Can money buy happiness?

Published: July 18, 2011

The writer is professor of economics at the International Islamic University, Islamabad asad.zaman@tribune.com.pk

Across time and space and widely different cultures and religions, there is an amazing amount of consensus that the answer to this age-old question is an emphatic ‘No’. Early in the 20th century, some influential thinkers argued that even though greed for gold was bad — a ‘disgusting morbidity’ — it could be harnessed for a good end. Unchaining the powerful drives for accumulation of wealth would create wealth for the society as a whole, ultimately freeing man from all worldly worries. Keynes expressed this vision poetically: “We must pretend that fair is foul and foul is fair. Avarice and usury must be our gods for a while, for only they can lead us out of the tunnel of economic necessity.”

This vision of a ‘heaven on earth’ created by a fabulous increase in wealth, inspired two generations of followers. The hope was that once free of the necessity to toil for a living, men would become kind, generous and gentle. They would turn to higher pursuits of philosophy, arts, aesthetics, and sciences, and develop an advanced and sophisticated culture.

Things did not go according to plan. Samuelson, who was one of the most influential disciples of Keynes acknowledged that ‘great affluence has not brought about the slackening of economic ambition’. The contrast between what was promised and what actually occurred was so great that many different fields of research emerged to analyse the discord. One of the most important of these is called ‘happiness studies’.

A study by Richard Easterlin, a professor from the University of Southern California, led to the surprising conclusion that very large changes in material comforts had virtually no effect on life satisfaction, or ‘happiness’, across time and across cultures. Easterlin showed that, during the 20th century, people in the US enjoyed comforts available only to princes of a century ago. Similarly, the standards of living were dramatically different in the US and India around the middle of the 20th century. Nonetheless, piecing together evidence from a wide variety of different sources, he found virtually no difference in life satisfaction among these vastly different societies. This became known as the Easterlin Paradox: in the long-run, there is no relationship between the wealth of nations and happiness. This discovery has radical implications. If true, then all the collective efforts poured into achieving high growth rates have been wasted. About a quarter-century of intensive debate and research has led to some firm conclusions, which we summarise below:

Firstly, money is extremely important for the poor. Satisfying basic needs definitely increases happiness. On this basis alone, it would appear that increased wealth would lead to reduction in poverty, and hence, to increase in happiness. In an earlier column entitled “The vacuum cleaner effect”, I explained why this was not the case. The process of economic growth has increased inequality and poverty.

Secondly, beyond the level of basic needs, increases in wealth lead only to temporary increases in happiness. Long-run durable changes in happiness are strongly tied to friends, family, community, and old-fashioned social norms represented by trust, commitments, loyalties, and courtesy. Legitimisation of the pursuit of wealth has led to an erosion of these social norms. It is an urgent priority for us in Pakistan, to take these findings seriously into consideration, in setting priorities for national growth and development.

Published in The Express Tribune, July 19th, 2011.

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Reader Comments (12)

  • Irshad Khan
    Jul 18, 2011 - 10:41PM

    Studies made in western coutries are not valid for our society, which has totally different norms and standards of happiness. But in our society money and Power, both together, have gone into wrong hands and made other`s life horrible by grabbing all their legimate human rights. This is the greatest problem of the society and needs to be corrected.

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  • Jul 18, 2011 - 11:54PM

    I beg to differ,here my take.Shakespeare once said only the wearer knows where the shoe pinches.I have been there on both street Poor BLVD and Rich Blvd.I was one of 9 childern and I’m born before 47,just around when second world war and terrible partition,seen refugee in north India,and though not refugee,to be one of 9 with grown up sisters to cover up their growing body in consevative pre indepedence day is no picnic in park.Poverty and hunger was constant companion,because I have been there,and then to make it to Usa as professional decently paid engineer,is long jurney.I will never willingly embrase poverty,no matter who says what.Just I will tell you this,sure “:HAPPINESS IS RELATIVE CONCEPT,WHAT IS ONE,IS NOT THE SAME TO SOME ONE ELSE’,lack of money takes away most options,and having money gives one options,and that is a major difference and the clinching argument.There is one mathamatical formula one can adopt for more happiness(So called hapiness)——–H= 1/desire full filled,that the least one desires,the more desire gets full filled,so keep numarator to least minimum,just dwell on it and you will realize what a wonderful formula this is,a lesson for humanity from a old goat!!!

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  • I
    Jul 19, 2011 - 12:43AM

    Yes

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  • amaar
    Jul 19, 2011 - 10:03AM

    well argued

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  • Mirza
    Jul 19, 2011 - 10:07AM

    “According to a new study from Princeton University’s Woodrow Wilson School, it sort of does — up to about $75,000 a year. The lower a person’s annual income falls below that benchmark, the unhappier he or she feels. But no matter how much more than $75,000 people make, they don’t report any greater degree of happiness.”

    This large study indicates that after achieving the status of middle class there is not much connection between the income and happiness. Of course if the income is at or below poverty level then the people would be more under stress and less happy. The poverty level in the US is about 22,000 a year. In other words if one earns 3 times or more than the poverty level then the chances of being happy become more.

    http://www.time.com/time/magazine/article/0,9171,2019628,00.html

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  • Inam Malik
    Jul 19, 2011 - 11:10AM

    Insightful article. One also has to take into account the modus operandi of getting wealthy.Wealth obtained through illegal means may not result in more happiness but legal wealth increase should lead to increase in marginal happiness.

    @hariharmani: simple but excellent formula:)

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  • Jul 19, 2011 - 11:37AM

    Yes, but we can say “partially”. Money can give you all the comforts of life but not peace of mind and heart.

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  • Sharif Lone
    Jul 19, 2011 - 12:00PM

    Interesting article. My late mother used to say that money is like strong alcohol (Funnily enough, which she never tasted, at least to my knowledge) which let you forget all your worries.
    I do not disagree with her. Money does make it possible to obtain things which we want. Cars, TV schools for our children and a medical facilities for the family. If you have a lot of it, you can go on world holidays, live in large houses, allow chauffeur driven cars and a lot more.
    But wait, Say hello to 5-HTT. Scientists have identified this strip of DNA as the “happiness gene”. If you’ve got it, you’re likely to adopt a glass half full attitude to life. If you don’t, your cup of sorrow will run over. But this leads us back to that old philosophical debate about nature versus nurture.
    For what good is the happiness gene if life keeps delivering lemons? We can be biologically predisposed to happiness, but that does not mean we will attain it.As Frank Sinatra said in one of his films: “Who wants millions? I don’t. Try giving me.”

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  • Sanaullah
    Jul 19, 2011 - 4:14PM

    Happiness is the art of enjoying what you have. If you don’t know the art of enjoyment then no matter how much money have you cannot be happy.

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  • Cynical
    Jul 19, 2011 - 7:53PM

    Money can buy happiness, for those who know where to shop.

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  • Salman
    Jul 19, 2011 - 9:09PM

    YES!!! Money buys happiness and EVERYTHING else.

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  • Umaer Butt
    Jul 20, 2011 - 2:51PM

    Media Mogul Robert Murdoch, recently acquitted in phone-hacking probe, lost $7bln in 2 weeks which took him almost 6 decades to make, his market credibility is been tarnished severely, and now all he is doing to secure his reputation in market, because he knew once he lost his credibility from the market investors would not follow him…building the credibility within the stakeholders is vital if your credibility is withhold fiat currency will follow you, which generate esteemed happiness…..

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