Thursday, March 4, 2010

The money-happiness index

This was an interesting subject for the time that's in it - how closely linked are your levels of happiness with the bottom line of your bank balance?
Could have written a book on it - and might still do! - but here's a small overview from Wednesday's Irish Independent...

Can having too much money really make you miserable?
Susan Daly ponders the question as a millionaire gives away his fortune

For those of us not rolling in it, the idiom that money can't buy happiness brings a certain comfort. But the notion that riches can make you actively unhappy? Would that we could all test that theory.

An Austrian multi-millionaire has done just that -- and claims his fat bank balance made him miserable. Karl Radeber has sold all his worldly possessions: his home; his luxury cars; his collection of glider planes; his €4m interior furnishings business -- and donated the proceeds to charity.

The process has left him feeling "free, the opposite of heavy", he says. "Money is counter-productive -- it prevents happiness to come."

Radeber is no bored trust-fund baby, playing at being penniless for kicks. He came from a poor family and built his business from scratch. The accumulation of money, he says, made him chronically dissatisfied.

"I had the feeling I was working as a slave for things that I did not wish for or need."

Radeber's story seems to back up what is known in the literature on human happiness as the Easterlin Paradox. In 1974, economist Richard Easterlin found that once income was sufficient to meet a person's basic needs, happiness did not necessarily increase incrementally with income. It reaches a plateau.

That research was challenged by a 2008 study that linked higher incomes to higher happiness -- but it did add that once a certain point was reached, the rate of increasing happiness slowed.

"I think that what is happening in the economy right now is leaving people more open to the concept of what is enough," says Dr Anne B Ryan of NUI Maynooth, author of Balancing Your Life and Enough Is Plenty. "The Irish phrase 'go leor' has the dual meaning of 'enough' and 'plenty'. There is an optimum and more than that isn't necessarily helpful."

Dr Ryan's first book, Balancing Your Life, was written at the height of the Celtic Tiger in 2002. What she discovered from her case studies was that working harder for money generated a "treadmill" effect.

"People were so tired by their hectic loves that they spent money to compensate for it," she says. "They bought themselves 'treats', massages, retail therapy, ate out or bought expensive ready-meals.

"The people who said they had satisfying lives were often living on what would be considered smallish incomes. The pay-off for them was free time to do voluntary work, work that really interested them or time for loved ones."

It would be glib to suggest that someone facing foreclosure on their house or someone on the poverty line in a slum in Guatemala is happier than Richard Branson. Yet even in dire poverty, the key to happiness is not necessarily money.

Research in Costa Rica between 2004 and 2006 found that not all people who were considered poor recorded low levels of life satisfaction.

Those who came out of poverty were as likely to be unhappy if they were dissatisfied in other areas -- family, health, how much they liked their job.

A famous 1978 study pitted the happiness levels of a group of lottery winners against a group of people who were paralysed in accidents. Both groups experienced a drastic shift in happiness in the initial months after the event -- those paralysed were often thrown into deep depression, while the lottery winners existed in a state of euphoria.

After that period, the injured's state of happiness returned to levels akin to those they experienced before their accidents. The ecstasy also wore off for the lottery winners but most seemed unable to find happiness in the mundane things that had previously brought them joy.

That is not to say that money can't bring happiness -- it's just a case of spending it correctly.

In what the field of positive psychology would dub 'pro-social spending', spending money on creating memories brings a long-lived joy that buying goods just can't match. Bringing your partner out to dinner or buying a ticket to see a concert with friends is a good emotional investment: buying a designer dress doesn't have the same psychological return.

Richard Branson is a good case of one who spreads his billions to bring maximum joy. His extravagances are in sponsoring football teams, buying a Caribbean island retreat for friends and family, and indulging his love of adventure sports -- the purchase of experiences over things.

He is also a prominent philanthropist, something which Jordan Campbell of Philanthropy Ireland says brings satisfaction when the donor is inspired by the causes to which they give.

"I think it is part of our human instinct to look after each other," says Campbell, "and that has the side-product of making us feel good."

Philanthropy is not just for billionaires -- any regular contribution of time or resources is the kind of sustained giving at which ordinary Irish folk excel.

"Money in itself can only bring you so far. Chuck Feeney (the Irish-American billionaire who transferred the bulk of his fortune to his Atlantic Philanthropies) says that his philosophy is that once your basic needs are met, well, what are you going to do with the rest of it?"

Economically we might be devastated, but emotionally we might just recover.

"We are becoming more financially intelligent and not calling it penny-pinching," says Dr Anne B Ryan.

Should our economic circumstances improve, Frances Feeney (no relation to Chuck) of Social Capital Ireland suggests we might be wiser to how to enjoy it.

"Companies are starting to look to invest in interesting projects that might yield a blended return, financial and social. People still want to make money -- but they want it to count socially too."

All profits from sales of Enough is Plenty by Dr Anne B Ryan (see go to sustainable economics foundation Feasta.

• “People ask why I don’t charge for my expertise – where’s the fun in that?”
Landscape gardener PETER DONEGAN

“I’m not stupid with the euro in my pocket but some of the things I most enjoy I do for free. Recently I took a group of people around the war memorial gardens in Islandbridge. My wife made country apple pie and we had coffee in flasks, and we have another trip coming up to Ireland’s Eye. But what people kept bouncing back to me afterwards was: Why didn’t you charge for it?
I don’t get that. I competed at the Irish Conker Championships last year just for fun. It’s like I won’t put a shop on my blog ( because that’s not why I do it. I’d say 50 per cent of the phone calls I get are for free gardening advice, and I’ve been on the garden side of things on the Niall Mellon trips. I’m going to sound like a martyr but for me, it’s just not the point of life to always have to tie in everything you do to paying the bills.”

• “Our baby has shown me that family, love, joy give a life its value”
Ice-cream maker KIERAN MURPHY

“During the Celtic Tiger people talked about money all the time, and now we’re past it people still talk about it all the time. There are all these other things that give a life value: family, love, joy.
I know budgets are shrinking – we’ve just had a baby so I’m quite aware of it. But compared to what joy the baby has given me, the financial stresses pale.
My brother and I didn’t get into making ice-cream for money exactly – we did it because we love sweet things. No-one actually needs an ice-cream but it transcends that. People come into us because they are either happy to start with or they want to be cheered up.”

• “I never worked for the money – but now I’m very aware I need it”
TV and radio producer/director PAT O’MAHONY
“When I was a nipper, I did stuff because I wanted to do stuff. In the ’80s we were living in one big recession but I left jobs I was making good money in because I hated them.
Now I’m not that fussy – I can’t afford to be. I’ve never, ever worked for money but now I’m very aware I need money. There is a minimum basic amount that people need and it varies from person to person. I have a young lad now in college and this is not a good time to be broke.
I’m nearly 49 and for the first time, I’m thinking, Come back that money I used to earn! I left Head2Toe (RTE fashion show Pat presented) after five years because it was time for something else.
I know people who are extremely money-driven and I don’t understand that attitude of ‘I need loads of cash and I need you all to know that I have loads of it’. But I will say I’m no longer the footloose and fancy-free kid I was. It’s very easy to be a middle-class hippie when you’re young.”

1 comment:

  1. Another interesting one :)

    Worth pointing out that money and health are strongly correlated, though. The richer you are, the longer your life expectancy is. Children born to unemployed parents in 1999 were over twice as likely to have low birth weights - and therefore lots of future health problems - than children born to wealthy parents. (Working on a little article about that right now!) So even though we may dismiss the importance of wealth, when wealth drastically decreases the extent of infant mortality in a society, it suddenly looks like a good idea again.

    So I guess it's important, but not the only thing. I also wonder if people are generally only happy when their income is broadly similar to their neighbours - and so a growing economy means they need to keep increasing this income to avoid "relative poverty"?