Thinking like an economist: The basic vocabulary of the field

Thinking like an economist: The basic vocabulary of the field



Thinking like an economist: The basic vocabulary of the field

1. In what ways can we say that ?money buys happiness??

The answer to this question depends on how poor a “poor country” is. People in poor countries where much of the population lives below subsistence level are much unhappier than people in rich countries, on average. International comparative studies of happiness consistently place the poorest nations of the world—especially the countries of sub-Saharan Africa—at the very bottom.

In 2006, one study ranking countries in terms of happiness found that Zimbabwe and Burundi were the unhappiest places on earth. And this makes sense, of course: It is ridiculous to imagine that illiteracy, high child mortality, and the threat of starvation are any more pleasant or bearable to a Burundian than they would be to an American. But once countries get past the prosperity level that solves large-scale health and nutrition problems, income disparity pales in comparison with other factors in predicting happiness, such as culture and faith. (Lee, 2005)

Like nations and communities, as long as they don't start out dangerously impoverished,  individuals get little or no extra happiness as they get richer—even massively richer. In a classic 1978 study, two psychologists interviewed 22 major lottery winners and found that the joy of sudden wealth wore off in a few months. Further, lottery winners have a harder time than the rest of us enjoying life's prosaic pleasures: watching television, shopping, talking with friends, and so forth. It's as if the overwhelming experience of winning the lottery dulls the enjoyable flavors of ordinary life. (Lee, 2005)

So it's true: Money doesn't bring enduring happiness for countries, communities, or individuals, except perhaps when people start out in abject poverty. Why not? ...