k p.a. probably doesn't add a great deal more than a millimetre.

i.e. an amount like £10k p.a. is worth vastly more to a poor person than a rich one.

this isn't inconsistent with a finding that more money is always welcome, always makes you happier, e.g. i'm sure that if you doubled the annual income of anyone on the planet then, well, they'd be delighted regardless of who they were. after all, if you doubled the income of someone like bill gates then he could greatly expand his philanthropy or whatever...

Percy1983

Interestingly I did ask myself this question a few weeks ago, in my work a vacancy came up to which I would be able to do the job and it paid more, my manager encouraged me to have a look.

Looking at the job spec it was something I am capable of but I know I wouldn't enjoy it and it would probably make me unhappy.

So I though about it and looked at my current finances and decided the extra money wasn't worth the drop in happiness, yes I would have more spare money at the end of each month but I can already afford whatever I want (more my wants in life are in check rather unlimited money).

In this case more money would have made me unhappy.

By all means if I job I would like going for more comes up I will go for it, but I suppose the money isn't my main driver.

Generali

chucknorris wrote: »

If only our winter was only 6 weeks long!

I agree, I only mentioned assets because my (employment) income isn't particularly high (only 50k pro rata although the public sector pension raises that to be worth around 62k, but still less than I could earn if I was motivated by salary). I did say that the amount would be different for everyone. I am perfectly happy with what I/we have, but my wife would like more. But only for silly things (I'm not even sure if she is serious) like a private jet (which we would never be able to afford and I certainly don't crave one either) which she often cites when I try to explain to her that we have everything that we could need or want.

EDIT: What is the winter like over there? I imagine it isn't even what we (and you when back over here) would consider winter?

A typical day in Sydney in July would be to wake up at 6am in the dark with the temperature below 10C but always above freezing. There won't be the humidity we get 10 months a year and it'll most likely be dry. Perhaps it'll be cloudy but most likely is clear and sunny. We get some rain in winter but much more in summer.

Maximum temperature will be well below 20C and on a really cold day perhaps 12C. Sunset is about 5pm and it's dark by 5.30pm.

If you go to the extreme western suburbs of Sydney you can probably knock 2C off those temperatures. If you go up to the Blue Mountains (the mountain range West of Sydney about 30-40kms inland) you'll get a proper frost (Goulburn, 2 hrs drive SW of Sydney) was -6C last week at 6am. I'll have crunchy grass in the morning a couple of times a year, perhaps every other year. We can easily go a winter without frost.

The problem with Sydney winters is the houses aren't designed for it. Our house has a single skin wall with fibre glass insulation 'batts'. We have a single air con unit that provides warm air and a plug in oil filled radiator for each room. We've single glazing in the windows and a big gap under each door. From now until September I'll wake up cold more than once each week.

John_Pierpoint

Yes Sydney gets a lot more than rainfall than London. (Even more than Manchester !)

http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

Generali

John_Pierpoint wrote: »

Yes Sydney gets a lot more than rainfall than London. (Even more than Manchester !)

http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

We do.

A typical week in Sydney in the summer is temperatures and humidity slowly building from mid-20s up to a max of 30-45C (very rarely over 40C though) over the course of 4-5 days. At some point during that 4-5 days we'll get a big load of rain, several inches often, but it falls over the course of an hour or two.

After the 4-5 days the weather cools for a couple of days to perhaps 22-23C and then the cycle restarts.

It's extremely rare for us to get light rain over a period of days as is often the case in the UK. Heavy rain for 2-3 days occasionally happens when a big tropical storm weakens and heads south.