An anonymous poster pointed me towards
a study which says that while income may not correlate well with happiness, wealth does:
It does not make you as content as getting married or finding a job, but money matters more to making people happy than previously believed, according to new research.
Two studies released yesterday shed new light on the importance of economic circumstances, and undermine earlier findings that poor people are just as happy as the rich.
Money doesn't buy Happiness - or Does It? by the Melbourne Institute of Applied Economic and Social Research, at Melbourne University, shows that when wealth - not just income - is measured, the rich are indeed happier than the poor.
Earlier research that focused only on income found very little difference in the reported happiness of high-income and low-income people.
Asked the same questions about life satisfaction, rich and poor responded in remarkably similar ways.
Mark Wooden, the study's co-author, said: "This has led some people to say money is not that important, relative to other things." However, when people's assets were taken into account - the value of their houses, cars, art works, even stamp collection - a different picture emerged.
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"Assets were far more important than income in determining happiness," said Professor Wooden. "And when you combine income and assets, money seems to matter more than people thought before."
The study was based on a survey of almost 8000 people aged 25-59. Professor Wooden said income on its own was not a good measure because it could fluctuate, while assets were stable and could tide people over periods of low income.
I would certainly trust wealth a lot more than income. For example, some of y'all are wealthy enough to be retired or semi-retired, but your income is relatively modest.
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patrissimo
Comments
I think a more useful study would be to take a more socialist society and compare the differences in happiness among the wealthy vs. the less wealthy, and compare those differences to the differences here between wealthy and not as wealthy. (And when I say "more socialist", I don't mean completely socialist or communist, but somewhere in between, such as a European country).
Context changes the definition of happiness, I think that's unavoidable.
It's almost, but not really at all, an argument for a strong safety net.
We know from other studies that buying that thing you want won't make you as happy as you think it will, but that doesn't mean it won't contribute to your happiness at all.
"Income" is the rate of change of one's money over time (generally positive otherwise I suppose it would become "outgo").
"Wealth" is a measure of available assets at any given time.
It seems to make perfect intuitive sense to me that Wealth would have an impact on someone's happiness more than Income.
One could make $100k/year yet squander it all and thus never feel secure or really have money for things they need.
One could make $20k/year and manage their money fantastically well, thus always having money for things they need.
Just the difference in amount of stress one has when living hand to mouth vs. knowing you have money in the bank for emergencies in a society where your health and welfare is constantly dependent on money seems like it would have a huge impact on happiness (if "happiness" is in some way affected by stress, which I think it is).
Although another factor to consider is what a person defines as a "need" vs. a "want", (where by "need" I mean something that they will be unhappy without and by "want" I mean something that sounds nice but one can be happy without).
Especially in a society as materialistic as ours, more things may fall into the "need" category that in some less materialistic society would only be in the "want" category. This has some impact on who ends up with Wealth and who doesn't.
So now that we've established that Wealth affects happiness, the question is, what factors determine the quantity of someone's Wealth?
I would argue from above (at least) the following:
1. What is categorized as a "need"
2. How well one's income level allows their "needs" to be met with wiggle room for future needs.
In a less materialistic, yet still capitalist society, my guess would be that it would be much easier to have Wealth (notwithstanding other factors).
It's a good question as to what affect net income has. I think often people with high incomes also may have high expenses, and may be much more at risk from things that alter their income randomly, like illness or a downturn in their company or whatever.
I can certainly imagine that a marketing executive with $12,500 / month ($150k/yr) income and a $7000/mo mortgage, $2000/mo on car payments, $2000/mo on childcare, and $1500/mo in food/clothing/utilities and no savings wouldn't feel all that happy compared to say a University professor who makes $5800/mo (70,000/yr) and has a $1500/mo mortgage, $1200/mo in childcare, ownes a used car outright, and spends $1500/mo in food/clothing/utilities and has $1600/month for savings and healthcare and soforth...
I'm not even taking into account taxes....
But clearly, the point is, it's not how much you make in dollars as much as it is how much satisfaction you get out of the money, and how much stress you have about money that makes the difference.
Probably a good observation: income is not generally thought of as NET income, but gross.
To go all calculus on you: In both models, income is generally the instantaneous rate of change (whether net rate or just the positive side of it)-- whose antiderivative is one component of wealth.
Like all antiderivatives, there's an initial condition to be considered: people who start with more wealth need to earn less of it for themselves, and are generally happy about that.
It is tautological than in a society where people earn the same, consume less, and thus save more, they accumulate wealth faster.
I think that one issue here is in the use of the word "asset". To me, there are a lot more assets one can have than just the kind of assets you'd list on a tax form. All of the things above are assets a person can have or not have in a way, as is a college degree, a license, or a large network of professionals or friends. All of them can open doors and provide opportunities that would otherwise not be available, and make a person feel happier and freer. But only a small subset of the assets a person has are generaly thought of as "financial" assets... some of them are even biological (eg, g factor).
Some assets can be traded in for other assets, but others are less liquid. The ones that are easier to convert into currencey tend to be more viewed as financial assets, whereas the ones that are more difficult to convert for whatever reason are seen as separate. But I don't really think they are all that different.
Wealth gives you autonomy, or at least the ability to choose it.
High income doesn't, necessarily.
I suspect that's a big part of it.
That's why I quite like this distinction between wealth and income: wealth makes you happy. Income can get you wealth, but income probably makes you unhappy. It's a tradeoff, with an optimization that's different depending on several unrelated factors, and one related one: starting wealth.
The answer, obviously, is to be born into a rich family. Sadly, I already blew that one.
Having accumulated assets is generally a result of your income exceeded your expenses, which is quite obviously a contributing factor to happiness. Living paycheck-to-paycheck isn't fun, especially if it runs out towards the end of every month.
Income > Expenses is only lightly correlated to level of income.