More Money, More Happy, Again
Here’s Betsey Stevenson and Justin Wolfers’ new paper [pdf] on happiness and economic growth. The bottom line:
The accumulation of more recent data (and a re-analysis of earlier data) suggests that the case for a link between economic development and happiness is quite robust. Moreover, we establish that the relationship between happiness and income within a country is similar to the relationship between happiness and national income across countries. Finally, we show that the within country relationship between economic growth and happiness is similar across countries.
And this effect shows up despite all the reasons — scale renorming, unbounded income scale vs. bounded happiness scale — that you would expect to flatten the trend. Taking the methodological considerations about surveys into account, the most reasonable conclusion is that these findings set the lower bound on the contribution of income to happiness.
The paper has all sorts of interesting findings from the Gallup World Poll that I have not seen. For example:
We next turn to a series of well-being questions contained in the Gallup World Poll. Respondents are asked to report whether they experienced “the following feeling during a lot of the day yesterday?” including enjoyment, physical pain, worry, sadness, boredom, depression, anger, and love. The middle panel of Table 4 shows that, among the positive emotions, the enjoyment-income gradient is positive and similar for both the between- and within-country estimates. More income is clearly associated with more people having enjoyment in their day. Love is less clearly related to income, although within-countries more income is associated with being more likely to experience love. Among the negative emotions, physical pain, boredom, depression, and anger all fall with rises in income, at both the national and individual level.
Beatles fans and headline writers please note relationship between income and love.
The final regressions analyze the relationship between income and some more specific experiences in people’s lives, such as feeling respected, smiling, doing interesting activities, feeling proud, and learning. Most of these assessments are related to one’s income in the within-country estimates. Fewer show signs of a similar sized effect when examining the relationship between countries. However, there are some notable exceptions. Wealthier people are more likely to say that felt that they were treated with respect yesterday and as countries get wealthier more people feel respected. Wealthier countries have people who report smiling more. This last measure is particularly interesting as smiling has been shown to be correlated with reported levels of happiness or life satisfaction. Indeed, in the data people who report smiling more, also report higher levels of life satisfaction. Finally, as countries get wealthier more people report having been able to eat good tasting food the previous day and the magnitude of the relationship is similar to that seen within countries.
All told, these alternative measures of well-being point to a robust relationship between rising
income and improvements in societal welfare.
MONEY IS GOOD FOR PEOPLE. I will continue to wait with bated breathe for conventional wisdom to catch up.
[HT: Zubin Jelvah]
April 9th, 2008 17:18
[...] Wilkinson is giddy over happiness research these days. One of the results he cited the other day was controlling for everything, kids [...]
April 9th, 2008 18:43
First of all, I want to say that the hypothesis that (ceteris paribus) money makes people happier seems entirely reasonable to me. But when there’s another paper showing the association, that isn’t automatically evidence. You have to consider the possibility that happy people go on to make more money rather than vice versa. After all, extremely unhappy people are what is otherwise known as “depressed,” and depression is not exactly conducive to the sort of long-term goal-oriented behavior that tends to be required if you want to become wealthy in a typical civilized society.
April 9th, 2008 23:15
So, the key to raising gross national happiness is the government distributing massive amounts of money to the people. Print it up and ship it out! What are we waiting for?!?!?!?!
April 11th, 2008 03:22
It seems rather obviuous that money make people happier to at least some degree. It is more intresting to sort out how strong the effect from money is compared to other factors.
April 11th, 2008 10:28
Bad link..
April 11th, 2008 19:44
The paper doesn’t appear to say that more money means more happiness. It says that countries with a higher GDP have less pain and more pleasure. This isn’t an argument that money causes happiness but that poverty causes misery as, presumably, the higher the GDP of a nation, the smaller proportion of its populace will be living in abject poverty. Further, one would expect that nations with higher GDPs would have more money to invest in health and safety infrastructure and, consequently, have fewer external events which lead to not being happy.
But to say more than that, to say that more money causes more happiness, you would have to compare happiness at the margins rather than comparing entire the entire GDP of a country. Are families (or individuals) who are alike in all other ways happier at a household income of 110 thousand than at 105 thousand? 120? 130? If so, is there a point at which the increase of happiness stops?
In fact, a quick scan of the recent news points to another study where according to the authors, once you crack six figures money loses its ability to reliably raise wellbeing and does not increase in line with increasing income”.
This idea has been around since the ancient Greeks. To be happy, Plato suggested, you need a sufficient amount of money but once you have too much money you face the danger of actually diminishing your happiness.
July 21st, 2008 12:50
[...] by Betsey Stevenson and Justin Wolfers that seems to put to rest once and for all the claim that money can’t buy happiness. Clive Hamilton and Ross Gittins certainly won’t be happy about [...]