There is a general perception that money as an economic condition has a significant impact on happiness. Economists have echoed that economic development improves the life of human beings (Bruno & Alois, 2002). Based on measures of happiness and household income, these economists have claimed that money, in this case, economic development, has a significant impact on happiness. However, critics have opposed this assumption by pointing out that the variable of money, such as income, seems to have minimal effect on happiness.
If people’s economic situation drastically improves, they will familiarize themselves with the condition and raise projections for the future financial situation, and they cannot gain happiness. An example of a lottery winner demonstrates that we are in a hedonic treadmill; it appears economic improvement of life circumstances produces no subjective benefits. Therefore, economic growth is not a relevant indicator of happiness.
The use of money as a measure of happiness may be relative rather than absolute. Instead of measuring utility directly, economists recommend an inference from behavior. This includes treating behavior as preferences. The utility is considered as a trade-off between work and pleasure (Daniel, 2005). People are considered to make a distinct trade-off, according to their choice of work and pleasure.
Specifically, a person who is happy is considered as an individual with much free time or with a basket full of shopping or nice care. This is not a substantial approach to measuring happiness. However, according to psychology, happiness is connected to wellbeing. Psychologists have recommended a therapeutic model of viewing happiness as life satisfaction (Seligman, 2011).
A sense of satisfaction with life consists of five dimensions: accomplishment, meaning, relationship, and engagement. Positive emotions help people’s subjective experience as well as expanding people’s minds and developing their future resources. Engagement is concern about the experience of flow.
Flow is the critical state of being where people are wholly involved in the demanded task: a sense of time disappears, self-conscious fades, and the emotions cease to occupy the mind. People with positive relationships live longer with better health, positive emotion, have a greater sense of meaning and satisfaction (Seligman, 2011).
Meaning helps individuals understand the sense of living as well as recognize their place on earth. Finally, accomplishment encompasses winning, a sense of mastery, achievement, and success that people pursue. Critics argue that the concept of happiness is connected to traits of personality, jobs, family relationships, health, the quality of the personal relationship, and measures of biological indicators like time of smile and activity of the brain. A comparison of money and wellbeing to happiness may be relative rather than absolute.
Specifically, at the society level, it appears that the increase in economic growth for the past decades in developed countries has resulted in gains in happiness, although the same is untrue for the underdeveloped nations. Most surveys have been performed enquiring about the connection between happiness and economic growth, thus, making it easy to assess the relationship between the two (Bruno & Alois, 2002).
It appears people in developed countries are happier than people who are living in underdeveloped countries. The positive relation between happiness and money is high in those countries that have average incomes below 13,000 dollars per annum. However, the rise in income in rich countries has no impact on happiness. In more developed countries like the United States and China, the average incomes have risen considerably for the past four decades, but the average reported happiness has not risen (Bruno, & Alois, 2002).
A social survey done in 2005 revealed that thirty-five percent of Americans were “very happy,” fifty percent were “pretty happy,” and ten percent were “not too happy.” Twenty-five percent of the household who had an annual income of 35,000 dollars reported to be “very happy” with the resulting graph showing an inclination to fifty percent on the families who earned more than 100,000 dollars. Based on these statistics, it appears the impact of income on happiness is relative, rather than absolute.
Blachnflower and Oswald (2004), economists, developed a model in which they measured happiness as a function of utility using a survey study from the 1970s to the late 1990s (Blanchflower, & Oswald, 2004). According to their findings, money, and other factors like marriage, family, jobs, and involvement in religious activities had an impact on happiness. Therefore, to some extent, it may be argued that money buys happiness.
While it appears desirable to assess utility, it is done in an ineffective means. According to economists, it is complex to make a comparison between work and pleasure (Bruno & Alois, 2002). Economists believe that a person who scores 90 on a survey assessment of satisfaction can be perceived as more satisfied than an individual who scores 60 (Bruno, & Alois, 2002).
People with income or a tax return of $50000 are happier than those having 2,000. Based on this belief, it can be assumed that people who have a higher income satisfaction scale are more happy and satisfied that those individuals with a lower scale. Specifically, this type of analysis and the assumption has been used in making of critical government decision as well as business decisions.
Psychologists who have developed the concept of wellbeing may disagree with this notion. Government and business organizations make decisions based on a group of people and not on single individuals. Therefore, there should be a clear distinction between measures of money and the subjective measure of satisfaction or general wellbeing of monetary situations.
Money helps people to tide over bad times, at least for some time. A person can borrow money to adopt to bad times or for the significance of investment. Most significantly, money produces income and an increment of benefits. Economists have contextualized the behavior of individuals regarding utility and the function of utility but admit that there lacks an existence of utility in any significant sense.
If people were asked whether they possess little or many utilities, they are likely to provide unsatisfactory answered. However, most people would choose more if they were asked whether they prefer more or little goods and services. Interestingly, these responses do not answer the question of whether or not they are happy when they have more services and goods.
Even though most people tend to argue that happiness and utility are related and that happiness is essentially being well off, they are not correlated. If money could buy happiness, it is expected that people who have higher income, with high utility, would be better off, happy, and satisfied with life.
References
Blanchflower, D. G., & Oswald, A. J. (2004). Well-being over time in Britain and the U.S.A. Journal of Public Economics, 88(7), 1359–86.
Bruno, F. S., & Alois, S. (2002). Happiness and economics: how the economy and institutions affect human well-being. Princeton: Princeton University Press.
Daniel, N. (2005). Happiness: The science behind your smile. New York: Oxford University Press.
Seligman, M. E. P. (2011). Flourish: A visionary new understanding of happiness and well-being. New York: Atria Paperback.