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.