Money makes you happier? It depends what you mean by happy....

In my last post I wrote about how happiness (or unhappiness)  tends to “wear off” over time, as we adapt or become accustomed to whatever made us happy (or unhappy).  This phenomenon has been called the “hedonic treadmill,” since the implication is that no matter how hard we work, we will arrive back exactly where we started. Richard Easterlin first reported signs of this phenomenon in research surveys of happiness, so triggering a controversy that still runs and runs.  

As you might expect, research seems to support the notion that there are certain basic needs to be met which do have a big impact on happiness; things like food, physical safety and comfort for example. In monetary terms in the Western world, this is somewhere around the equivalent of US$10,000 (See Diener & Seligman, “Beyond Money” APA, 2004, http://internal.psychology.illinois.edu/~ediener/Documents/Diener-Seligman_2004.pdf). But beyond that basic level the rise in reported happiness measured as a feeling (psychologists call this “positive affect”) with increasing income is relatively weak. 

However, there are more things to consider in all of this than meets the eye. It especially matters what you choose to measure as “happiness.” Happiness as a feeling might be surveyed by asking people how happy do they feel, today, yesterday, and “in general” and to rate it on a scale on a scale of 1 to 6. On the other hand, if you ask people to rate their “satisfaction with life,” then a slightly different picture emerges. 

Afghans, for example, were happier than the world average as measured by the happiness question, but scored much lower than the world average when they were asked about how satisfied they are with life, and lower still when asked how it compared to “the best possible life”. Whilst surprisingly cheerful, it is not unexpected that Afghans know that life is better elsewhere. (Graham, 2010, “More on the Easterlin Paradox: A Response to Wolfers” http://www.brookings.edu/blogs/up-front/posts/2010/12/15-happiness-easterlin-graham) 

So, as far as I have understood it, the latest conclusions are that in fact the more your earn the more satisfied you may be - which is a kind of “mental” evaluation - but it is far less clear that you'll feel much happier. You pays your money and takes your choice?