So it is surprisingly consistent and useful. 8:11, russ: so now, let's go after Easterlin. Talk about what work you have done, the two of you together, in this area and where does it fit in with other findings that people have found in trying to understand the relationship. This is where we prefer to relabel the easterlin Paradox, easterlin's Hypothesis. And the reason is we think the data just don't agree with him. The usual ways social science debates go is we all agree on the facts and then we argue like hell about what they mean.
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The other thought I have is Henry david Thoreau, who said: The mass of men lead lives of quiet desperation. A bit of a oil pessimist. It might have been time-centric, when he said that; it wasn't the best of times when he was writing. But there is a certain illusion that we present to the world, a certain mask, a certain number that we might list in our 1-to-10 scale that might mask what we really feel, like deep down inside lots of times. So we all understand that this is a somewhat mushy concept. And yet, betsey, you who point out that it seems to hold up with some interest in some larger applications. GuestS: you know, it really does. They've also shown things that it's correlated in the way you'd expect it to be with life events. So, people who are recently divorced or are in the process of divorcing are less happy or less satisfied with their lives on average than people who are newly married. People who have experienced a death show declines in their happiness and life satisfaction. And have as a group average life satisfaction that is lower than people who haven't recently experienced that?
Part of the lined problem I have is that when I think about my own happiness or my own satisfaction, yeah, there's a general overall number on a scale of 1 to 10 I might have from time to time. It might change when you ask. But it's kind of a rich concept to reduce to a single digit, even with a decimal point. GuestW: Well, i think just about any interesting social indicator. Think about the rich experience of our lives that is summarized by Gross Domestic Product (gdp or the incredible richness of the labor market we try and summarize by the unemployment rate. Russ: I have problems with those, too. GuestW: I'm with you on that. As long as we're willing to admit that all statistics are imperfect, i'm on board. Russ: okay, that's fair.
They've also done things like ask friends and biography family and found that friends and family tell us things that are similar to what the individuals say. So it writings turns out that simply asking people, overall, taking things all together, how happy would you say your life is, or how satisfied are you with your life, people give answers that are consistent and interpretable. Russ: Later we're going to talk about replication, i hope. I'm very suspicious of those psychology studies of showing a picture of a person, a snapshot i assume, not a video of their day. I'll remain open-minded because i don't know that literature very well. But I would wonder about that. That would seem extremely difficult.
But to give you just a really stark example of the easterlin outlook, or the easterlin hypothesis, now if you take a village in Africa that doesn't have running water, and you bring running water and you give it equally to everybody in that village. If you bring it only to the chief's house, you have made the chief better off relative to everybody else in the village, because you have changed his relative position by increasing the difference between what the chief has and what everyone else has. Russ: And how did he measure-and this of course is always going to be an issue in this literature, it's one of the questions I have about it-how did he measure happiness? What was that measure based on? GuestW: so the standard in this, and this is what all economists do if you are analyzing happiness, is you analyze large cross-sectional surveys, where you go out and you ask people either how happy they are or how satisfied they are with their lives. GuestS: so, i have to admit that I came to studying these kinds of questions with a great deal of skepticism. And what's been really stunning to me is the work psychologists have done to really validate, not only how useful these questions can be, but also how universal they are. That people-that if I tell you how satisfied i am with my life, if you took a picture of me and you showed it to strangers, they would be able to give a reasonable guess that would be correlated with my life satisfaction. In fact, psychologists have done that kind of study where they ask people to rate their satisfaction with their lives; they've taken pictures of them; and they've shown those pictures to strangers; and they've found that what the strangers assign to people is correlated with.
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The second was that if you look instead across countries, you fail to find any evidence that rich countries were happier essay than poor countries. And third, when you looked at countries through time, you fail to find any evidence that as they got richer, they got happier. So that seems thomas paradoxical. And his preferred explanation was that what must be going on is what matters is relativities. What matters is your income relative to the joneses, and that would explain why rich people in a country are happier than poor people but would also explain why rich countries weren't happier than poor countries-because when you are in a rich country your neighbors.
And that's something that will offset the impact of your own richness. GuestS: so, easterlin's findings and his interpretation of the data have led him to a very, very clear policy recommendation. And he stated that a focus on economic growth is simply not in the best interest of society. And that's because he believes that the core relation you see, when you look within a country where wealthier people seem like they are happier or more satisfied with their lives than poorer people, simply reflects status. And that there is nothing that is actually gained as we develop because we-maybe because we acclimate or get used to things.
Russ: Now, you are my first pair of guests on EconTalk. It's going to be exciting to see how that goes. You folks are going to have to share the mike. We're going to talk about a number of issues today. We are going to start with research that you've done together on the relationship between happiness and income. Then we're going to talk about a column you wrote on the work of reinhart and Rogoff.
And if we have time we'll close with some unrelated issues. So, let's start with your contribution to what is sometimes called the 'happiness' literature. And let's begin with that literature, the origins of that literature, the work of Richard Easterlin. What did he find? GuestW: so, the easterlin Paradox is 3 empirical claims and then the implication that follows. So, the first claim was when you look within a society, like the United States, at a point in time, you find that rich people are happier than poor people.
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Happiness often has a significant social component diary and you can get a lot of social approval by helping others. Even if others do not directly praise you, you may well praise yourself for complying with strong values to help others. The effect works at all levels of income. (2010) measured happiness of a wide sample of Americans and found that those who spend money on themselves did not increase in happiness whilst those who spent on others became happier. They also measured happiness at a boston firm where employees received a bonus of between 30Those who spent more on others were happier. They also found that even small and regular spending on others had a distinct ongoing positive effect. See also varying Experience, random Acts of Kindness. Recording date: may 28, 2013.
How we define relative success does essay vary with cultures, although money often (but not always) plays a significant part, at least in how it may be used. As an example, how much you have recently earned is more important in the usa than in the uk, where how much you have in total is more significant. Experience, money is better spent on experiences than goods. The happiness of having is not as intense as the happiness of experiencing, and does not last as well. If you go on an exciting adventure holiday then the memory will keep you going for longer. A reason for this effect is that experiences satisfy higher order needs, whilst having money mainly satisfies only lower-order needs. Philanthropy, a simple way of using money to find happiness, perhaps counter-intuitively, is to give it away.
rich estates worry about intruders, even after putting up barbed wire and employing security guards. Just as the miser grimly hoards money, there is a danger of jealously guarding your possessions and thinking ill of others in angry imagining them stealing your goods. Relativism, feeling successful is related to happiness and we determine our success relative to others. If our friends are all billionaires, then being a millionaire may not seems that successful. If my yacht is smaller than your yacht then I may not be that happy. It is often the status that having money brings that leads to happiness (Boyce. The reason i am less happy about my yacht is because my richer friends look down on it (and hence me).
Money in itself does not create happiness. It is the thought of what you can do with it that can lead to happiness. But the thought of spending it also may lead to thoughts of the unhappiness of not having. Without money there is no anticipated pleasure of potential and shredder basic hardships return, which can be a sad place. Money tends to have a negative relationship with happiness. Not having money can lead to sadness, but having money does not automatically make you happy. How you think about it and what you do with it can make a lot of difference to your happiness. Materialism, money is often associated with buying things.
Important things are free: Essay
Techniques happiness money and Happiness, basics, potential, materialism. Relativism, experience, philanthropy, see also, money does not automatically make you happy. So here's some information about how you can use it to make you happy. Basics, without the basic in life, of a roof over your head and food in your stomach, then your world may be quite miserable. Money helps you escape such hazards and a safe, healthy person is generally much happier than one who is not. Once the basics of survival are covered, however, more money does not mean more happiness. Having money is like having a battery or standing at the top of a mountain. It is stored power, ready for action.