Can Money Buy Happiness?

16 September 2013 Comments Offon Can Money Buy Happiness?

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Can Money Buy Happiness?
Dr. Asad Zaman

                Across time and space, in widely different cultures and religions, there is an amazing amount of consensus that the answer to this age-old question is an emphatic “No”. The legend of how the golden touch of King Midas turned his daughter to gold teaches this lesson to children. Early in the twentieth century, some influential thinkers argued that even though greed for gold was bad – a “disgusting morbidity” – it could be harnessed for a good end. Unchaining the powerful drives for accumulation of wealth would create wealth for the society as a whole, ultimately freeing man from all worldly worries. Keynes expressed this vision poetically: “… we must pretend that fair is foul and foul is fair. Avarice and usury must be our gods for a while, for only they can lead us out of the tunnel of economic necessity.”

This vision of a ‘heaven on Earth’ created by a fabulous increase in wealth, inspired two generations of followers. The hope was that once free of the necessity to toil for a living, men would become kind, generous and gentle. They would turn to higher pursuits of philosophy, arts, aesthetics, and sciences, and develop an advanced and sophisticated culture.

Things did not go according to plan. Samuelson was one of the most influential disciples of Keynes, and played a central role in spreading the vision of human progress through economic development. After witnessing decades of unprecedented increases in wealth, he acknowledged that “great affluence has not brought about the slackening of economic ambition,” and that we live in a “ruthless economy.” The contrast between what was promised and what actually occurred was so great that many different fields of research emerged to analyze the causes of this failure. One of the most important of these is called “Happiness Studies.”

A study by Easterlin which initiated this field,  led to the surprising conclusion that very large changes in material comforts had virtually no effect on life-satisfaction, or ‘happiness,’ across time and across cultures. Easterlin showed that people in the twentieth century in USA enjoyed comforts available only to princes of a century ago. Similarly, the standards of living were dramatically different in USA and India around the middle of the twentieth century. Nonetheless, piecing together evidence from a wide variety of different sources, he found virtually no difference in life satisfaction among these vastly different societies.  This became known as the Easterlin Paradox: in the long run, there is no relationship between the wealth of nations and happiness. This discovery has radical implications. If true, then all the collective efforts poured into achieving high growth rates have been wasted. We have been pursuing the mirage of economic heaven at great costs to environment and society.  About a quarter century of intensive debate and research has led to some firm conclusions, which we summarize below.

In the first place, money is extremely important for the poor. Satisfying basic needs of food, health, education, housing etc. definitely increases happiness. On this basis alone, it would appear that increased wealth would lead to reduction in poverty, and hence to increase in happiness. In an earlier column entitled “The Vacuum Cleaner Effect,” I explained why this was not the case. The process of economic growth has increased inequalities and poverty. A recent article by Nobel Prize winning economist Joseph Stiglitz entitled “Of the 1%, by the 1% and for the 1%” shows the dramatic increase in the concentration of wealth in the hands of the wealthy.

Secondly, beyond the level of basic needs, increases in wealth lead only to short term and temporary increases in happiness. Long run durable changes in happiness are strongly tied to friends, family, community, and old fashioned social norms represented by trust, commitments, loyalties, and courtesy. Legitimization of the pursuit of wealth has led to an erosion of these social norms.The unfortunate consequences in the West have been documented in a book entitled “The Loss of Happiness in Market Democracies,” by Professor Robert Lane. It is an urgent priority for us in Pakistan to take these findings seriously into consideration in setting priorities for national growth and development.