Impact of Money on Happiness

Published Date: 18 Sep 2017

The love of money, as they say, is the root of all evil. Yet money remains an essential commodity in everyday living. It is a universal need that is pursued one way or the other world over. There are several amenities in life that can mostly only be purchased by money; hence the lack of it can speedily reduce an individual, any individual into distress and a state of depression. Money is acquired by several means; for most people of certain ages, to acquire money means to simply work for it. For others of younger and even older ages, their acquisition of money is largely determined by others, such as parents, guardians in the case of younger people or the government, pension and previous investments in the case of the older generation. All in all, money is an essential part of living. It may not necessarily be the most important aspect in life as will be critically examined later on but it most certainly ranks very high indeed on the list. Some might argue that with enough money or adequate finances, every other aspect of life falls into perspective. Yet it may immediately be counter argued that the term ‘enough money or adequate finances’ is, in itself, a relative one. What constitutes adequate finances, when is a man said to have enough money? Perhaps it is worth mentioning at this juncture the economic theory of supply and demand and vice versa. The more you make, the more you need. Human need is such that can never be fully satisfied. For instance the needs and demands of a toddler differ significantly from that of a teenager as does that of a man in his 20s from that of a family man with children. Is it then possible to quantify one’s overall state of wellbeing by how much wealth the individual has been fortunate enough to acquire? Can money be said to possess the ability of buying or at the very least orchestrating happiness? What, in the first instance, is happiness? While it remains difficult to attribute a specific definition to hhappiness, it is often referred to as the state of well-being characterised by emotions ranging from contentment to intense joy or emotions experienced when in a state of well-being. The opposite of ‘happiness’ would therefore be ‘sadness’ or to be in a sober mood. Happiness is a robust state of mind that has been pursued by mankind since the stone ages and is as old as man himself. Man as a social being has goals and expectations in life. Such goals and expectations are quite naturally based on individual beliefs, societal or cultural norms as well as personal experiences. It is however safe to surmise that whatever a man’s^[1] ambitions, goals, expectations and desires, when these desires and expectations appear to be within easy grasp and ultimately achieved, he will naturally be in a state of well being and experience what is known as happiness. Some of the major contributory factors to happiness include but are by no means limited to the following:

1. Good or optimum state of health
2. Secured and well paid employment
3. Supportive family or friends

As pointed out above however, these factors are based on individual concepts of happiness and the means by which this state of mind can be achieved. From the factors above, it becomes increasingly visible that happiness can be analysed from the economic as well as psychological perspectives. According to economists, it is a standard assumption that happiness – individual utility in the economic vocabulary - depends on income, leisure and sometimes a few other factors. Yet, although mainstream models would predict that higher income leads to greater happiness, most earlier empirical research has been unable to find a sufficiently strong correlation between subjective well-being and per capita income in rich countries to support the standard utility assumption.^[2] In a research carried out in the 90s, it was discovered that even though many, if not all, African countries were classed as under developed societies where poverty assails most of the population, people were still happier than others of more substantial means in countries like the United Kingdom and the United States. In a country like Nigeria for instance, the term ‘depression’ was almost a strange expression for many while others who had heard of the world had never even come close to suffering such a low state of mind. Research on the other hand, shows that quite a significant number of patients in the UK suffer depression which is the exact opposite of happiness or a state of bliss and well being. The pursuit of happiness and all it entails has been a goal shared by people world over more than any other goal in the history of mankind. While economics might be associating the pursuit and ultimate capture, so to speak, of this rather elusive blissful state of mind with the accumulation of wealth and material satisfaction, it has been proven in recent times that this may not very well be the case. In fact, a positive association has been shown to hold only at certain points in time within particular countries and not for the group of high-income countries as a whole.^[3] The usual explanations given for this paradox are either that people compare themselves with their peers and neighbours^[4] or that as incomes increase, so do people’s income aspirations^[5]. Both these factors are assumed to be present already at fairly modest levels of per-capita income. However, one recurring problem with previous studies is that conclusions on the absence of an effect of economic performance on well-being have typically been based on either limited cross-sectional samples which may be contaminated by a strong time-constant cultural component^[6] or on sparse and incomplete longitudinal data.^[7] The unavoidable fact remains that with the accumulation of wealth or any other commodity for that matter, comes more responsibility or need which in turn leads to even more desire for greater accumulation. In that regard, it might be safe to surmise that perhaps wealth or its endless accumulation does not exactly guarantee happiness.^[8] For instance, if a man is said to have achieved his goal and been fortunate, lucky or smart enough to secure a fantastic job and comfortable income, if the economist approach on consumer behaviour is accurate, he should be in a blissful state of mind. However there are other factors which need to be considered to determine a man’s state of mind and this is where the psychological and social researches into happiness comes into play. In support of Duesenberry’s paradox, Kenneth Arrow believes that it offered “one of the most significant contributions of the postwar period to our understanding of economic behaviour”^[9] and that it was to be commended for attempting to link economic theory more directly with psychological motivations and with consumer learning processes.^[10] Some saw Duesenberry's work as attempting to broaden the theoretical economist's horizon.^[11] Others like A. C. Pigou, expressed serious methodological reservations but nonetheless commended the potential significance of the work.^[12] In more recent times, there has been a steadily increasing interest on the part of economists in happiness research. It has been argued that reported subjective well-being is a satisfactory empirical approximation to individual utility and that happiness research is able to contribute important insights for economics. It has also been reported how the economic variables such as income, unemployment and inflation affect happiness as well as how institutional factors, in particular the type of government; democracy or dictatorship and the extent of government decentralisation, systematically influence how satisfied individuals are with their life, the effects and some of the consequences for economic policy and for economic theory. Whereas psychologists and sociologists have been researching the concept of happiness for a very long time, the economist approach to happiness is actually a more recent approach. Early economists and philosophers, ranging from Aristotle, who promulgated that a happy life is a good complete life and concluded that although happiness is good other things are equally good and important; such things as health and wealth, knowledge and friendship, and a good moral character^[13] to Bentham, who formulated that “happiness is the greatest good”^[14] John Stuart Mill, an ardent supporter and disciple of Bentham who agreed that “…. actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness….”^[15] have all incorporated the pursuit of happiness in their work. Yet as economics grew more rigorous and quantitative, more parsimonious definitions of welfare took hold. Utility was taken to depend only on income as mediated by individual choices or preferences within a rational individual’s monetary budget constraint. Even within a more orthodox framework, focusing purely on income can miss key elements of welfare as numerous economists have noted over time. People have different preferences for material and non-material goods. They may choose a lower paying but more personally rewarding job, for example. The study of happiness or subjective well-being is part of a more general move in economics that challenges these narrow assumptions. Richard Easterlin was one of the first modern economists to re-visit the concept of happiness, beginning in the early 1970s.^[16]

In economic researches world over, when people are asked relevant questions about what for them constitutes happiness, the answers are mostly identical. For those who are currently struggling to make ends meet, those who are out of jobs, those who are classified as under priviledged in society by virtue of their meager or no income it would appear that the wide belief is that money can indeed buy happiness. But when probed further and deeper, it emerges that money on its own, may not necessarily bring happiness but mere momentary satisfaction. What money certainly does however is to relief people from their financial burdens. Where a family struggles to pay the rent/mortgage at the end of every month, bills accumulate from lack of adequate finances, holidays are a thing of the past or never experienced. If such a family is transported to a place where they can suddenly afford to consolidate their debts, pay off the mortgage, go on holidays, eat what and when they like, their spirits will certainly be lifted significantly higher than when they had little or nothing to exist on. It is therefore apt to surmise that money would most probably clear debts, reduce or out rightly pay off mortgages, which would certainly be a tremendous source of relief for most people. Money however may not necessarily have the ability to purchase true happiness. The human brain is trained to adapt to situations, good or bad. It is therefore only a matter of time before the new found wealth becomes a ‘given’ and the family is faced with other challenges. Many people, cross-section, agree that acquisition or possession of significantly more money than they have at the moment can calm their day to day frustrations and perhaps distract them from their personal problems, but it cannot make them truly happy. If an individual is basically positive and optimistic, the acquisition of wealth will only enhance that person's life. It is believed that money can bring relief if the lack of it is causing stress (as is the case in the majority). If however, a person is generally neurotic, unhappy and pessimistic, no amount of money will eradicate such pessimism or other unrelated psychological problems the individual deals with on a daily basis. A windfall can also bring problems to people who have no idea how to deal with money. To those who have lived from hand to mouth all their lives, unless they are intelligent about it, there is a tendency to fritter a windfall away. One has to know how to use or invest money wisely, in order to make it work for them. In a survey carried out in England and America on lottery winners it became a clear pattern that people essentially remain who they basically were before winning the lottery. A pessimistic, uninspired individual who wins £1,000,000 in lottery is more likely to be back to exactly the same spot he was in before winning the lottery in less than five years. While a more optimistic, ambitious and level headed individual who wins £500,000 is more likely to go ahead and invest the money in ventures that will guarantee him better income for the foreseeable future. Money or shall we say too much money is itself a catalyst for trouble for those who are not psychologically balanced enough to handle instant wealth.

Economists and psychologists have come together in numerous attempts to untangle the webs of how, why and why-not of money and the general state of well being/welfare. Of particular importance, it would appear, is the aspect of why money is seen by many as unable to set right all that is wrong in their lives and by so doing guarantee them lasting happiness. Why is it that the more money one has, the more one aspires to acquire? In the popular words of an artist ‘..the more money you come across, the more problems you have’^[17] The economics of happiness is an approach to assessing welfare which combines the techniques typically used by economists with those more commonly used by psychologists. It relies on surveys of the reported wellbeing of hundreds of thousands of individuals across countries and continents.^[18] Why is it that when one is finally able to possess those material things that appeared all so important in the absence of money and to basically achieve their dreams it only brings momentary joy? In attempting to answer these seemingly depressing questions, scholars of happiness have arrived at some insights that appear very useful and educational indeed. It has been commonly acknowledged and accepted that money can help find more happiness, so long as one knows just what to expect from it and does not have unrealistic expectations. Splashing out money on luxurious cars or even buying a private jet is not necessarily a means of utilising money to becoming happy. Research suggests that seeking the good life at a store is an expensive exercise in futility.^[19] It is essential to realise and understand where one has been going wrong in order to achieve a blissful state of mind. According to Richard Gelfond, co-chairman and CEO of Imax, being an achiever and rising out of poverty certainly brings happiness. Wealth therefore appears to play a bigger factor in being happy than most would like to admit. In surveys, people consistently give three reasons for their personal happiness: wealth, family and health. Being richer means being able to afford better health, however debatable an argument this is. For a terminally ill patient for instance, perhaps with the notorious HIV virus or the equally formidable cancer; wealth most certainly affords them better treatment and immediate access to the very best specialists in those fields as well as the very best medication. The patients are therefore guaranteed far more comfort in their sickness than the ordinary man on the street who depends on the state or government for his treatment. At the end of the day however, can one honestly assert that the affordability of better health care makes the former patient happier than the latter? Can either be truly happy simply because one has more money than the other? Does it not then depend on the individual’s outlook on their conditions? Would the wealthy not willingly give up their wealth to become healthy again? Strange and surprising as it might sound, it is not uncommon for the poorer man to come to better terms with his condition and find, if not downright happiness, some sort of peace in the terminal medical situation he finds himself than for his richer or wealthier counterpart. Professor Robert Shiller, a Professor of Economics at Yale University, in his argument for the advantages of having money is of the opinion that more money, in all likelihood, guarantees better relationships.^[20] This is open to extensive debate and arguments. The simple question thereafter arises, if money or wealth enables one to find better relationships, how come then that most celebrities, by far the best paid individuals in the world, find it, from time immemorial, practically impossible to be happy in their relationships and marriages? It is common knowledge that marriages and relationships in Hollywood or any other star studded part of the world, for that matter, are more often than not, a fleeting experience for the parties involved. Talking about celebrities and their wealth, if money does indeed procure happiness, why is it that the majority of celebrities have had at one time or the other alcohol problems, drug addiction issues, depression, suicidal tendencies and even in albeit admittedly fewer cases, death by over dose of one dangerous substance or the other? Surely if money brings happiness they, the celebrities with more money than most should be the happiest on earth. This is however evidently not the case. It stands to reason therefore that while money promotes a better sense of well being in some, better sense of achievement in others, contentment, the satisfaction that comes with the ability and affordability of luxury items o comfort, and even perhaps momentary happiness and joy in others, it is not the mere happenstance of such money or wealth in one’s life that procures happiness or any true sense of joy for the consumer. Tim Webber of the BBC’s Business Edition, in one of his editorials, ‘Why money doesn’t buy happiness’^[21] quotes an African artist, Youssou N’Dour as follows… “… Forget money entirely”. Youssou N'Dour is reported as going on to say that there is plenty of happiness in Senegal, even though its people are not wealthy at all. "Just see the joy that music and entertainment can bring to the boys in the poorest parts of Dakar." says Mr N'Dour. But he concedes that one thing was even better than the music and other elements that promote happiness in Senegal; the moment when Senegal beat France in the 2002 Football World Cup.^[22] Catherine Sanderson, a psychology professor at Amherst College expresses her opinion on the debate of economics approach to happiness by saying that human beings are never satisfied. It is standard consumer behavioural pattern. The more we have, the more we are likely to want. It is the inherent nature of man. Ms. Sanderson authoritatively asserts that we always think just that little bit more money will be the answer to all our problems and bring ultimate satisfaction.^[23] Indeed, it would appear that the more money one makes, the more one wants or continue to aspire to make. The more one has the less effective it is at bringing one joy. Little wonder it is therefore that this seeming paradox has long bedeviled economists. Another reputable scholar, Professor Dan Gilbert, psychology professor at Harvard University opines that “Once you get basic human needs met, a lot more money doesn't make a lot more happiness,"^[24]. Regrettably, there is no easy way out of being unhappy; money is no short cut to happiness for a depressed person. Overcoming one’s emotions and teaching one’s self to be happy can be more difficult that earning more money or winning the lottery as explained above. In fact, according to Matthew Herper,^[25] if a person is handed $10, the pleasure centres of his brain lights up as if he were given food, sex or drugs. But that initial rush does not translate into long-term pleasure for most people. Surveys have found virtually the same level of happiness between the very rich individuals on the Forbes 400 and the Maasai herdsman of East Africa. Lottery winners return to their previous level of happiness after five years. Increases in income just do not seem to make people happier and most negative life experiences likewise have only a small impact on long-term satisfaction.^[26] Probably via media exposure or even in real life, at some point in time or another extremely rich, wealthy and famous people have been seen to be unhappier than one would expect them to be, given the amount of material benefits that they have. It is surprising that a large number of wealthy people do not seem to experience the happiness that one would expect goes with so much money and riches. A study conducted by the University of Illinois indicated that more than 30 percent of the richest people in America were not as happy as the person who earned a modest income.^[27] It is worth mentioning that more often than not, most of the sulking, miserable people one comes across in everyday life are rich people. This is obviously not due to the fact that these wealthy people are unable to afford three square meals, pay the mortgage, go on holiday or afford whatever luxurious item catches their fancy. Their misery is as a result of the fact that people generally seem to have more expectations from money. Money cannot buy anyone everything but in the minds of people who give up everything for money, it is difficult to accept, having acquired the wealth of their goal that they strove so hard to achieve partial success. This is not to negate the positive effects money has in the society and on one’s well being in particular. Yes, money most certainly is important to help one live life to the fullest and be able to experience the good things in life, not necessarily criminally expensive activities but such holidays, clothes, jewelries, and cars that become seemingly unreachable when one is void of the purchasing means. But at the same time, an increase in its inflow does not bring proportional happiness with it. As the age old saying goes…the grass will always (appear to) look greener on the other side. If ‘A’s’ income increases by $20,000, he is happy until he finds out his next door, perhaps less qualified neighbour’s income has increased by $60,000 and that the neighbour can now afford the car of A’s dreams without breaking the bank.

The economics of happiness does not purport to replace income-based measures of welfare, but instead to complement them with broader measures of well-being. These measures are based on the results of large-scale surveys, across countries and over time, of hundreds of thousands of individuals who are asked to assess their own welfare. The surveys provide information about the importance of a range of factors which affect wellbeing, including income but also others such as health, marital and employment status, and civic trust. The approach, which relies on expressed preferences rather than on revealed choices, is particularly well suited to answering questions in areas where a revealed preferences approach provides limited information. Indeed, it often uncovers discrepancies between expressed and revealed preferences. The latter cannot fully gauge the welfare effects of particular policies or institutional arrangements which individuals are powerless to change. Examples of these include the welfare effects of inequality, environmental degradation, and macroeconomic policies such as inflation and unemployment. In a recent happiness survey at the University of Colorado, it was established that actual involvement in doing things can bring more joy than having things. Gilovich and Leaf Van Boven, both of the University of Colorado conducted this survey by asking students what makes them happy, when and where. The students were also asked to ultimately decide if they were at the happiest when they were doing something as against when they were buying something. It emerged that man’s preoccupation with stuff obscures an important truth: that the things that do not last create the most lasting happiness. One reason may be that experiences tend to blossom and not diminish as they are recalled. "In your memory, you're free to embellish and elaborate,"^[28] Gilovich admonished the students. “Your trip to Mexico may have been an endless parade of hassles punctuated by a few exquisite moments. But looking back on it, your brain can edit out the surly cabdrivers, remembering only the glorious sunsets. So next time you think that arranging a vacation is more trouble than it's worth--or a cost you'd rather not shoulder--factor in the delayed impact.”^[29]

Economists have found out in the United States for instance that an increase in income does not necessarily automatically yield an equal increase in one’s level of happiness. In one of the several surveys conducted, it was discovered that going from earning less than $20,000 a year to making more than $50,000 admittedly makes the recipient twice as likely to be happy, yet the payoff for then surpassing $90,000 is slight. And while the rich are happier than the poor, the enormous rise in living standards over the past 50 years has not made Americans happier.^[30] Why? David Futrelle gave three reasons for this. According to him, we overestimate how much pleasure there is to be derived from having more. Humans are adaptable creatures, which has been a plus during assorted ice ages, plagues and wars. But, he argues, that is also why people are never all that satisfied for long when good fortune comes their way. While earning more makes people happy in the short term, we quickly adjust to the new wealth, status and everything that comes with it. Granted, there is bound to be a certain thrill and sense of achievement which comes with the first shiny and exotic car one buys from the increased income or new found wealth, splashing out on huge screen televisions and even spending money on family. But it is not long before all these become ‘normal’ and the consumer begins to want even more. It is when this insatiable appetite for more yields little or no result that man begins again to experience dissatisfaction and many people find themselves descending back to the very initial position they were in the first place; reverting to a state of running in place that economists call the ‘hedonic treadmill.’^[31] The hedonic treadmill theory explains the popularly held observation that rich people are no happier than poor people, and that those with severe money problems are sometimes quite happy. The theory supports the argument that money does not buy happiness and that the pursuit of money as a way to reach this goal is futile. Good and bad fortunes may temporarily affect how happy a person is,but most people will end up back at their normal level of happiness.^[32]Buttressing Mr. Yarrow’s point on the same subject, John Lanchester also observed that following studies of data from all over the world, it is clear that, instead of getting happier as they become better off, people get stuck in a place where their expectations rise at the same pace as their incomes and the happiness they seek remains constantly just out of reach.^[33] Reference is here being made yet again to the hedonistic treadmill. Daniel Kahneman, the one time (2003) winner of Nobel Prize for economics is best known for his work on hedonic psychology.^[34] Kahneman opines that suddenly the big question is being asked by those who spent their lives on making and measuring money: what indeed is it all for when people are no happier than they were.^[35] Be all these as they may, the fact remains undisputable that money does matter in various ways. In England, for instance, people who are earning less than or around £10,000 per annum are measurably, permanently happier when paid more. It matters when people of any income feel a drop from what they have become accustomed to. But above all, money makes people unhappy when they compare their own income with others'.^[36] Richer people are happier not by the simple virtue of the absolute size of their wealth, but because they have more than other people. But the wider the wealth gap, the worse it harms the rest. Rivalry in income makes those left behind more miserable that it confers extra happiness on the winners. This insatiable appetite for more will keep driving a man back to the car dealership or to the electronic gadget stores in search of better and bigger items for more satisfaction. According to Gilbert^[37] however, what is being mistaken for happiness and satisfaction at buying a new ‘toy’ is simply the feeling that comes on the day one actually buys the item in question. Once the initial razzmatazz fades away and the new Ferrari or even private jet no longer races the heart, man tends to draw the wrong conclusions. Instead of questioning the notion or erroneous, if honest, belief that happiness can be bought at the dealership, one often begins to question their choice of car. ‘Perhaps I would feel better with a Ford Mustang?’ This thought alone sparks a fresh burst of enthusiasm and hope for more happiness which simply leads to yet more disappointment once the new car is purchased and the racing heart also inevitably settles back to normal after a few days or weeks. Again this is what economists refer to as typical consumer behaviour. More often than not, this dissatisfaction with the material things that come with wealth is borne out of envy for others around us. Quite naturally, more money can and does lead to more stress. The big salary pulled in from a high-paying job may not necessarily procure much in the way of happiness, at least not much more than the individual is accustomed to. Some have even gone as far as saying if one is unable to find happiness in their current situation on a low income job; it is unlikely that such persons will ever be happy even in a high paying job. The whole idea is to cut one’s coat according to one’s size to afford flexibility, satisfaction and happiness because however low one’s income is, there are always people below the hierarchy of earnings. Just as however much one earns, there will always be people on the upper rung of the ladder of success. What more money can do however is to buy one a (more) spacious house in the suburbs. What immediately becomes a problem is the long trip to and from work, taking the children (if there are any) to school and commuting to social activities from the suburbs or the countryside. At the end of the day, it is only natural that the everyday commute, even if permissible initially, becomes a problem and however much one loves their job, becomes a burden and wears down the individual. As in the case of lack of continued satisfaction with ones purchases, comparison between the family next door who drives no more than 20 miles to get to work will constantly binge on the mind and lead to even more dissatisfaction with the commuting. Happiness at buying the spacious house in the country and coming home to a fabulous garden and the fantastic view begins to dwindle.

It is only natural that some economists and the ordinary man on the street simply assume that higher income as a matter of certainty leads to higher happiness, as it probably well should. After all a higher income expands one’s abilities and capabilities as well as a nation’s opportunity set in the sense of its affordability of goods and services for the peoples’ consumption. One might therefore be tempted to conclude that income and happiness go hand in hand when and where the two are accurately measured. Consequently, economics textbooks do not even make an effort to provide a reason, but simply state that utility U is raised by income Y: U = U(Y), with U’>O.^[38] However there are some economists who beg to disagree with this view of happiness or utility rising in commensuration with salary/income increase. According to John Kenneth Galbraith, there is little or no use in increasing private income while the public sector is starving.^[39] Also, one of the first economists to seriously study the data on happiness, Richard Easterlin, on the issue of whether raising the income of all will lead to the happiness of all simply concluded that “money does not buy happiness”.^[40] His argument for this conclusion was that the material norms on which judgments of well-being are based increase in the same proportion as the actual income of the society. He continued that these conclusions were suggested by data on reported happiness, material norms, and income collected in surveys in a number of countries over the past half century.^[41] Another author of repute who asserts that the most cherished of values cannot be bought on markets is Tibor Scitovsky. He recalls how back in the 18^th century, the disciplines of economics and psychology were quick to proclaim Jeremy Bentham their ancestor and elaborated on his theory of the second cup of coffee, which he shrewdly claimed was always less satisfactory or enjoyable than the first. In later years, economists would come to refer to this as the Law of Diminishing Marginal Utility.^[42] Scitovsky rather simplifies the matter by explaining that at the core of economics is the market; where one buys from the other what he needs in exchange for what the seller wants. Evidently, one prefers what he gets to what he gives in return. The act of this exchange, according to him, is the source and proof of all economic gain and explains the economists’ preoccupation with the same. This preoccupation with the act of exchange has propelled the economist to promulgate that the higher one’s income the more one can spend and the more one can spend, the more satisfied one should be.^[43] He however did not agree with this theory as exhibited in his earlier quotation of Jeremy Bentham’s Law of Diminishing Marginal Utility. Still on reputable authors who are of the contrary opinion that increase per capita income is relative to an equal rise in happiness, Robert Frank reiterates that ever increasing income and consumption does not bring higher happiness.^[44]

In Happiness and Economics also by Bruno S. Frey and Alois Stutzer, the economical as well as psychological factors contributing to one’s subjective well-being otherwise known as happiness were critically examined. It emerged from their combined effort on the book that one factor can not be held solitarily responsible for the continued happiness or even increased state of well being of an individual. Some of the factors examined include: demographics i.e where a man lives and to a reasonable extent the system of government that obtains in his society. A man’s marital status as well as employment status was also seen as relevant contributory factors. For the purpose of this debate, the scenarios below examine different individual’s levels of happiness at different points in their lives. Their sense of subjective well-being has been measured as they dropped or rose owing to changes in their lives:

Take for instance Mr. X; a low income earner who was relatively happy; in fact on a scale of 1 to 10, one could say X was an 8. However on securing a better job and earning up to twice his initial salary, X’s scale rose significantly to 9.5. In his case, one may very well argue that income does affect one’s level of happiness. However, a few months later, in an unfortunate twist of events, X lost his new job owing to the current financial crisis and became unemployed. His level of happiness dwindled drastically from 9.5 way below its initial scale of 8 to 6.5. Again, it is arguable that loss of income or lack of money does affect a man’s state of well being just as it has been argued that inflation also does. In the second scenario, Ms. A is a Masters Degree holder with a high paying job of $75,000 per annum. She lives in a beautiful part of town and has a country house for holidays. She is however single and has very little to call family or close friends. On the scale, Ms. A’s level of happiness is at 6, surprisingly lower than that of her counterpart subject matter, Mr. X even after he lost his job. Ms. A admits that with a partner and close friends, she might very well hit a scale of 9. This is a very significant difference indeed. In yet another scenario, Miss. Y is a pensioner who has had a very good life by all standards and even now makes a fairly handsome income from her pension. Her scale of well being was recorded in January as 9.5. Miss. Y is content and happy in the fact that she is making a very comfortable, if not out rightly wealthy income, she is surrounded by her family and grandchildren and has managed, over the years, to accumulate quite a number of close friends who she enjoys a healthy social life with. By mid July however, Miss. Y’s scale has taken an alarming nose dive to 4.5. The reason for this twist of fate is the fact that Miss. Y has recently been diagnosed as having a rapidly spreading and inoperable tumor. Last on the chart is Mr. O who is a celebrity with immense wealth and very lavish life style. Yet he derives very little or no lasting satisfaction or happiness from his purchases. According to him, whatever gadget he acquires today soon becomes practically obsolete in this fast paced computer age, mandating him to go out and purchase yet another item. It is again bringing us back to the hedonic treadmill theory of economics; running on the spot. At any given time, his level of happiness on a scale of 1 to 10 is, as constant as constant goes, a 7.

It is also worth looking into economic surveys and researches carried out in different countries over certain periods of time in an attempt to compare their income rates, growths and how commensurate it is to their level of happiness. In an abstract paper he produced in December 2006 Prof. Karlheinz Ruckriegel was of the opinion that happiness research is based on the concept that human beings strive for happiness, and that their principal aim is happiness, or satisfaction, which reaches far beyond income. He went further to point out that the pursuit of happiness is so important that it is even a right within the American Constitution to pursue happiness.^[45] However, he concluded that although the past 50 years have seen an unequalled economic growth in Western countries, studies on happiness show that the evolution of life satisfaction or indeed the sense of being happy over the same period does not match that growth. The figure reproduced below emphasises Prof. Ruckriegel’s statement as it shows findings for the United States which according to Professor Lord Richard Layard, the director of CEP’s research programme on well-being, can be transferred to most European countries and Japan. Figure 1.1 is based on a period of research spanning from 1945 to 2000:

^[46]

The figure shows a rise in income from the region of 20.5 in 1945 (shortly after the Second World War) to a significant high of 80 in 2000. Yet the level of happiness remains resolutely more or less the same. The level of well being according to this Figure actually fluctuates rather unpredictably but in the most part remains the same and never above 40%. This is by no means commensurate to the level of income. The question therefore arises yet again: if money can buy happiness or rise in income can increase satisfaction as economics predicts, why then are people not happier when they become wealthier? In an attempt to answer this question, Professor Ruckriegel subscribes to the school of thought that although money does help, it takes more than just money to make a man happy. Other factors he holds responsible for promoting a happy life include:^[47]

1. Family relationships
2. Job satisfaction
3. Social Environment
4. Health
5. Personal Freedom
6. Life philosophy (Religion)

Financial situation or income of course remains a vital factor as well. In retrospect, this is not unlike the conclusion arrived at by the majority of economists quoted above. It would appear therefore that happiness is not a commodity simply to be purchased by money, hence its continued elusiveness even in the face of immense wealth. In yet another research recorded in Carol Graham’s book^[48] the differences in per capita income of residents of various international countries ranging from the United States, United Kingdom to African countries such as Nigeria and back again to Australia was examined. The research showed that people in richer countries were indeed happier than those in poor countries. The equivalent sense of subjective well being of such residents was also examined. According to Graham, macro-econometric happiness equations have the standard form: Wit = α + βxit + εit,^[49] where W is the reported well-being of individual i at time t, X is a vector of known variables including socio-demographic and socioeconomic characteristics. Whereas in the majority of economic researches into happiness, most of the studies find that within the countries under research or study, wealthier people are, on average, happier than poor ones,^[50] in studies cutting across countries however, very little, if any, relationship between increases in per capita income and average happiness levels are observed.^[51] Happiness does seem to rise with income up to a certain level; a level where knowledge of affordability brings about a certain level of satisfaction but not beyond. This proves yet again that there are other factors contributing to an individual’s level of happiness, the collective happiness of a group of people in a society or a country at large.

Having looked at diverse views on happiness from the economist perspective as well as the sociological and psychological perspectives, it begins to emerge that perhaps one school of thought is not so far removed from the other. While some are of the opinion that money does make people happy or happier, others are of the opinion that while money admittedly makes people happy for a certain period of time, usually the initial stage before the human brain gets accustomed to the change, there are more factors that come into vital effect where lasting happiness or subjective well being of a man or a nation is concerned. Ed Diener, the University of Illinois researcher who surveyed the Forbes 400 and the Maasai of East Africa acknowledges that there may be at least one important relationship between money and happiness after all. He is also of the opinion that happy people tend to have higher incomes later on in their lives. Hence, while money may not help make people happy, being happy may help them make more money. This view is expressed in the work he co-authored with Oishi on culture and well being, which expresses their view that while European Americans are more likely to select tasks they are good at for more job satisfaction, their Asians counterparts are more likely to emphasise mastering even tasks at which they are not proficient to generate more income. This, according to them results in European Americans over time being more likely to enjoy tasks because they are more likely to select activities at which they excel, hence making them happier than the Asians.^[52] On the subject of wealthier countries and the level of happiness of the residents of such countries, the Easterlin paradox is worth revisiting. Going back memory lane, one might remember that Japan, better than any other country in the world had the best economic boom following the Second World War. In the aftermath of World War II, the Japanese economy went through one of the greatest booms the world has ever known. From 1950 to 1970, it was believed that the country’s economic output per person grew more than sevenfold. Japan, in just a few decades, remade itself from a war-torn country into one of the richest nations on earth. Yet, strangely, Japanese citizens did not seem to become any more satisfied with their lives than they previously were. According to one poll, the percentage of people who gave the most positive possible answers about their life satisfaction actually fell from the late 1950s to the early ’70s. They were richer but apparently no happier. This can again be related to Diener’s contribution to the research of happiness when he promulgated that over time there is a tendency for people to use the same types of information in judging satisfaction with life, and therefore life satisfaction tends to be relatively stable in the short term, but is somewhat less stable in the long term due to systematic and sometimes unanticipated changes that may occur in life conditions such as widowhood, inflation, economic recession, sickness or unemployment. The Japanese economic boom and the lack of equivalent rise in the peoples’ well being became the most famous example of the Easterlin paradox.^[53] This paradox was based partly on the findings of a survey conducted in the United States of America in the 1960s by a social psychologist of repute, Hadley Cantril, who carried out an intensive survey in fourteen countries worldwide, ranging from the rich and poor, to capitalist and communist. The difference between Cantril’s survey and others of the same purpose was the fact that rather than present the subjects of his survey with his own prepared and tailor made questions which invited expected answers, Cantril reportedly asked open-ended questions about what people want out of life and what they felt would be necessary to make their lives completely happy. Yet, despite the enormous socio-economic and cultural disparities among the countries, responses to these questions were strikingly similar. In every country, material circumstances, especially level of living, are mentioned most often. Also deemed important were family concerns such as a happy family life as well as concerns about one’s personal or family health. Following thereafter and of about equal importance, came matters relating to one’s work (interesting job/and job satisfaction) and personal character (emotional stability, personal worth, self-discipline, etc.). Concerns about broad international or domestic issues, such as war, political or civil liberty, and social equality, were rarely mentioned. Abrupt changes in these latter circumstances do affect people’s sense of well-being at the time they occur; a recent typical example will be the war on Iraq and the impact it has had on not only the people of Iraq but also families, friends and well-wishers of the troops deployed to Iraq, Americans, Britons and many more people world over affected directly or indirectly by the war either economically or otherwise. Yet, it has been discovered over time that mainly the things that occupy most people’s everyday lives, and are somewhat within their control, that are typically in the forefront of personal concerns. Based on the results of Cantril’s survey, in 1974, Richard Easterlin, then an economist at the University of Pennsylvania, published a study^[54] in which he argued that economic growth did not necessarily lead to more satisfaction. He, not unlike some other authorities already cited above, was of the opinion that although more money might bring a sense of relief from certain hardships, the idea that void of every other contributory factor, money makes a person happier is nothing but misleading and erroneous.^[55] He argued that accumulating survey evidence indicated that contrary to set point theory and the assumptions of economic theorists, life events such as marriage, divorce, and serious disability or diseases do have lasting effects on happiness, hence it will be fallacious to argue or promote the notion that the more money people make, the happier they are.^[56] Sharing this view in their joint work, Happiness and Economics, Bruno S. Frey and Alois Stutzer also expressed their opinions and findings that indeed unemployment and inflation nurture, to a rather significant extent, unhappiness. Their most striking revelation, however, is that the more developed the democratic institutions and the degree of local autonomy, the more satisfied people are with their lives. It has also been found that people in poor countries, quite naturally, become happier once they can afford basic necessities. Beyond that however, further gains simply seem to reset the bar (hedonic treadmill).^[57] In other words, owning a BMW X5 is no sure guarantee to being happier because shortly thereafter the BMW X6 becomes available on the market and more desirable, resetting the bar in the process. This is typical consumer behaviour in most, if not all, men. Relative income; how much one makes when compared with others around matter far more than absolute income in Richard Layard’s opinion. In his exact words, “people are concerned about their relative income and not simply about its absolute level. They want to keep up with the Joneses or if possible to outdo them.”^[58] The inability to stay satisfied is arguably one of the key reasons why man may find absolute or complete happiness for ever elusive. The fact that a man can afford his basic and essential needs, meet basic and essential expectations and not have to worry about mere survival has not stopped him from trudging on endlessly on the hedonic treadmill. While such factors as rising income quite admittedly increase personal happiness only minimally and momentarily, institutions that facilitate more individual involvement in politics have a substantial effect. This rings particularly true for countries such as the United States, where disillusionment with politics seems to be on the rise.^[59] Easterlin’s paradox has however been challenged in more recent times as not entirely accurate. It has been argued by two American economists that money does bring happiness even if it does not necessarily guarantee happiness. In their joint work, Betsey Stevenson and Justin Wolfers both of the University of Pennsylvania, point out that in over three decades since Mr. Easterlin published his paper, an explosion of public opinion surveys has allowed for a better look at the question. ^[60] “The central message,” Ms. Stevenson argues, “is that income does matter.”^[61] They based their argument on Gallup polls done around the world as exhibited Figure 2 below, which clearly shows that life satisfaction is highest in richest countries. The two economists go as far as asserting that absolute income seems to matter more than relative income. In the United States, about 90 percent of people in households making at least $250,000 a year called themselves “very happy” in a recent Gallup Poll. In households with income below $30,000, only 42 percent of people gave that answer. But the international polling data suggests that the under-$30,000 crowd might not be happier if they lived in a poorer country.

^[62]

Finally, while one is propelled towards agreeing that money does bring immense relief and frees up the individual’s preoccupation with the how, where and when to make money and the illusion that by so doing he may be happier, the availability of money or wealth also frees up people’s time to concentrate on other important parts and aspects of life without which it has been established over the years that happiness might just remain a fleeting experience to man; now you see me now you don’t. One can not trivialise the importance of family and friends or relationships in the pursuit of happiness. One of the secrets of happiness would appear to be none other than people themselves. Innumerable studies suggest that having friends makes a lot of difference in how one copes with the ever changing aspects of life. Large-scale surveys by the University of Chicago's National Opinion Research Center (NORC), for example, find that those with five or more close friends are 50% more likely to describe themselves as ‘very happy’ than those with nil to smaller social circles. Compared with the powers and effects of human connection on happiness, the power of money significantly reduces way below the level ascribed to it by some economists and even psychologists. Even more important to one’s happiness than friendship or a healthy social circle is one’s relationship with the succinctly named ‘better half’ or the ‘significant other.’ People in happy, stable, committed relationships have been found to be far happier than those who are either single or in failed, unproductive abusive and unsatisfactory relationships. Among those surveyed by NORC from the 1970s through the 1990s, close to 40% of married couples said they were ‘very happy’. Divorce or widowhood brings misery to all parties concerned just as failed marriages can be just as devastating where both parties remain stubbornly oblivious to the fact that their union has hit the rocks. While I am more inclined to agree with the theory that money does indeed bring some level of satisfaction and in its own way, happiness to an individual, like many others cited above, I am much more in support of the theory that happiness does not depend solely on per capita income or a country’s GDP. I am emboldened to actually go a step further and say that money or the relentless pursuit of the same is more often than not responsible for a glaring drop in happiness. I am more of the school of thought that believes in other major factors contributing to happiness; factors such as family relationships, a significant other, good health, healthy and moderate social life amongst others. Regrettably, while chasing the erroneously held belief that money or higher income brings more happiness, many people neglect these factors that when put together are terribly essential ingredients in promoting the sense of well being in any individual. Take for instance a happy couple who in pursuit of more money take for granted the most vital contributory factor to their happiness- their togetherness and happy relationship- and decide for one party to accept a job which promises much higher income but takes him or her hundreds of miles away from home. The time they spend together is reduced from probably 80% to as little as 20%. While there might admittedly be temporary and instant gratification from what the higher income affords the couple, over time, their level of happiness could very well drop way below its initial scale prior to their separation in the quest for more money. Like Easterlin, one may very well ask the question, “Could we make our lives happier?”^[63] Based on the arguments for and against hereinabove appearing, I am confident that His response to this rhetorical question in the affirmative remains relevant then as it is now even nearly four decades on. Easterlin argued then as I am inclined to do now that most people could increase their happiness by devoting less time to making money, and more to non-pecuniary goals such as family life and health.^[64] Widening the horizon somewhat and looking into whether people in richer countries are happier than those in poor countries, I will maintain that happiness and a state of well being remains a relative term. It is indeed what one chooses to make of it. Even though some of the surveys and researches referred to have established evidence that people in richer countries are happier, why is it then that people in richer countries have the higher rate of depression, suicides, dependence on alcohol and drugs for recreation? Granted, different institutions govern the political and social lives of people in these different countries and this is also vital to their level of happiness.^[65] Hence the people in a democratic state like America are bound to be happier than those under the brutal leadership of a dictator in another country where freedom in any aspect of their lives is a myth. At the end of the day however, happiness, to a very large extent depends on what people place of their list of priorities. Contentment can not be bought, just as a grumpy attitude cannot be traded. In the well put words of Nathaniel Hawthorne, United States writer of novels and short stories mostly on moral themes (1804-1864), ‘happiness is as a butterfly, which, when pursued, is always beyond our grasp, but which, if you will sit down quietly, may alight upon you’^[66] Similarly, George Loewenstein, contributing to the work of Isabelle Brocas and Juan D. Carillo^[67] is of the opinion that it is possible to overestimate the importance of happiness. According to him, part of the meaning of life is to have highs and lows. A life constantly happy, he opines, is not a good life.^[68] Finally, just as it would be ill informed to conclude that economic growth or money can buy or guarantee happiness, it will be equally erroneous to negate the effect of affluence in an individual’s life, a home, a family, a community or in a country. The fact remains that economic growth does not just make countries richer in superficially materialistic ways, it also means that such countries can also pay for investments in scientific research that may lead to longer, healthier lives, better management and hopefully eventual cure for terminal diseases such as cancer and the HIV virus, and provide assistance to less fortunate countries (e.g. the G8). On a personal or individualistic level, higher income or more money also means more opportunities to travel and spend time with friends and relatives not seen in years or places one has never visited. Becoming richer means one can choose to work less and decide to spend more quality time with family and friends or simply in pursuit of other aspects of life other than the relentless race to acquire more and more money. The underlying question therefore is when, if ever, does one become wealthy enough? The simple and immediate answer is that one is never wealthy enough due to the fact that the only constant thing in life is change. Divorce, inflation, significant change in institutions and government policies (tax increase), unemployment, illness and of course economic recession of significant proportions and repercussions such as the on going one in the United Kingdom, United States and a few other countries remain just a few of such changes in life. The advice, in my humble opinion, therefore remains the age long words of wisdom to be content and happy with what one has, remain ambitious and productive and spend time on other things apart from money, which brings joy and happiness or a general sense of pleasure. Ending with the very words that started this work, it is worth remembering that the love of money is indeed the root of all evil.

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