Money may not buy love, but it can buy happiness.

Betsey Stevenson and Justin Wolfers have a new paper out that debunks the Easterlin Paradox. It’s a classic Stevenson-Wolfers style “throw all the data we can find at the problem” paper, and it concludes that (a) rich people are happier than poor people; (b) richer countries are happier than poorer countries; and (c) as countries get richer, their people become happier. Over the next few days, Justin is blogging about the paper at Freakonomics – his first post is here.

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12 Responses to Money may not buy love, but it can buy happiness.

  1. Patrick says:

    The lede would presumably be that they find that the evidence is consistent with absolute wealth being
    a) important as such, and
    b) more important than relative wealth.

    If that is confirmed by other studies, Hamilton et al can just about go shut up for ever (I already think they should, of course!).

  2. dk.au says:

    Hypothesis: Wealth brings happiness

    Testing:
    Ask lots of people the same question, eg: “Taking all things together, would you say you are: very happy; quite happy; not very happy; not at all happy.”

    Theory:
    Uniformity of meaning of term ‘happiness’ or ‘life satisfcation’ if you like across all respondents (note that the respondents don’t get a chance to interpret the terms, but by the researchers sure take a good crack at it). You might say this is a theory of a ‘hermeneutically sanitized’ populace.

    Conclusion:
    The onus of the researchers is to show that this idea of happiness does not just reproduce or, ‘perform’ if you like, the very idea that subject wellbeing as they’ve defined it correlates to happiness. I don’t see how interchanging between the terms ‘life satisfaction’ or ‘happiness’ escapes this problem of circularity.

  3. The strength of any research finding is always related to the quality of the data and the methods used to obtain the data. I’d like to know more about how happiness was measured. Could someone point me to where I could assess the data?

  4. Andrew Leigh says:

    Trevor, if you click on “new paper” in my posting, it will bring up the paper.

  5. Thanks Andrew, I worked that out after my comment. Appreciated the post.

  6. Aussie Equitist says:

    I wonder whether these researchers have ever travelled to any semi-remote subsistence-based villages of, say, South America, Africa or Asia?

    Some of those peoples really know how to enjoy life – regardless of day to the day-to-day hardships and natural challenges!

  7. Brendan says:

    This was actually the topic of an essay question in the 2006 Yr 12 VCE English Exam: http://www.vcaa.vic.edu.au/vce/studies/english/pastexams/2006english-w-cpr.pdf

  8. christine says:

    I’m sorry, but Stevenson-Wolfers have a classic style? ALREADY? Surely they should have to wait a couple more years for that?

  9. Patrick says:

    Some of those peoples really know how to enjoy life – regardless of day to the day-to-day hardships and natural challenges!

    Well why don’t you go and learn from them then?

    You really are bringing the weirdos out of the woodwork lately Andrew!

  10. Andrew Leigh says:

    Some of those peoples really know how to enjoy life – regardless of day to the day-to-day hardships and natural challenges!

    Well why don’t you go and learn from them then?

    Perhaps a slightly more decorus way of making Patrick’s point would be to say that migration patterns seem to support the hypothesis that people in richer countries are happier.

  11. Verdurous says:

    Andrew:

    re: “Perhaps a slightly more decorus way of making Patrick’s point would be to say that migration patterns seem to support the hypothesis that people in richer countries are happier.”

    Haven’t you ever chased the wrong goals (perhaps persuaded by advertising or false perceptions) and then realised it was a mistake. Comes back to rationality and whether all choices are free or are in part the consequences of other forces and positive feedbacks e.g. brain-drain phenomenon.

    Is it possible that it is the existence of extreme wealth, poverty traps and “wealth pumps” (e.g. debt from interest-bearing loans) that fosters the existence of extreme poverty. Perhaps the flip side to the lucky, happy, rich is the existence of masses of relatively invisible, hungry millions and a dangerously stressed planet.

    sincererly – another “weirdo from out of the woodwork”.

  12. Winton Bates says:

    The point that some people commenting seem to have missed is that Easterlin thought he had found a paradox. Incomes were rising, but people didn’t seem to be becoming happier. He also thought that the data didn’t support the belief that people in wealthy countries were happier on average than people in poor countries.
    A lot of economists responded that they didn’t believe the survey data. The Stevensen/ Wolfers paper now suggests that there isn’t anything wrong with the data. There is just not much of a paradox if you include data for enough countries and do the analysis properly.
    So, now we have another group of people (particularly on the Freakonomics blog) saying that there must be something wrong with the data. The wheel has turned full circle.

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