Saturday, May 26, 2007

Money Does Not Buy Happiness

By Annie Kahn
Le Monde

Monday 21 May 2007

Work more to earn more is the watchword of the new government. As though it were self-evident that earning more is a guarantee of universally-desired happiness.

Some American economists have recently proved the opposite. To the question, "Would you be happier if you were richer?" 2002 Nobel Prize-winning economist Daniel Kahneman and four of his colleagues from Princeton University's Center for Economic Policy Studies (CEPS) answer in the negative. "When this question is posed by itself, people exaggerate its importance. They think they'll be happier if they earn a higher salary. But it's an optical illusion," the authors assert.

An illusion, certainly, but not for everyone. For the authors' conclusions are valid only for "middle class" households that earn over 50,000 dollars (37,000 Euros) a year. For those households, an increase in income translates only barely into well-being. Below the $50,000 threshold, on the other hand, increases in salary and in contentment seem to go hand in hand.

To explain their conclusions, the American economists emphasize that it's not the absolute value of income that makes people happy or unhappy, but rather the gap between theirs and their neighbors. In other words, to be rich among the rich is not of any great benefit; or worse, can make people very unhappy, since one still frequently encounters someone still richer than oneself. Moreover, the authors deem that the consumption of material goods does not increase the sense of well-being. Finally, they assert, the leisure pastimes of the well-to-do (shopping, going to the gym ...) generate tension and stress.

So then why do CEOs negotiate severance compensation, gilded retirement packages, and other golden parachutes that add up to astonishing sums? They are victims of this optical effect, explain the Princeton economists. They overestimate the increase in pleasure they will be able to extract from that money by thinking that the happiness they feel at the moment they are accorded those sums will last. In the long run, that is not the case.

The OCDE draws similar conclusions in its Panorama of Society. A population's "degree of satisfaction" is not necessarily linked to a country's GDP. Mexicans declare themselves happy to live while Mexico's GDP is relatively weak. In Japan, the opposite holds true. "People's well-being depends to a large degree on the situation of the collective to which they belong and on their relations with that collective," concludes the OCDE.

The French population is also less happy with its fate than its GDP would suggest. The French are complainers and that's no optical illusion.

Translation: t r u t h o u t French language correspondent Leslie Thatcher.

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