Money and Happiness

Way back on March 12th, my very first post was on money and happiness. Now The Economist has a very good piece discussing the same thing.

Here lies a paradox: an individual who becomes richer becomes happier; but when society as a whole grows richer, nobody seems any more content.

In recent years the study of "happiness"-as opposed to more conventional economic measures, such as GDP per head-has attracted increased attention from economists. In a series of lectures* earlier this year, Richard Layard, an economics professor at the London School of Economics, reviewed the various evidence from psychology, sociology and his own discipline to try to solve this paradox. One explanation is "habituation": people adjust quickly to changes in living standards. So although improvements make them happier for a while, the effect fades rapidly. For instance, 30 years ago central heating was considered a luxury; today it is viewed as essential.

I think this is an important point that is never addressed in politics today. In my opinion, the "average Joe" won't really be happy until the gap between he and the rich is very small. No one points out that even the "poor" in America have a better standard of living than most people in the world. The "poor" here have cars, cell phones, stereos, televisions, etc., but they complain because they aren't satisfied. They want to be in the upper echelons of wealth.

It almost supports the idea that we should treat citizens like we treat children. We make children do certain things because we know better than they do what is best for them. Perhaps a nanny state is what we need. Most people seem incapable of maximizing their own long-term happiness, so the government should do that for them. Think about it, people want to be skinny, but they still eat junk food. They want to be smarter, but they would rather watch tv than read or take a class or whatever. They want to make more money but they hope to do so by winning the lottery, not by earning it. But here's the problem with that – people also are happiest when they are free to make their own decisions.

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Thus I see a conundrum. We can let people have freedom, in which case many will make bad decisions and then want the government to bail them out of the consequences, or we can have a nanny state which will give people more long-term happiness, but they will be unhappy (because eating junk food does bring a certain amount of happiness, and shouldn't be forbidden by the state – even if it is for your own good).

There are no good answers. This just proves my theory that all of our problems today stem from the fact that we evolved to inhabit a much different world from the one we now live in. This is why I am increasingly apathetic about politics. I think we can't make progress as a society until we first understand more about ourselves, and embrace the truth – we aren't really the noble creatures that we think we are.

I could say a whole lot more about this – but for now I'll add it to my list of things to write a long entry about someday.

**I know many of you don't go on to read the articles I link to, but you really should read this one.