Rich and Happy

May 11, 2013
Posted by Jay Livingston
Cross posted (in edited form) at Sociological Images

In America I saw the freest and most enlightened men placed in the happiest circumstances that the world affords, yet it seemed to me as if a cloud habitually hung upon their brow, and I thought them serious and almost sad, even in their pleasures.
    DeTocqueville, Democracy In America, Book II, Chapter 13 

Mo money, mo problems  
    Notorious B.I.G.

Forty years ago Richard Easterlin proposed the paradox that people in wealthier countries were no happier than those in less wealthy countries.  Subsequent research on money and happiness brought modifications and variations, notably that within a single country, while for the poor, more money meant fewer problems, for the wealthier people – those with enough or a bit more – enough is enough.  Increasing your income from $100,000 to $200,000 isn’t going to make you happier.  

It was nice to hear researchers singing the same lyrics we’ll soon be hearing in commencement speeches and that you hear in Sunday sermons and pop songs, both the earnest (“The best things in life are free”) or ironic (“Money, it's a gas / Grab that cash with both hands / And make a stash” sounds anything but joyful).  But this moral has a sour-grapes taste; it’s a comforting fable we nonwealthy tell ourselves all the while suspecting that it probably isn’t true.

A recent Brookings paper by Betsey Stevenson and Justin Wolfers (here) confirms that suspicion.  Looking at comparisons among countries and within countries, they find that when it comes to happiness, you can never be too rich.

Stevenson and Wolfers also find no “satiation point,” some amount where happiness levels off despite increases in income.  They provide US data from a 2007 Gallup survey.

The data are pretty convincing.  Even as you go from rich to very rich, the proportion of “very satisfied” keeps increasing.* 

Did Biggie and Alexis get it wrong? 

Around the time that the Stevenson-Wolfers study was getting attention in the world beyond Brookings, I was having lunch with a friend who sometimes chats with higher ups at places like hedge funds and Goldman Sachs.  He hears wheeler dealers complaining about their bonuses. “I only got ten bucks.”  Stevenson and Wolfers would predict that this guy’s happiness would be off the charts given the extra $10 million.  But he does not sound like a happy master of the universe.** 

I haven’t read Robert Frank’s Richistan, but the New York Times review had this to say: “If  Richistan is travel journalism, then . . . do we want to go there? Not much. The people sound dreadful and not very happy, to boot.”

I think that the difference is more than just the clash of anecdotal and systematic evidence.  It’s about defining and measuring happiness.  The Stevenson-Wolfers paper uses measures of “life satisfaction.”  Some surveys ask people to place themselves on a ladder according to “how you feel about your life.”  Others ask

All things considered, how satisfied are you with your life as a whole these days?

The GSS uses happy instead of satisfied, but the effect is the same.

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?

When people hear these questions, they may think about their lives in a broader context and compare themselves to a wider segment of humanity.  I imagine that Goldman trader griping about his “ten bucks.”  He was probably thinking of the guy down the hall who got twelve.  But when the survey researcher asks him where he is on that ladder, he may take a more global view and recognize that he has little cause for complaint.  Yet moment to moment during the day, he may look anything but happy.  There’s a difference between “affect” and life satisfaction. 

Measuring affect is much more difficult – one method requires that people log in several times a day to report how they’re feeling at that moment – but the correlation with income is weaker. 

In any case, it’s nice to know that the rich are benefiting from getting richer.  We can stop worrying about their being sad even in their wealthy pleasure and turn our attention elsewhere.  We got 99 problems, but the rich ain’t one.

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* Sample size in the income stratosphere might be a problem.  As the authors footnote, “While 100 percent of those reporting annual incomes over $500,000 are in the top bucket of ‘very happy’, there are only 8 individuals in this category.” I suspect that bucket is a Cupertino and that they intended it to be bracket.  But bucket is a much more colorful metaphor.

** In Tom Wolfe’s Bonfire of the Vanities (1987), the yuppie bond traders appropriated the Mattel action figure title to refer to themselves.  And they were not being entirely facetious.  Wolfe does research for his fiction – he was a first a journalist, then a novelist – and I suspect that in this use of MOTU he was reporting, not inventing.