Money Can't Buy Happiness? - WSJ article

Money Can't Buy Happiness?
This Blogger Begs to Differ

By Gretchen Rubin

From The Wall Street Journal Online

Last month the Journal's Jonathan Clements argued that money alone doesn't buy a lot of happiness. Here, happiness blogger Gretchen Rubin takes a different point of view. Share your view here.

Money can't make people stay in love, connect with friends or enjoy a hike in the woods. But money, spent wisely, can contribute greatly to happiness.

Recent articles in the news media tackle the money-happiness connection. A study this summer in Science magazine showed that when participants were asked to record the previous day's activities and describe their moods, being wealthier didn't have great impact on their moment-to-moment experience.

A different sort of study presents another picture. According to a Pew Research Center 2006 report, the percentage of people who declare themselves "very happy" goes up as family income rises. People were asked: "Taken all together, how would you say things are these days, would you say that you are very happy, pretty happy, or not too happy?" Twenty five percent of people with incomes of $30,000 or less said they're "very happy." That compared with 50% of people with incomes of $150,000 or more.

What might explain the fact that wealthier people say they're happier -- even though their days don't seem to be that much more fun? There are different theories, but one conclusion is that money does, in fact, help promote people's general satisfaction with their life.

Economist Richard Layard identifies the "big seven" of happiness as family relationships, financial situation, work, community and friends, health, personal freedom, and personal values. While a person's financial situation is just one element among the seven, a look at the other big six shows that money matters with them as well, too.

Top doctors and fresh vegetables help you keep healthy, and they cost money. Hiring a house-cleaner leaves means less fighting with your spouse, and household help costs money. A ski trip with your college friends strengthens those bonds, and it costs money. Giving to charity feels good, and it costs money.

Also, the idea that money can't buy happiness may overlook one of the most precious luxuries money does buy: not having to worry about money. Having money means you don't have to worry about paying for the intensive speech therapy for your child. Or about paying retail for a new digital camera when your old camera breaks right before your vacation. Or about buying a bottle of water on your way to the gym.

Once you have money, it's easy to take this freedom from worry for granted -- yet it may help explain the greater overall contentment enjoyed by richer people.

Commentators who maintain that money doesn't buy happiness often point out that between 1972 and 2005, Americans' buying power rose dramatically, yet their level of happiness didn't budge much. Therefore, the reasoning goes, money doesn't buy happiness.

But people generally measure the benefits of wealth on a relative scale rather than an absolute scale. For example, a 2005 study by researchers Glenn Firebaugh and Laura Tach showed that for happiness, wealth relative to peers of the same age matters more than absolute wealth; that is, the dollar amount of your income matters less to your happiness than whether your income is larger or smaller than that of your age-peers. Therefore, a society-wide rise in the absolute level of wealth wouldn't boost your happiness as much as relative gains.


Also, a common obstacle to happiness is what's called the "hedonic treadmill." People are highly adaptable, and soon take for granted their possessions and comforts. A new car or a set of golf clubs gives a brief rush of happiness, but that high may fade quickly. For an even more acute example, think about kids' short-lived reaction to new toys. When everyone can afford air-conditioning, a color TV and a cell phone, those benefits shift in perception from longed-for luxuries to barely-noticed basics.

So how should you think about money and happiness in the context of your own life? It's easy to say "choose time over money" and that cutting back hours at work will likely leave you happier. But there's a limit to that theory. Having a lot of leisure is not relaxing if you spend the time worrying about how you're going to pay to get the car fixed. Socializing over a great meal with friends brings more happiness than a flashy watch. But great meals cost money. It's more fun to fly fish when you have money to travel to a river you've never fished before.

The secret is to be smart about how you splurge. Spend money toward things that promote the components of happiness. The hedonic treadmill means that loading up on stuff, though gratifying for a moment, isn't a lasting source of happiness. Instead, spend money on your relationships, your health, and your experiences.

It isn't really surprising that money, spent the right way, helps buy happiness. As economist John Kenneth Galbraith noted, "Wealth is not without its advantages, and the case to the contrary, although it has often been made, has never proved widely persuasive."


-- Gretchen Rubin is the author of Forty Ways to Look at Winston Churchill, Forty Ways to Look at JFK, and Power Money Fame Sex: A User's Guide. She is working on a book on happiness and is author of a blog, http://www.happiness-project.com.

Email your comments to cjeditor@dowjones.com.

Will You Laugh All the Way to the Bank? - WSJ article

Money & Happiness: Will You Laugh All the Way to the Bank?

By Jonathan Clements

From The Wall Street Journal Online

It's only money. Really.

If you're reading this column, you are no doubt looking to get ahead financially. But don't kid yourself: All those extra dollars won't make you extra happy.

In recent years, economists and psychologists have turned their attention to "happiness research" -- and the results are a little disturbing if your life's goals are a bigger paycheck and a fatter nest egg. Money alone, it seems, just doesn't buy a whole lot of happiness.


• It's all relative. To be sure, high-income earners often express greater satisfaction with their lives. In a 2004 survey, 43% of those with family incomes of $90,000 or more reported being "very happy," versus 22% for those with incomes below $20,000.

But the truth, it seems, is messier than such surveys suggest. Yes, if you live in poverty, more money can bolster your happiness.

"But once you're safe and warm and fed, it makes surprisingly little difference," says David Schkade, professor of management at the University of California at San Diego. "Once you get to the lower-middle class, then it takes a lot of income to make a difference. Income does matter, just not as much as people think."

Indeed, despite rising standards of living, just 30% of Americans described themselves as "very happy" in the late 1990s, down from 34% in the early 1970s, according to a study by economics professors David Blanchflower and Andrew Oswald that appeared in the Journal of Public Economics in July 2004.

Faced with this sort of data, researchers have speculated that our happiness is influenced not by our absolute level of wealth and income, but rather by how our financial situation compares with friends and colleagues.

This may help explain why so many high-income earners describe themselves as "very happy." Much of the time, these folks aren't necessarily all that cheerful. But when asked in surveys to assess their satisfaction with their lives, they think about their standing in the world -- and that prompts them to say they are happy.

• On the clock. What happens when high-income earners aren't contemplating their position in the financial pecking order? Consider a June 30 article in Science magazine by Daniel Kahneman, Alan Krueger, Norbert Schwarz, Arthur Stone and Prof. Schkade.

The five professors analyzed data for 374 workers who were asked every 25 minutes during the workday about the intensity of various feelings. Those with higher incomes didn't report being any happier, but they were more likely to say they were anxious or angry.

The five professors also studied government data detailing how folks divvy up their waking hours. They found that people with higher incomes tend to spend more time working, commuting and engaging in obligatory nonwork activities, such as maintaining their homes. All of these are associated with lower happiness.

"People who are richer aren't having a better time," Prof. Schkade concludes. "But if you ask them about their lives, they report being a little more satisfied" than those who are less affluent.

• Buying time. This raises the question: If more money won't make us much happier, what will? Here are four pointers.

• Keep your commute short. Tempted to use your latest pay raise to buy a big house in a distant suburb? Don't do it.

While we often adjust amazingly well to life's hardships, commuting is an exception. "You can't adapt to commuting, because it's entirely unpredictable," says Daniel Gilbert, author of "Stumbling on Happiness" and a psychology professor at Harvard University. "Driving in traffic is a different kind of hell every day."

• Choose time over money. Cutting back the hours you work will likely leave you happier, even if it means less pay.

What about the fall in your standard of living? It may hurt less than you imagine. True, you are thrilled when you buy a new car. Soon enough, however, the good feelings fade and you're taking the new car for granted. Academics call this "hedonic adaptation."

• Think carefully about how you spend your dollars. While a new car may not boost your happiness for long, maybe a trip to Europe would.

"Money itself doesn't make you happy," Prof. Gilbert says. "What can make you happy is what you do with it. There's a lot of data that suggests experiences are better than durable goods."

The car might seem like the better purchase, because it has lasting value. But, in fact, it sits in the driveway, slowly deteriorating. "Experiences don't hang around long enough to disappoint you," Prof. Gilbert says. "What you have left are wonderful memories."

• Use your leisure time wisely. Surveys show that leisure is better for your happiness than work. But much also depends on how you spend your leisure time.

Passive activities like watching television usually don't make folks as happy as eating. A good meal, in turn, doesn't rank quite as highly as active leisure activities, such as socializing with friends.

"Going to a dinner at a nice restaurant, where you're going to see friends and eat good food, is one of the best combinations," Prof. Schkade says. "The French know what they're doing, when it comes to how to enjoy a good meal."


Email your comments to cjeditor@dowjones.com.

September 11, 5th Anniversary

Our nation’s resilience and fortitude has helped us overcome the loss of hundreds of innocent lives. But our lives will never be the same again. We are fighting a battle with religious fanatics fed by poverty on one side and free will and democratic ideals on the other. The long term solution is freedom, education and economic development in the Middle East but oil muddies the water and blurs the lines.


The United States is the only country that can take a stand on principles. Our European friends are not willing to stand up and China despite its power is still searching for its soul. At some point, sooner that we expect, our idealism will have to face economic reality. How we face up to that reality will define the role of this nation in this century.

Wittgenstein, Aristotle and Pluto

Wittgenstein, Aristotle and Pluto

By BRIAN M. CARNEY
September 2, 2006;
The Wall Street Journal
Editorial

If Aristotle had known about the planet Pluto, recently sent into ignominious exile, he probably would have called it Hades, the Greek name for the god of the underworld. But would the philosopher have called the celestial object a planet? Plato's greatest student did not do his best work in astronomy. But his "Nichomachean Ethics" offers some guidance for those who question the decision to demote Pluto to "dwarf" status.

Early in the "Ethics," Aristotle cautions his readers that every field of study should aim for a degree of precision appropriate to the subject matter. "The same exactness must not be expected in all departments of philosophy alike," Aristotle wrote, "any more than in all the products of the arts and crafts." The officious astronomers who redefined planethood to exclude Pluto are guilty of what scholars of Aristotle like to call a "category mistake." They are striving for a degree of precision inappropriate to their subject matter.

More than 2,000 years after Aristotle, another philosopher, Ludwig Wittgenstein, made a related point about definitions. Wittgenstein asked his readers to come up with a definition for the word "game." He then proceeded to show that this was not a trivial task. Some games involve competition, but not all do. Some have fixed rules or a defined end-point, but some do not. Most games are fun, somehow defined. But the differences between ring-around-the-rosie and chess are much easier to discern than their similarities. Wittgenstein's point was not that we don't know what a game is, but rather that we are perfectly capable of using the word and understanding it without possessing a mental rule that includes every activity we might call a game and excludes everything that is clearly not a game.

The recent campaign against Pluto's planethood proceeds from the assumption that we can't really know what we're talking about when it comes to planets unless we have a "strict" definition. Without a rule, the argument runs, we don't really know what a planet is at all. Does this make any sense?

That depends on the stakes. If we ask, "Who is a citizen of the United States?" it is important that we have a definition and a set of rules for answering the question unambiguously in any conceivable present or future case. Voting rights, entitlement eligibility and the obligation to pay taxes on one's world-wide income are just three significant areas in which this question matters a great deal. Membership in Club America has its privileges -- and downsides.

Things are different at Club Planet, though. Pluto receives no subsidies, pays no dues and has no privileges by virtue of being admitted or excluded from the club. It gets to keep its off-kilter orbit and its distance from the sun whether it is a planet or merely a "dwarf." Neptune can't cut off the cute little shortcut Pluto takes across its neighbor's orbit every 250 years or so, no matter what names astronomers or the bigger planets call it. Nothing turns on whether Pluto is a "dwarf" or not.

Which brings us full circle. Defining planethood is an exercise in ersatz precision. At the end of the day, it's a judgment call. What's more, the recently drawn boundaries of Club Planet were not developed in a vacuum. They were designed to achieve a preordained result.

If some faction wanted Pluto out of the club, it could have just kicked him out. Instead they drew up a rule and then declared, "Lookee here at the rule book! Sorry, Pluto, you'll have to go. Not our fault, you understand -- rules is rules."

But defining "planet" is not a moonshot. And until last month, most of us thought that Pluto was a planet. Where was the harm in that?

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