How we feel about the quality of our lives is what matters. So is there a link between money and happiness? Absolutely – especially at the bottom of the pay scale. As you move up, there are diminishing returns. So the wellbeing boost from a £20,000 salary moving to £40,000 would be significant, but to achieve that again, you’d have to move from £40,000 to £80,000, then £80,000 to £160,000. To get the same impact, you have to double each time.
Diminishing returns, even, if I’ve my maths right, a logarithmic one.
Which is correct, it’s also the answer to the Easterlin Paradox. It’s true in general of economic growth and also of individual incomes.
Of course, he then goes on to deny it but still….
Yes, log base 2.
Pretty basic stuff though. I explain this to my 14 year old students (when they see a log GDP scale on a correlation).
History would tend to indicate a log scale is far too simplistic. People’s aspirations tend to rise along with their improvement in quality of living. Give people a roof over their head & enough to eat & they start expecting big flat screen TV’s & the latest iPhone. Human nature means that comparative wealth is a stronger driver than absolute wealth. Why the Graun’s full of articles on middle class poverty.
In fact it’s amusing to see that article in a newspaper dedicated to proving it isn’t true.
Surely you’d get less increase in wellbeing from a doubling of salary each time, not the same increase. Presumably by the time your income gets to (say)£50m/yr, doubling that to £100m really isn’t going to make much difference. There must be a point where you have enough income to satiate every possible want and any extra income beyond that is functionally useless.
No. It’s just nonsense. Money can have a diminishing value (e.g. the rate required to do an extra hour of work). Whether it’s logarithmic will depend on the measure.
Wellbeing is either an aggregate measure or a reported rating. Aggregate measures can give any relationship desired, but a decent aggregation is probably far worse than logarithmic (the component measures cap-out). Even this means little, because valuation is tricky within a single metric let alone an aggregate measure.
Reported ratings are ordinal data. Ratings mean fundamentally different things and have no numerical relationship beyond order. If you don’t define or baseline the scale, reported ratings mean very little. Academics doing calculations with ordinal values should be sent on a remedial stats course.
There must be a point where you have enough income to satiate every possible want and any extra income beyond that is functionally useless.
The sort of people who make hyper money are often hyper competitive. They’re not much beyond “keeping up with the Joneses” mentally except in the surpassing stakes. And ostentatious displays of wealth are part the power networks they operate in. Being rich can be very expensive.
There must be a point where you have enough income to satiate every possible personal want and any extra income beyond that is devoted to feeding your Messiah complex and allowing you to impose your quasi-scientific theories on lesser humans.
Log base X, keeping up with the Joneses; all well and good.
But I suspect that the ennui of Western society stems from the fact that many people are simply not equipped to realise Maslow’s highest point on the pyramid. (Call it fulfilment, transcendence, whatever.) No amount of money will compensate for that absence.
Money may be a lot like health – it can increase happiness providing something else isn’t preventing the increase (a sort of “weakest link” function).
If your salary doubles, but your child dies, your happiness is unlikely to increase that year.
M,
Hunter Biden’s dad may be the case that proves that rule.
Another way to happiness is to make other people unhappy, Just Stop Oil being a prime example. The Germans have a word for it.
Speaking for myself, my happiness index rocketed when I had accumulated enough money to stop going to work. I’m now super fit and a slightly less inept pianist. The garden still looks a bit like a jungle but life still has to have challenges remaining, it’s what gives it meaning.
It’s also normally used as an excuse for just taking money from the rich – taking 10,000 from some rich bastard won’t hurt him as much as it helps me so it’s ok when I do it.
But I suspect that the ennui of Western society stems from the fact that many people are simply not equipped to realise Maslow’s highest point on the pyramid.
There are too many deficiencies with Maslow’s pyramid for it to be a useful tool. “Transcendence” belongs further down because it exists further down. Religiosity is widespread to the point of being almost innate in humans, and is so powerful it can overwhelm all but the most base reflex physiology. Choosing to be burned at the stake in preference to physical safety (and thrusting your hand into the flames for good measure) is an extreme but illustrative example. Likewise with group-belonging, which is probably deeply connected.
This explains why so many are willing to, and quite likely will, throw away all the comfy trappings of Western civilisation for the sake of Gaia. Follow the science priests! Cast out the fossil fuels from hell and embrace the power-giving light from above! Cleanse your rubbish before placing it in the coloured totems! Sacrifice (having) children!
Pathetic bloody species, I’ve no sympathy at all.
Without wishing to be a pedant going from £20K to £40 K is not a doubling of income in real terms – after tax it is less than doubling.
@PJF it can be expensive to be rich. But not to be wealthy. Rich people signal their status. Wealthy people do not.
Another way to happiness is to make other people unhappy, Just Stop Oil being a prime example. The Germans have a word for it.
The English have a word for it as well. (Maybe different to the German one).
Say it with me now…
Ahem
Cuntishness
Rich people signal their status. Wealthy people do not.
You’ll need to be more specific, SadButMadLad. I had a quick scan of the dictionary sites to check definitions haven’t changed, but these still appear to be entirely interchangeable in this context (money). Wealth is riches; wealthy people are rich people.
“Pathetic bloody species, I’ve no sympathy at all.”
Some of us are pathetic, some of us are amazing. Could you design a smartphone, a sports watch or build a robot and land it safely on Mars? The human species covers a huge spectrum, from knuckle dragging thargs to levels of genius that the likes of myself cannot hope to comprehend.
There is no point at which all your desires are met. I don’t need much more money, and I actively turn down opportunities for a little bit more, but I sure know what I would do with any extra.
There comes a point where the expenditure of effort isn’t worth it. But that is because the increase in effort is fighting against that log scale. That validates the concept, not proves it wrong.
It is a truly unusual person who will not take money for zero effort.
≈========
The log scale of income to various outcomes is very well attested at a societal level. It causes all sorts of correlations to become linear. That cannot be accidental.
So while people, without evidence mind, can disparage the idea of a log relationship of income and wellbeing, that is clearly the *average* relationship.
@ Stonyground.
It’s a play on the Vogon from Hitchhikers Guide to the Galaxy when about to destroy the Earth to make way for a hyperspace bypass. My post was in jest. Not the first of mine to land on your username.
Re: humans, you are correct.
“This explains why so many are willing to, and quite likely will, throw away all the comfy trappings of Western civilisation for the sake of Gaia. Follow the science priests! Cast out the fossil fuels from hell and embrace the power-giving light from above! Cleanse your rubbish before placing it in the coloured totems! Sacrifice (having) children!”
Nonsense. All the eco-mentalists show absolutely no sign of being prepared to don hair shirts themselves. They certainly don’t do it voluntarily. Instead they want to impose poverty on other people. Just as the Church in medieval times grew fat on the back of the poor, the environmental crowd all assume that they too will be part of the priestly class who are given dispensation to be sinful because of their ‘good works’ in ‘converting’ the masses.
Why isn’t the obvious answer basic income?
@ Why isn’t basic income the no-brainer solution?
Because those of us *with* brains observe that needs are not uniformly equal so those with a disability need more income to acquire an equal standard of living, those fit and healthy retired/unemployed with an allotment need less income, married couples need less than twice the income of a single person living on their own, homeowners don’t have to pay rent and council tenants only pay half the market rate …
Universal Credit was an attempt to provide for those in need without Gordon Brown’s spikes of effective tax rates far in excess of 100% but it is far from perfect (albeit a great improvement on the previous system).