The Frontal Cortex

Money Can’t Buy You Love

Money also can’t buy you happiness. It’s been reported before, but it’s always worth repeating: the rich aren’t happier than the rest of us. In the last issue of Science, a team of researchers (including Nobel Laureate Daniel Kahneman), reported that

“The belief that high income is associated with good mood is widespread but mostly illusory…People with above-average income are relatively satisfied with their lives but are barely happier than others in moment-to-moment experience, tend to be more tense, and do not spend more time in particularly enjoyable activities.”

Of course, this isn’t what we expect. We really do believe that the rich are having more fun. For example, survey respondents expected women who earned less than $20,000 a year to spend 32 percent more of their time in a bad mood than people who earned more than $100,000 a year. In real life, poor people only spend 12 percent more time in a bad mood than rich people. Furthermore, poor people have way more leisure time than rich people. According to the U.S. government, men making more than $100,000 per year spend 19.9 percent of their time on passive leisure, compared to 34.7 percent for men making less than $20,000.

But this doesn’t mean you should go out and quit your job or stop worrying about the pernicious effects of inequality. Even if having less money doesn’t make us less happy, we are still upset when we see someone else making more money than us. In other words, it’s not the big screen TV and fancy BMW that give us pleasure, it’s the sense of self-worth and self-esteem that comes with them. (We quickly habituate to more pixels, a refined steering feel and plush leather seats. What we don’t habituate to is the feeling of superiority whenever we accelerate past a Kia.)

If you’ve been a fan of behavioral economics, this isn’t news. When given a choice, most people would rather work at a job where they make $30,000 but everyone else makes $27,000 than at a job where they make $32,000 but everyone else makes $35,000. We are willing to forgo some material wealth in order to feel superior to everyone else.

So what’s the takeway lesson? If the government was run by behavioral economists, we would worry less about growth in G.D.P. and more about income inequality. (Essentially, we would look a lot more like France…) After all, poverty isn’t necessarily depressing, and excess wealth isn’t very satisfying. What does affect people, however, is perceptions of unfairness and wide disparities in wealth. We don’t mind driving the Kia; what really bothers us is getting passed.

Comments

  1. #1 SteveA
    July 7, 2006

    what an unfair knock at Kia, they’re making excellent cars these days, built as well as Honda and Toyota for a lot less money. Perhaps driving a Kia will make some feel better knowing they got as much car as John Smith in his Toyota but for a lot less money?

  2. #2 Mark Paris
    July 7, 2006

    So does this mean that the current VW ads touting fewer ego emissions for their cars are doomed to failure?

  3. #3 asg
    July 8, 2006

    This study published in Science made for interesting reading, especially the authors point about how survey questions get people to focus on one aspect of life over the exclusion of other aspects when trying to answer questions about overall quality of life.

    One might ask whether “percent of time spent in a bad mood” is any measure of “happiness” since consummatory behavior may be very brief but give intense gratification. Thus, given the difficulty of measuring the ‘quality’ of the emotion, the authors may have diverted from the issue a little bit by choosing a seemingly ‘quantitative’ parameter associated with it.

The site is currently under maintenance and will be back shortly. New comments have been disabled during this time, please check back soon.