User:Wsampson1974/Happiness economics

Individual income[edit]
Historically, economists have said that well-being is a simple function of income. However, it has been found that once wealth reaches a subsistence level, its effectiveness as a generator of well-being is greatly diminished. Happiness economists hope to change the way governments view well-being and how to most effectively govern and allocate resources given this paradox.

In 2010, Daniel Kahneman and Angus Deaton found that higher earners generally reported better life satisfaction, but people's day-to-day emotional well-being only rose with earnings until a threshold annual household pre-tax income of $75,000. This particular study by Kahneman and Deaton showed the relationship between experienced happiness and the maximum amount of income at $75,000. Experienced happiness is the happiness received on a daily basis-"the frequency and intensity of experiences of joy, fascination, anxiety, sadness, anger, and affection that make one's life pleasant or unpleasant." The other finding from Kahneman and Deaton is there is no evidence supporting a maximum income to what is called reflective happiness. This data is supported by the use of the Cantrill Ladder and revealed that there is a direct relationship between income and reflective happiness. This can conclude, to a point, that money does buy happiness.

Other factors have been suggested as making people happier than money. A short term course of psychological therapy is 32 times more cost effective at increasing happiness than simply increasing income.

Scholars at the University of Virginia, University of British Columbia and Harvard University released a study in 2011 after examining numerous academic paper in response to an apparent contradiction: "When asked to take stock of their lives, people with more money report being a good deal more satisfied. But when asked how happy they are at the moment, people with more money are barely different than those with less." Published in the Journal of Consumer Psychology, the study is entitled "If Money Doesn't Make You Happy, Then You Probably Aren't Spending It Right" and included the following eight general recommendations:


 * Spend money on "experiences" rather than goods.
 * Donate money to others, including charities, rather than spending it solely on oneself.
 * Spend small amounts of money on many small, temporary pleasures rather than less often on larger ones.
 * Don't spend money on "extended warranties and other forms of overpriced insurance."
 * Adjust one's mindset to "pay now, consume later," instead of "consume now, pay later."
 * Exercise circumspection about the day-to-day consequences of a purchase beforehand.
 * Rather than buying products that provide the "best deal," make purchases based on what will facilitate well-being.
 * Seek out the opinions of other people who have prior experience of a product before purchasing it.

In their "Unhappy Cities" paper, Edward Glaeser, Joshua Gottlieb and Oren Ziv examined the self-reported subjective well-being of people living in American metropolitan areas, particularly in relation to the notion that "individuals make trade-offs among competing objectives, including but not limited to happiness." The researchers findings revealed that people living in metropolitan areas where lower levels of happiness are reported are receiving higher real wages, and they suggest in their conclusion that "humans are quite understandably willing to sacrifice both happiness and life satisfaction if the price is right."