Yes, if you live in poverty, more money can bolster your happiness. “But once you’re safe and warm and fed, it makes surprisingly little difference,” says David Schkade, professor of management at the University of California at San Diego. “Once you get to the lower-middle class, then it takes a lot of income to make a difference. Income does matter, just not as much as people think.”
In fact, as one would expect, getting and staying rich kinda sucks:
Five professors [including Alan Kreuger, someone’s work I find fascinating] analyzed data for 374 workers who were asked every 25 minutes during the workday about the intensity of various feelings. Those with higher incomes didn’t report being any happier, but they were more likely to say they were anxious or angry [all this published in June 30 article of Science]. The five professors also studied government data detailing how folks divvy up their waking hours. They found that people with higher incomes tend to spend more time working, commuting and engaging in obligatory nonwork activities, such as maintaining their homes. All of these are associated with lower happiness.
So what should you do?
a. Keep your commute short:
While we often adjust amazingly well to life’s hardships, commuting is an exception. “You can’t adapt to commuting, because it’s entirely unpredictable,” says Daniel Gilbert, author of “Stumbling on Happiness” and a psychology professor at Harvard University. “Driving in traffic is a different kind of hell every day.”
b. Its funny. I was talking about this with Eric the other day, about how some grad students don’t really fret about being poor because they have so little spare time that its not like they could use the extra money. Of course, that runs into the fundamental paradox that if you have poor, overworked people, it seems the best way to make them happy is to make them work more — so they care less about being poor. Anyways, the article recommends that you cut the time you work, even if it means taking less pay. Any economist worth his or her salt, however, will say that only applies to individuals who are not operating at the point that their budget constraint intersects their indifference curve for salary versus leisure.
c. Use your leisure time wisely.
Passive activities like watching television usually don’t make folks as happy as eating. A good meal, in turn, doesn’t rank quite as highly as active leisure activities, such as socializing with friends.
d. And this wasn’t in the article, but have more sex. From the abstract to an NBER study on “Money, Sex, and Happiness: An Empirical Study” (272 kb of fun):
This paper studies the links between income, sexual behavior and reported happiness. It uses recent data on a random sample of 16,000 adult Americans. The paper finds that sexual activity enters strongly positively in happiness equations. Greater income does not buy more sex, nor more sexual partners. The typical American has sexual intercourse 2-3 times a month. Married people have more sex than those who are single, divorced, widowed or separated. Sexual activity appears to have greater effects on the happiness of highly educated people than those with low levels of education. The happiness-maximizing number of sexual partners in the previous year is calculated to be 1 [I wonder how they calculated that]. Highly educated females tend to have fewer sexual partners. Homosexuality has no statistically significant effect on happiness. Our conclusions are based on pooled cross-section equations in which it is not possible to correct for the endogeneity of sexual activity. The statistical results should be treated cautiously.