Studies have shown that money does not makes you happier -- beyond a certain point. The economist Richard Easterlin concluded in 1974 that people do get happier as they make enough money to cover their basic expenses, but beyond that there is no correlation. Among economists this is known as the “Easterlin paradox.”
Hard nosed economists are generally resistant to soft data like subjective self-reports, but the felt quality of the lives we lead is hardly irrelevant to society, even if hard to capture. More importantly, in a society organized as much around consumerism as ours, it is useful to have data to support our intuition that more and more goods do not lead to greater joy and contentment, despite what advertisements promise.
The British and French governments now regularly try to measure the happiness of their citizens along with the GDP, though they frame it more as a matter of emotional well-being: being healthy, secure, clean, decently housed, and so on. And economists who study this are finding that the original “Easterlin paradox” is turning out to be more complex than originally framed. There is no simple and direct correlation between money and happiness, but, as Adam Davidson, a financial reporter for The New York Times put it recently: “most rich countries have reported increases in happiness as they become richer.”
But, he adds, there is “one strange exception. The U.S. is nearly three times as rich today as it was in 1973, when Easterlin was collecting his data. According to nearly every survey, though, Americans are not at all happier than we were back then.” Davidson suggests that this may be because “many Americans have not shared in the increased wealth. With the disappearance of pensions and the increased volatility of labor markets, many workers face more uncertainty than ever before.” (See, “<a href="https://www.psychologytoday.com/%3Ca%20href%3D"http://www.nytimes.com/2013/02/10/magazine/money-changes-everything.html?pagewanted=1&_r=0&hp">http://www.nytimes.com/2013/02/10/magazine/money-changes-everything.html... ">Money Changes Everything</a>.”)
That is a good point, but growing income inequality afflicts Britain and France as well as the rest of the West. What might be distinctive about us?
A new study by the American Psychological Association suggests that “almost half of Americans are one emergency away from financial ruin.” As reported in The Los Angeles Times, “Slightly more than 50% said that overwhelming worries disrupted their sleep in the past month. A dour economy is top of mind for young people, with work and job stability sending their stress levels soaring.” (See “<a href="https://www.psychologytoday.com/%3Ca%20href%3D"http://www.latimes.com/business/money/la-fi-mo-millenials-stress-economy-20130208,0,3567750.story">http://www.latimes.com/business/money/la-fi-mo-millenials-stress-economy... ">Millennials Feel More Stress</a>.”)
So income inequality has increasingly come to mean insecurity, stress and sleeplessness. Americans have tended to believe that if you worked hard you would succeed. We have seen ourselves as the land of opportunity. But now the dismal job market not only undermines that faith, it also confronts us all -- and especially younger generations -- with the specter of failure and poverty.
The dream, it turns out, has an undercurrent of dread. Living with those fears not only makes it harder to maintain our faith but harder to feel content. Life on the edge is tense, short-tempered, sleepless, self-centered, ungenerous – and, need it be said, unhappy.