Here’s the pre-edited version of my latest Muse for Nature News.
Does money make you happy? It depends what you mean by happy.
You want to be happy? Here’s how: be highly educated, female, wealthy, not middle-aged (tell me about it), married and self-employed. These are among the most salient characteristics of people who describe themselves as being the most happy. Misery, meanwhile, comes from unemployment, low income, divorce and poor health.
Not rocket science, is it? Nevertheless, the booming discipline of ‘happiness studies’ continues to excite controversy. What is cause and effect, for example? Are people happier when they marry, or do happy people marry?
And what exactly do we mean by happiness: that we laugh a lot, feel optimistic and secure in our lives, are serenely calm or deliriously hedonistic? In a recent Gallup poll of national happiness, the USA came fifth, and yet at the same time came 89th from ‘best’ (out of 151) in terms of ‘worry’ and had the fifth highest stress levels. How to make sense of that? Does happiness compensate for stress, or are they ineluctably conjoined?
Besides, is happiness a desirable goal? That might seem obvious (it was to the authors of the US Declaration of Independence) – and it surely seems a better measure of human wealth than conventional ‘well-being’ economic indices such as GDP. But what if a happy nation is a selfish or profligate one? And who’s to say that the inhabitants of Aldous Huxley’s Brave New World would not, blissed out by the drug soma, have rated high on the happiness scale?
These dilemmas have deep roots. Jeremy Bentham’s utilitarian political philosophy in the nineteenth century sought to arrange for the maximum happiness for the greatest number of people, according to a so-called ‘hedonistic calculus’: a principle, however, rendered indeterminate by what has been called the ‘fallacy of double optima’, with no unique optimum.
One of the most contested issues is the relationship between happiness and income. Everyone agrees that abject poverty is miserable, but how does the relationship play out above that unfortunate state? While being female or married are all-or-nothing factors, income is quantitative: if being wealthy makes you happy, does being more wealthy make you more happy?
Since most of us are, by definition, not relatively wealthy in our society, we probably feel a glow of self-righteous satisfaction from studies suggesting there is a ‘wealth threshold’ above which happiness no longer increases . That fits with intuition: the super-rich do not strike us as a particularly joyful bunch. (In the UK we like to wheel on the Royal Family as the prime exhibit, disregarding the fact that less representative members of society you will never find.)
But now Nobel laureate economist Daniel Kahneman and his colleague Angus Deaton at Princeton University have thrown a cat among the pigeons. In a new paper in The Proceedings of the National Academy of Sciences USA  they use the US data from the recent Gallup survey to argue that income does continue to impact on our evaluation of life satisfaction as we enter the realm of the rich.
Does this validate the anonymous quip that those who say money can’t buy happiness don’t know where to shop? Not exactly. Kahneman and Deaton say that previous discussions have been muddied by a failure to distinguish a sense of emotional well-being from our life evaluation. The first refers to daily experience: how much we laugh, how relaxed we feel as we go about our life. The second is a more objective overview: are we content with our family, job, house, insurance, credit rating? It is not hard to imagine the head of a big corporation feeling good about all this while never cracking a grin.
The Gallup poll surveyed more than 700,000 US residents, although Kahneman and Deaton jettison about a quarter of the responses because they appear unreliable. From the rest, they deduce that income is more closely correlated with life evaluation than with emotional well-being, and that this correlation persists for all income levels, at least up to around $160,000 per annum. While reported well-being also generally increases with income, this relationship plateaus at an income of around $75,000.
For all their ambiguities, happiness studies are closely monitored by politicians and policy makers, not least because policies that make people happy seem likely to win votes. What will they make of these findings? Is it better to promote good life evaluation, or emotional well-being?
Kahneman and Deaton refrain from taking a position – and the richness and subtlety of their data advise against glib answers. As they imply, any society should wish to improve the lot of people who have poor emotional health and are gloomy about their prospect. But their results, while complicating the previous picture, surely suggest that income (and dare one therefore add, taxation levels?) should not be regarded as a relevant happiness dial for the comfortably off. While some might be determined to extract the conclusion that, as the New York Times once put it , ‘maybe money does buy happiness after all’, there is a strong case here that better education, secure health provision, lowering of stress, and the nurturing of social and familial relationships offer a far greater dividend of smiles.
1. Easterlin, R. A. in Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz (eds P. A. David & M. W. Reder) 89-124 (Academic Press, New York, 1974). Paper available here.
2. Layard, R. Happiness: Lessons From a New Science (Penguin, New York, 2005).
3. Kahneman, D. & Deaton, A. Proc. Natl Acad. Sci. USA doi: 10.1073/pnas.1011492107.
4. Leonhardt, D. New York Times 16 April (2008).