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July 19, 2004

What Good is Happiness, It Can't Buy You Money

Recent advances in the economics of happiness (discussed on this blog here, here, and here) are getting a little more mainstream attention, due to the growing body of research on the relationships between money and subjective wellbeing.

The bulk of the research that's been done on the subject suggests that the correlations between income and happiness are weak. In general, wealthier people are a little happier than the less well off, but it takes an awful lot of income to "buy" the happiness that companionship and community provide for free. For example, on average a long-lasting marriage is worth about $100,000 in annual income -- which means that a stable, 30-year marriage has a present value of about $1.3 million. That's quite an investment opportunity.

But an interesting trend in reporting about this research is that, rather than emphasizing how little difference money actually makes to happiness, many reporters (as well as some academics) are trumpeting the modest contribution that money does make to our sense of wellbeing. Thus, headlines like this one, on the relationships among happiness, money, and sex: "Money Buys Happiness, But Not Sex".

I expect to see more of this, as reporters on the economy beat -- who are used to seeing things in terms of hard cash -- use their own intellectual filters to understand and distill what, to them, could be a somewhat threatening area of research.

Posted by ClarkWD | Permalink