A Peace of Someone Else's Mind

Todays lecture by Dan Gilbert on economics and happiness. 

"Wealth is a poor predictor of happiness. It’s not a useless predictor, but it is quite limited. The first $40,000 or so buys you almost all of the happiness you can get from wealth. The difference between earning nothing and earning $20,000 is enormous—that’s the difference between having shelter and food and being homeless and hungry.

But economists have shown us that after basic needs are met, there isn’t much ‘marginal utility’ to increased wealth. In other words, the difference between a guy who makes $15,000 and a guy who makes $40,000 is much bigger than the difference between the guy who makes $100,000 and the guy who makes $1,000,000. Psychologists, philosophers, and religious leaders are a little too quick to say that money can’t buy happiness, and that really betrays a failure to understand what it’s like to live in the streets with an empty stomach. Money makes a big difference to people who have none.

On the other hand, once basic needs are met, further wealth doesn’t seem to predict further happiness. So the relationship between money and happiness is complicated, and definitely not linear. If it were linear, then billionaires would be a thousand times happier than millionaires, who would be a hundred times happier than professors. That clearly isn’t the case.

On the other hand, social relationships are a powerful predictor of happiness—much more so than money is. Happy people have extensive social networks and good relationships with the people in those networks. What’s interesting to me is that while money is weakly and complexly correlated with happiness, and social relationships are strongly and simply correlated with happiness, most of us spend most of our time trying to be happy by pursuing wealth. Why?

Individuals and societies don’t have the same fundamental need. Individuals want to be happy, and societies want individuals to consume. Most of us don’t feel personally responsible for stoking our country’s economic engine; we feel personally responsible for increasing our own well-being. These different goals present a real dilemma, and society cunningly solves it by teaching us that consumption will bring us happiness.

Society convinces us that what’s good for the economy is good for us too. This message is delivered to us by every magazine, television, newspaper, and billboard, at every bus stop, grocery store, and airport. It finds us in our cars, it’s made its way onto our clothing. Happiness, we learn, is just around the corner and it requires that we consume just one more thing. And then just one thing more after that. So we do, we find out that the happiness of consumption is thin and fleeting, and rather than thinking to ourselves, “Gosh, that promise of happiness-by-consumption was a lie,” we instead think, “Gosh, I must not have consumed enough and I probably need just one small upgrade to my stereo, car, wardrobe, or wife, and then I’ll be happy.”

We live in the shadow of a great lie, and by the time we figure out that it is a lie we are closing in on death and have become irrelevant consumers, and a new generation of young and relevant consumers takes our place in the great chain of shopping."

–Dan Gilbert, “Affective Forecasting” 

Gilbert is a wealthy rich guy who has billions.  So he probably has a good handle on this subject.  He was also the guy who started Quicken Loans and is owner of many sports franchises, including the Cleveland Cavaliers.  I have no idea if he is a good guy or not.  He is rich so probably hasn't been in touch with reality, or at least my reality for decades.