Asymmetrical Information

Does the epitaph on W.C. Fields' tombstone read "I'd rather be here than in Philadelphia" or "I'd rather be in Philadelphia" ? Or is the whole stroy about Fields' tombstone apocraphyl? I'm always interested in a guy who maintained that he once lost his corkscrew on a journey, and was forced to survive on food and water for several days.

Considering that $20K is barely above poverty in anyplace I'd care to live I'd have to suggest these folks are just plain nuts. Somebody living on $20K in a major US city has to think too much about whether they can afford that new DVD to be anyehere near maxxed out on the happiness scale.

The story of the epitaph on W.C. Fields tombstone is apocryphal.

Go to - http://www.findagrave.com/cgi-bin/fg.cgi?page=gr&GRid=1148

There you will find a photo of his tombstone - actually a marker on the wall of a mausoleum in Forest Lawn cemetery. It simply says "W.C. Fields 1880-1946"

20k pounds.. maybe but highly unbelievable...

people "know" they're supposed to say that money doesn't make them happy...

course ennui and anxiety over starving are completely different, and ennui should count as happiness (since its just the human reaction to lack of stimulation or challenge.. we're all psychotic!)

i'm pretty damn happy, and well, i'm not making 20k, and most people i know are happy, and make over that, and work their asses of... no one i know (who's not a luddite) would actually prefer to make 20k than their current situation (course even the luddites don't have the courage of their convictions!)

There are also questions of relative happiness and absolute happiness. People making 20K may be unhappy because their stuff isn't as nice as other people's, but not because their food/shelter/clothing is inadequate. Status, however, is a problem we are unlikely to solve in a society composed of primates.

People may prefer things that don't increase their net happiness, because it may well be that happiness is not something that can be increased or decreased past a certain point once needs are met.

Think of Maslow's Hierarchy of Needs. Once you've got all the basics covered--you're well fed, well-sheltered, have regular sexual gratification, and are not in fear for your life, now what do you have? That spiritual level at which all your physical needs are met, and now you have to decide what to do with yourself.

If you are prone to be depressed, you will be depressed much of the time. If you are prone to be cheerful, you will be cheerful much of the time.

You will persue your interests either way, depending on what makes the most sense at any given moment. More acquisition is not likely to give you greater "happiness" in the sense of sitting around most of the day feeling chipper and good. Mostly, folks don' t work that way--chemically, I mean.

So I'm not sure there's that much contradiction here. Of course we still have a desire to obtain more things, and why not? It enhances our sense of security, of achievement, etc. But in terms of sitting around all day feeling gloomy or feeling chipper...

Well, you're measuring different things, is all.

There is also the fact that the pursuit of income is not somethig that's independent from the happiness it produces. If someone needs moeny to be happy, they will try to get money and will hence earn more. If someone can be happy earning 20K a year, there's not the incentive to work harder and longer to earn more. So there's a likely hidden correlation here that they're ignoring.

>>The fact that people choose to earn more than $20,000 in income strongly suggests that higher income produces more happiness

No, it suggests that people desire things other than happiness, surely?

>> The fact that people choose to earn more than $20,000 in income strongly suggests that higher income produces more happiness ... The formal term we use is revealed preference.

I wouldn't think the revealed preference is for "happiness" from income but greater welfare from income. There's tons of hard evidence showing welfare increases with income, and that's plenty enough to explain a revealed preference for greater income. But I don't see much indication that subjective happiness increases with income.

My memory from the days when I used to read psychology was that most people have an individual "set point" for happiness, and that their feelings of happiness temporarily move up or down around it as good or bad events happen, but eventually return to the set point.

A quick Google search on this found as the first hit...
~quote~

Happiness or subjective well-being (SWB) ... varies from time to time about an average value that is characteristic of the individual. My colleague, Auke Tellegen, and I have measured SWB on hundreds of pairs of middle-aged twins .... [and] obtained estimates of average SWB by repeating these measurements after intervals ranging from 4 to 10 years ... the heritability of the set-point or mean happiness level is about 80%...

Psychologists David Myers, at Hope College, and Ed and Carol Diener at the University of Illinois have been studying SWB for years with remarkable results. They find first that SWB is essentially unrelated to socioeconomic status, to income, to level of education, to gender or to race...

The Illinois researchers have shown that the effects on current SWB of both positive and negative life events are largely gone after just 3 months and undetectable after 6 months.

A happiness reading on a victim of a spinal injury -- or on a winner in the lottery -- taken a year after the event, is likely to give about the same value obtained before the event...

http://www.psych.umn.edu/psylabs/happness/hapindex.htm
~end quote~

If so, then it really doesn't seem that money can buy happiness except for a moment, and I don't see any particular reason for believing it should.

OTOH, as one of my favorite philosophers asked, "Is happiness not happiness because it doesn't last?"

The problem with dismissing self-reports on happiness in preference to “revealed preference” is that revealed preference relies on behavior to assess a state of mind. There is room for slippage. Economists are on safe ground asserting that behavior reveals, well, preference, but not happiness. The notion of “utility” gets around making claims about happiness. That’s a wise dodge on the part of our economist predecessors, and should probably be respected. It may be that the product of our striving isn’t happiness or the things that bring happiness. We strive for one reason and are happy for another.

DeLong makes a nice point in distinguishing between what we do and how we feel: “We cannot approach utopia in terms of material welfare because we can always imagine how increased resources could give us a more comfortable and rewarding life.”

I can’t prove it, but I have the impression that this “money can’t buy happiness” finding is pretty consistent, another reason not to dismiss it lightly. Snoop around DeLong’s site for reference to a study by John Helliwell. He found that once GDP per capita surpassed half the US level, happiness was unrelated to GDP. Thus, at least internationally, there is support for the notion that a $20k income is sufficient to happiness. Helliwell also found lots of social factors that are important to self-reports of happiness, reason enough to think that the impact of income on happiness is diluted.

The Atlantic thingy isn't talking about individual income. It's talking about whether people in a country with per-capita income of $40,000 are on average twice as happy as people in a country with per-capita income of $20,000. Their answer appears to be "no", based on surveys they've done in poor countries and rich countries.

It's a bit of a mistake to bring in individuals to the discussion.

Anyway:
" The fact that people choose to earn more than $20,000 in income strongly suggests that higher income produces more happiness."

No, actually it strongly suggests that people *think* higher income produces more happiness. People tend to think that they'd be happier if only they had that one more thing. That plasma TV will make them happy. Or that Hummer H2. Or the Kate Spade bag. And maybe it does, for a little while. But it fades, and something else becomes the thing that will make you happy. But clearly, doses of happiness based on purchases aren't going to create a substantive, lasting happiness.

One facet of happiness is the gap between one's sense of where one's life should be, and the realities of that life. It's hard to be happy if you are constantly concerned for the future and the logistics of day to day living. Contrary to the assumption that it is the aquisitions that make happiness, in fact, increases in wealth allows less time and effort worrying about the mundane, leaving more time and resources to reduce the dissonance gap.

I'd add that the biography of Christina Onassis, to pick an example out of many, provides decent support for the hypothesis that people who choose to earn more than US$20K are revealing a preference for certain kinds of work, rather than for simply having a lot of money. (Of course, revealed preference was never meant to be this kind of universal theory of psychology, and the fact that it is often taught as if it was one is just one of the minor scandals of the economics profession)

The Economist presented research awhile ago concluding that money can't really buy happiness. Although income makes a difference, other factors—notably health and love—are supposed to make more.

http://www.economist.com/displayStory.cfm?Story_ID=1250578

Just go to Brazil to see how money does not equate happiness.

When did Brazil's per capita crest 20K?

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