February 22, 2009
FULL WALLETS, EMPTY SOULS:
Wealth does not always add up to happiness (Jay Hancock, 2/22/09, Baltimore Sun)
A growing body of research suggests that money, if not the root of evil, is not the fount of satisfaction, either. And many of our feelings about money and financial loss are flat-out irrational."There is more to life than just consumption," says Amitava K. Dutt, a professor of economics at the University of Notre Dame who is teaching a course called Consumption and Happiness. "Sometimes when we are forced to consume less, good things can happen, although it's pretty bitter medicine to take."
Three decades ago, researchers discovered that, on average, people in poor countries were pretty much as happy as people in wealthy countries so long as they had shelter, heat and food. Developed nations were richer in pocket than in spirit.
But within each country, richer people reported more satisfaction than poorer people no matter their absolute level of possessions. The key was status, having more stuff than one's neighbor, whether in goats or swimming pools. The unhappy had less than what their peers had or what advertisers suggested was adequate.
More recent investigation has found that the negative emotions that investors feel when losing money are more intense than their pleasure when gaining an equal amount.
Neither of which is rational. Your neighbor's lifestyle, no matter how luxurious, has zero material effect on you. If you weren't over the moon when the 401(k) went up $50,000, maybe you should not need therapy when it crashes by the same amount.
Last month, the New York Times illustrated the tendency to focus on relative wealth. Reporter Peg Tyre profiled a couple in Darien, Conn.
The husband lost a Wall Street job. The family economized by replacing a full-time nanny with an au pair and taking less-expensive vacations. They still resided in an upscale town, belonged to the country club, had paid off their mortgage, and had saved money for the children's college.
Even accounting for setbacks, they lived better than 99 percent of everybody who ever existed. Yet they were stressed and worried.
In the grand scheme, money is less important than other assets anyway, happiness experts say. In the long run, friendship, marriage, education, sex, group memberships, and exercise all promote happiness in ways that mere income and consumption cannot.
The more we learn about the costs of inequality the greater the challenge to the First Way Right.