Written by:Kaitlin Beattie
Happiness and Economics
Many argue that money and happiness have an implicit relationship, sure at face value it seems logical that the more money people have the happier they will be. But there are underlying facts that these two objects, one tangible and one intangible, may be more intertwined than we had originally perceived. Money often times is used as a status and provides implications of power and wealth. In today’s materialistic society it seems that people can never have enough objects, technology and gadgets. As a society we live off of the principle of scarcity - we are never fulfilled by what we have and we continue to desire more limited resources. So does the amount of wealth we possess truly indicate how happy we are?
Studies do show that money and economics are closely related, an article from The Atlantic entitled “The 10 Things Economics Can Tell us About Happiness” suggests that not only money but the principles of economics may be some indicators of happiness. (To read the full article go here). Before looking at the facts, let’s look at the at a graphic created by the Organization for Economic Co-operation and Development that shows the relationship between the GDP per capita in 2003 and the mean happiness of people in their respective countries.
When given the data it is to be noted that there are anomalies to the data but overall there is a positive correlation between the amount of money you make and your mean happiness. But the relationship isn’t as simple as if you make more money you will have more happiness. Even an article on NPR states that happiness is not everything and there are other economic ideas we also have to be worried about. (If you want to read the full article is it at this website).
In fact, there are other factors that contribute to your happiness and subjective well-being.But before we see these facts, it is also important to note that there are confounding variables to each argument that can be made about the aforementioned correlation. We cannot simply ascertain that because we make more money we are happier, for example the countries that are some of the happiest also have the most economic, societal and personal freedom meaning they are democratic nations. So that questions the confounding nature of money and institution type. Which could suggest that governments with a laissez faire approach could have happier people.So money might not be the only contributing factor to happiness.
Studies also show that happiness and money have a complex relationship, for example people seem to report being happier the more hours they work. As many people move from part-time to full-time jobs their level of happiness seems to go up, so as people make more money they become happier. But this is associated with a lot of trade-offs, in order to work more people have to give up a lot more too, which eventually could be a source of unhappiness. The idea of money and happiness becomes more complex when the data shows that working too much will make you miserable. But go figure, overtime hours actually create higher job satisfaction (Thomson). So many sets of data contradict other sets or even the same data which means that we cannot assume that money and happiness aren’t not solely related to each other, there are other variables that contribute to subjective well-being.
Another thing that makes people miserable is income inequality, those countries with a high gini-coefficient (the measure of distribution of income in a country 0 is perfect equality and 1 is maximum inequality) are much more miserable than countries with lower rates of income inequality. When there is inequality there are people experiencing extreme poverty and extreme wealth, which causes a wide range in levels of happiness. It is also important to note that countries with a higher GDP per capita also report increased levels of happiness. Although this data may be accurate it does not explain the anomaly of Bhutan, where the economy is based off of happiness instead of money - so there is no GDP. So how do we account for and explain the wide array of results we find in different sets of data.
The video link here also reaffirms that some research conducted how higher income and subjective happiness may not be as closely linked as they seem. Professor Ada Ferrer-i-Carbonell from the video, disc000usses her belief that happiness in economics is actually closely related to the changes in a persons income over time.
One last point that I found interest amid my research about economics and happiness, was a study conducted by Michael Norton through TED talks. (You can watch the video at this link) So rather than trying to find the connections between how much money you make and your happiness, Norton decided to go about this idea by conducting an experiment about happiness and the way you spend your money. His results concluded that spending money on other people became more happy than spending money on themselves. It was interesting to see how people’s moods and happiness change when you spend money on someone else rather than yourself.
Money gives you choices, you are able to decide where to allocate the money that you have - you are able to buy goods or services, you are able to spend money on other people, you are able to save the money or you are able to donate your money. And while money can be contributed to happiness to a certain extent, money does not in fact equal happiness. And while we can’t assume that the data provided is always accurate due to the fact that too many other factors play a role in the data that people gather, we can note though that happiness is now an emerging topic in economics.
Works Cited
"Bhutan's New Prime Minister Says Happiness Isn't Everything." NPR. NPR, 3 Oct. 2013. Web. 27 Jan. 2015.
<http://www.npr.org/blogs/parallels/2013/08/03/208299418/bhutans-new-prime-minister-says-happiness-isnt-everything>.
Ferrer-i-Carbonell, Ada . "The Economics of Happiness." Barcelona GSE . , Barcelona . 28 May 2008.
Lecture.
Norton, Micheal . "How to buy Happiness." TEDxCambridge. TED talks. , Cambridge . 24 Apr. 2012. Lecture.
"The Joyless or the Jobless." The Economist. The Economist Newspaper, 25 Nov. 2010. Web. 27 Jan. 2015.
<http://www.economist.com/node/17578888>.
Thompson, Derek. "The 10 Things Economics Can Tell Us About Happiness."The Atlantic.
Atlantic Media Company, 31 May 2012. Web. 27 Jan. 2015. <http://www.theatlantic.com/business/archive/2012/05/the-10-things-economics-can-tell-us-about-happiness/257947/>.
Your post is insightful and interesting, and makes several good points regarding the relationship between money and happiness. However (in all honesty I just may not have read this post thoroughly enough), how "happiness" is measured appears nowhere in your post itself, and with happiness being such a subjective state anyway, it is nearly impossible for me to decipher exactly what "8 happiness" is. Is it possessing 8 units of happiness? The amount of kittens per family? Average rainbows per second? Despite my one complaint this is overall a great piece economic analysis.
ReplyDeleteIt is not altogether surprising that there is a correlation between happiness, and the GDP of a country. It was interesting to hear about the economy that ran on happiness as opposed to money. I would be interested to see a graph showing the correlation between Gini Coefficient and happiness of the country as a whole, and see if that eliminates some of the randomness on the graph, as it would likely be better to compare the median people of each country rather than the average person.
ReplyDeleteThis was a very interesting topic and it was funny to me how much this related to our recent class discussion. The graphs you used were helpful and also familiar, which made me help understand your piece better. It is interesting how happiness relates so much to money, or how much you work or the country's GDP. So can a country's happiness be measured by its GDP or is there more to it? GDP is supposed to measure the country's overall well being but it doesn't really take in account of happiness. I really liked your points brought up and thought this was a great economic response to this issue.
ReplyDeleteKaitlin, I really enjoyed your post. You brought up some very interesting points about the relationship between money and happiness--something that we actually discussed in class today. One thing that I am wondering, however, is how to effectively measure happiness.
ReplyDeleteThis is a difficult subject because it is so subjective. In relating GDP to happiness, it makes sense that with more money, one would be happier, but it also makes sense that with more money, one would fall victim to greed and become unhappy. I agree that many factors come into play when discussing the happiness of a nation, such as the type of government. Overall, great findings and post!
The apparent relationship and lack of a tangible relationship between money and happiness is extremely interesting. The fact that happiness has been both found to correlate and not correlate with income is especially intriguing because it brings in to question how the data was collected because if it were the collection method that skewed the results, fixing that could help us in actually determining if there is a real and tangible relationship between income and happiness.
ReplyDeleteThe GDP is not the only thing that measures the happiness of a country. GDP only counts material items while there are many non material items that give people happiness. For example if a worker takes a day off he does not produce any material items that day however he still may find enjoyment from a day off where he can relax and spend time with friends and family. Other non economic factors go into happiness such as how many friends you have or how the weather is outside can all affect your happiness and not show up in GDP. This is why we can’t look at GDP as the only measure of happiness.
ReplyDeleteYour blog is full of interesting facts and brings about much complexity about how money may or may not affect happiness. I think it is very interesting how associated money is with how good it is that one lives their life. Money is important, as many necessities and luxuries cannot be achieved without it, but it is important as well to understand that money should not control our happiness as there are countless of free ways to have a full life. It is cool how you incorporated the links you researched from into your very well written writing, I will try this on my writing.
ReplyDeleteI really enjoyed reading this post! I think that the topic you chose is very interesting and can be applied to everyone's lives. I love how you included various visuals and graphs that directly related to your topic. I also liked how you included videos and other articles so that if someone wanted to research further, they could look at the attached links. I agree with Daniel, partially, while non economic factors are a large part of our overall happiness, money does play a large role.
ReplyDeleteThis was a really interesting post! The visuals used really helped strengthen your argument and were very effective. I was not surprised to hear that there is a correlation between GDP and happiness, because as you said we are a materialistic society. One thing I took note of was that the United States even though having between a 30,000 and 40,000 GDP per capita did not have the highest overall happiness, but rather Denmark did. I am now curious to know why that really is? Overall great job!
ReplyDeleteAfter looking at the title, I was feeling skeptical. However, once I started reading, it all started making sense. The topic, by itself, was very interesting, and you found excellent evidence and visuals to support your claims. A thought that came to mind, which you did touch on briefly, was other factors that would influence the happiness of the people. How can you be sure that the happiness of the people is as largely influenced by money as the studies show?
ReplyDeleteInterestingly enough, though we always claim that money can't buy happiness, it sure seems as if money can buy us the things that LEAD to happiness, can't it? Money buys us food, clothes, housing, water, and everything else we might need to live successfully. Therefore, I don't think it's surprising that a higher GDP leads to a greater amount of happiness. But I'm a little confused on how happiness can be quantitatively measured, as there are no units on the happiness correlation graph except for... well, "happiness". It's be helpful to know exactly how this was measured. Was it a survey, or an observational thing, or interviews with people? Were people of all economic classes considered in this? There are probably a million questions that could've been asked, and I'm curious about a lot of reasons behind super happy countries such as Denmark and how that was accounted for, but for time's sake, I think you did an excellent job of proving your point with lots of sources and good facts, so I'd say this was very much a success!
ReplyDeleteYour post does a very nice job of describing the relationship between economics and happiness, which as you stated may seem simple but is actually quite complex to comprehend. You mentioned that a country's GDP and level of wealth distribution tie into the happiness of the people living in that country, which both make sense in an economic fashion, but you didn't touch quite so much on what other factors influence people's happiness. Although talking about the other factors may have veered slightly off topic, it would have added a basis to compare the economic statistics to. Your graphs and other visuals made the information easier to process, which was helpful.
ReplyDeleteI really like your use of visuals to support your argument. I am curious about how much happiness money brings to people compared to other things, though, and how big of an impact money has on someone's overall happiness. Still, this is a very interesting post and you make a lot of good points. If someone has a lot of money, they will be more likely to be happy because they can afford to buy things they need and want.
ReplyDeleteYour blog post was very interesting to me because I always knew people are happier when they have money to actually live life and do what they want. However, I've also heard money can't buy happiness. I think some other things that should be considered in the correlation between happiness and money would have to be if the person loves the job they do because they can make a ton of money from it but also hate their job at the same time, and also if they have a family that they can gain happiness from. I don't think anybody who is in their right mind can be happy with a ton of money if they are alone and have nobody to share it with. I liked studying the graphs you added into this piece as well because they were very helpful. I think you did a great job!
ReplyDeleteI really liked the topic of this post because it is such a good question that I think our world is split on. I always feel like money cannot buy happiness, but like you stated and researched, it obviously influences happiness. I like how you said that the more money you have, the more choices you are able to make. Those without money can't choose to do things they want which could affect their happiness. I think we all, living in Pewaukee and being pretty well off, are fortunate and take money for granted. Some of us aren't that happy with what we have and we complain a lot. This just goes to show that money doesn't really influence happiness. And same with situations in other, poorer countries. There are videos we have all seen with starving children, but yet they are smiling, happy and playing. So while I feel that research definitely shows that happiness and money are linked somewhat, they don't and shouldn't directly affect one another. It's just the society we have grown to know here in the United States that affects our happiness. Also, I liked the graphs and pictures you provided because they were very insightful. Why do you think people in India and China are less satisfied with life than we are?
ReplyDeleteOverall, this taught me a lot between the difficult correlation between happiness and money and they sometimes are intertwined and other times not. It seems as if there is limit to how much money you spend before you’re no longer gaining any more emotional benefit. Referencing the graph of the happiest countries and their wealth, it shows that once you’ve hit a certain GDP people almost have too much money and their happiness begins to decline. It’s countries like the U.S. that harbor their money instead of distributing it, or spending it for others, that leads to greed and that emotion begins to wear away happiness because people are so focused on keeping the money for themselves, they forgot what it feels like to be charitable.
ReplyDeleteThe topic that you brought up in your blog post was a great topic. Us as classmates can probably relate to money issues in some way. The GDP graphs that you had pasted had also made me understand what you were talking about. And also it gave me a perspective from a more national type of view. Also I find it not very surprising that there is a correlation between the GDP and our states of happiness. As humans we always tend to think happiness is just making money and things like that be it can be changed in many ways. With the the paragraph that you stated, I felt as it was powerful to end it the way you did. Your exactly right you have money and then you can spend the money with your choices that you make. Your reasoning for trade-offs is spot on also. Which is exactly true as much as I like to have a job myself right know there are many different trade-offs that effect me. The first picture that you have on in your post is very well seen in the worlds today it seems like everyone wants to have something. In which they tend to spend all the money that they have, which can lead people to working more because they want the money for something else. Overall you did an outstanding job explaining happiness and the GDP.
DeleteThis blog brings up several interesting points. I am reminded of the documentary we watched last year in English titled “Happy,” which took a look at what contributes to happiness. Among them were economic, societal, and personal freedoms, as you had mentioned in your post. I have always believed that money is not at the root of happiness, but you have very interesting data points to show how it does play a factor in it, such as the graph depicting a higher mean life satisfaction for countries with higher GDP per capita. Ultimately, I think that the balance between money and happiness lies within economic efficiency--trying to meet everyone’s wants while using limited, scarce resources. Going back to the documentary, it seems that people are happiest when they can make the most out of their economic situation, and even if they are not the richest people in the world, they can still find happiness by best utilizing their available resources.
ReplyDeleteThis was a really interesting topic, and it taught me a lot about the differences in opinions on the correlation between happiness and money where sometimes they are related and sometimes they are not. From what I gathered from your research I noticed that once you hit a certain economic standpoint more money won't necessarily make you more happy, because as I was referencing the graph of the happiest countries in the world and their wealth, it shows that once you've hit a certain GDP people who have more money it seems their happiness levels taper off. It as if once you are economically secure having more money won't make you more happy, however if you were in poverty and you earned more money it could increase your happiness levels substantially. I was wondering what your thoughts were on why countries like China and India have much lower GDPs but a considerably higher satisfaction of life compared to the trend? Could it be because they already hit to mark where more money won’t necessarily bring them more happiness because they are economically secure?
ReplyDeleteYour analysis of the many effects of money and economics on happiness was very thorough. Approaching the topic from different angles allowed you to acknowledge the many various factors and, as you said, not infer that the relationship between money and happiness is concrete. The paragraph where you talked about the laissez faire approach does just that, mentioning that societal and personal freedom also play a role in the satisfaction of a nation. Overall, because your argument was not rigid, but rather just an assertion that money and economics have some but not all control over happiness, this was a strong piece.
ReplyDeleteI would say that the most interesting part of the post would be the quantification of how money is associated with happiness, especially how while having a lot of money doesn't always make you happy and not having money most often doesn't make you happy, it is the ability to make choices with more money that inspire happiness. It could be argued that the purest forms of happiness do not lie with those who are incredibly rich, nor with those who have personal happiness but economic stress, but rather those who have enough money to get by the way they want to and also have enough to spend on others. As you said, spending money on others has been shown to increase happiness, and so I think something we could both agree on is that a balance of wealth and philanthropy, even on a small scale, are among the most important ingredients for happiness.
ReplyDeleteI knew that there have been debates about money and happiness, but I never knew that it was so complex. It was interesting how you discussed so many different points of view about the topic. I personally agree the most with the theory that it is not only the money itself that buys happiness, but it is also how you spend it. I also agree that money gives power to people so perhaps that is why they feel happiness. Good job.
ReplyDeleteThis was very interesting. I liked how you argued against your point of view, but I didn’t actually know what you thought until the end, so it might be better to make that a little clearer. I found it interesting when you mentioned the more hours one works, the happier they are, which I can’t see being true. I feel like more work would overwhelm you, instead of making you happy. But, I do believe that more money can make one happier, because they have less to worry about, money wise. Overall, this was very well written. Good job!
ReplyDeleteI really like the topic you chose, and you picked some interesting evidence to back it up. I found the part about how we spend our money affects our happiness very interesting, as well. The fact that working more hours can lead to a person feeling happy is an interesting debate, because like you said, overworking can lead to more stress and unhappiness.I can relate to this because when I am scheduled to work more than usual during the week, I get mad that I have to give up my free time, but once I get a bigger paycheck than usual, I realize that the trade off was worth it. I think the correlation between money and happiness is that when you have a lot of money, you are financially stable, which causes the happiness, and once you have a certain amount of money, you realize that you'll be financially stable for awhile, and that's what causes the happiness level to level off.
ReplyDeleteIt was interesting to read about the topic of happiness and economics because as high school students, a lot of times we do not think about how we spend our money or how happy it makes us. I think the use of all the visuals helped support your argument on just how much happiness people get out of money. It is in fact that most people are happier when they have money due to the fact that they can then buy and have whatever they want. Something interesting that might be effective in this argument is to compare money to other things that make people happy, and to see the results. Overall, this was a strong piece.
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ReplyDeleteOverall I truly still don't believe that money brings us happiness. Looking at your graphs I saw that India had a low GDP per capita. But their ranking of happiness was much greater than the U.S who had over a 40,000 but a low happiness. So sometimes money isn't always the key to happiness. Although sometimes money can make us happy at times.It isn't completely necessary to have to be happy.
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