Wednesday, January 02, 2008

So money DOES buy happiness after all!!

"Aspirational treadmill" advocate (and economics Nobel winner) Daniel Kahneman does a stunning about face on the issue:

" To compound the irony, recent findings from the Gallup World Poll raise doubts about the puzzle itself. The most dramatic result is that when the entire range of human living standards is considered, the effects of income on a measure of life satisfaction (the "ladder of life") are not small at all. We had thought income effects are small because we were looking within countries. The GDP differences between countries are enormous, and highly predictive of differences in life satisfaction. In a sample of over 130,000 people from 126 countries, the correlation between the life satisfaction of individuals and the GDP of the country in which they live was over .40 – an exceptionally high value in social science. Humans everywhere, from Norway to Sierra Leone, apparently evaluate their life by a common standard of material prosperity, which changes as GDP increases. The implied conclusion, that citizens of different countries do not adapt to their level of prosperity, flies against everything we thought we knew ten years ago. We have been wrong and now we know it. "

Hat tip to Tyler, who is far too polite to point out the obvious implication, viz. those who have been using the old view to bash development and capitalism and globalization need to go back to the drawing board.

2 comments:

Tom said...

Post hoc ergo propter hoc?

I would guess that good life satisfaction and higher GDP both result from a third factor, most likely, a less-crappy-than-usual government.

Anonymous said...

I'd bet GDP & personal income have a direct effect too.
Having enough to eat, antibiotics, school for your kids, a TV, all tend to make life more pleasant.
Money may not buy happiness, but poverty sucks.