Tuesday, April 11, 2006

If Money Doesn’t Buy Happiness, What Does?

A growing field of economic research is being devoted to the Economics of Happiness. Researchers attempt to understand peoples’ quest for material possessions despite the apparent lack of happiness obtained from them. And, if money doesn’t buy happiness, what does? Marketing applications of happiness research is obvious, as firms spend billions of dollars annually to convince consumers that they need the firms’ products.

However, some researchers suggest that happiness lies in the pursuit of goals, not in the goals themselves. University of Southern California researcher Richard Easterlin theorizes that people are caught in a constant cycle of desire and dissatisfaction. Temporary happiness is possible by striving for and achieving a goal, but inevitably people quickly become dissatisfied with that goal and desire a new goal. Behavioral economists call this adaptation--once you get what you want, it quickly loses its luster.

Easterlin offers a comparison of psychological and economic explanations of happiness in his 2004 article in Daedalus. In the article, Easterlin discusses the effects of income, marriage, divorce, children, etc. on an individual’s short-run and long-run happiness. He references a 1960s international study that identified material wealth, family concerns, and personal and family health as the most important factors (in that order), and examines these factors in terms of happiness today. He finds that family and health circumstances have lasting effects on happiness, while wealth does not.

1. What are the positive implications of the “treadmill approach to happiness?”

2. What are the biggest determinants of your happiness?

3. How could happiness research be used in legal proceedings and pharmaceutical marketing?

Topics: Happiness, Adaptation, Behavioral Economics


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