Money Doesn’t Always Equal Happiness Course: Microeconomics Happiness “that sense of warmth that begins at the core of the soul, spreads to the heart, and radiates outward from the eyes and lips of those who know it. The gift of happiness is elusive, but tangible. You cannot seek to find that which makes you happy for happiness comes from within and by your own choice. ” (Mr. Dale Reddish, 2010). This is a rather eloquent interpretation of happiness that really gets to the heart of the argument; does money really buy happiness?
The problem with most of the required reading is it is derived from survey data that uses a list of answers that is predetermined by the interviewer. That is where the social psychologist Hadley Cantril differed in his approach. Mr. Cantril understood the complexity of the question, and how people’s answers might vary throughout different cultures and socio-economic backgrounds. We are complex beings and one would think that the things that make us happy would vary significantly. The open-ended approach Mr. Cantril used allowed for a broad gap in actual results, surprisingly this was not the case. Despite Mr.
Cantril’s ambitious attempt the most common answer he received were along the lines of material conditions, and more importantly the individual’s level of living. We have all heard the phrase “you get what you put in to it”, this relates extremely well to the concept of marginal utility. I for one was raised knowing that in order to get the things I wanted I had to be willing to make sacrifices. One thing you learn while serving your country is nothing in this world is free, not even freedom itself. However, when one pursues their monetary goals in excess more often than not they tend to neglect the actual things that matter.
People become so caught up in chasing the buck that they tend to forget why they are doing it in the first place. Having fortune and fame is something that everyone wants, but few realize the sacrifices that our favorite movie stars and athletes have made throughout their lives. Look at some of the recent deaths that have surfaced due to prescription medications. Heath Ledger and Brittany Murphy, both were bright young stars who died tragically from prescription overdoses. To my surprise in many of these recent cases the victims were being prescribed medication for some form of depression.
The average person might be thinking, why on earth these people are so depressed; they have everything that money can buy. Unfortunately, the average hard working American is wrong in thinking that money buys happiness. They fail to realize the opportunity cost involved with the surrender of the time and energy on the way to stardom. The sad truth is many of these young actors and athletes have missed out on so much of their young lives because of the sacrifices they were forced to make. The principal question is simple, what is the opportunity cost of gaining this desired level of living.
What are you willing to sacrifice and what is the value of that particular sacrifice to you in order to get what you want? I am sure most readers of this paper would say something along the lines of “I will worry about the sacrifice once I am drinking margaritas by the pool at my new 14 room mansion” this type of thinking is exactly why most people are unhappy. They do not stop to think, about who is going to share those 14 rooms with them, and how lonely they could be in a big house with no real friends or family to enjoy it.
People think that money will answer all their problems, but rich people I’m sure will tell you that just isn’t the case. It might alleviate some of them, but you would have to be a rather shallow person if it was the answer to all your dilemmas. Let’s take a look at some of the pros and cons of being filthy rich; for starters you won’t have to work anymore! This is probably one of the biggest reasons young people want to be well off, and probably one of the biggest misconceptions. People seem to think that they can be rich, have all the things they want, and not have to work at all.
Sadly, this is never the case. Most rich people live a lavish lifestyle and the majority live just within their means. This isn’t only common among the rich; people earning lower incomes also tend to spend extravagantly. When people get a pay raise they tend to think that they will have extra money to save or spend. The truth is most people have probably already spent that raise before it even hits their bank accounts. In my opinion the answer to this dilemma is to live below your means and not within them; unfortunately, it is far more common to see people living above their means.
People want the finer things in life, and they want them fast. So much so that they forgot completely about the concept of optimality, which is simply doing the best we can within our constraints. Instead, they are up to their eyeballs in debt and paying outrageous amounts of interest to credit companies. After reading the paper written by Mr. Dwight R. Lee I was forced to reconsider my thinking on the matter slightly. Mr. Lee focuses on the idea that if people didn’t pursue money, then we would not all be afforded many of the comforts that we have today.
He goes on to say that although the happiness awarded through money is only temporary, there is a far bigger picture to consider. When people make money they inherently buy things with it, by doing this they create a demand for goods. As these good are in higher demand more suppliers will enter the market, which will naturally create competition. This competition stimulates lower prices, which in turn opens these commodities to people with lower incomes; by opening these markets to people with lower incomes we are contributing to overall better living conditions for everyone.
In Mr. Richard Easterlin’s paper he talks about the concept of internal norms specifically the internal living level norms. His theory states that the internal norms that people use to evaluate happiness only increase as you gain more wealth, and because of this people fail to factor the potential increase in their internal norms into their overall judgment of how well-being is affected. By not accounting for the increase in their internal norms people incorrectly assume that happiness and their well-being will increases with wealth.
However, because our expectations also increase along with our expenditures our overall happiness remains the same. Furthermore, Mr. Easterlin’s research shows that other things, including family create a longer lasting happiness. I think this is a key point in this argument, money comes and goes; however, good friends and family last a life time. The most important thing I took away from Mr. Easterlin’s paper is that in order to find happiness you need to find your own level of contentment, which is after all the actual definition of happiness.
The Merriam-Webster Dictionary defines Happiness as “a state of well-being and contentment”. (Merriam-Webster, 2010). Only you can decide what makes you happy, but you must find a balance between what creates long term happiness and what creates short term happiness. The evidence provided clearly shows that over your life cycle, what you do with your health, and family typically has a far more lasting effect on your overall happiness We need to get over this “money-illusion” and dedicate less time to making money, and more to nonpecuniary goals such as family and health. References Happiness. (2010).
In Merriam-Webster Online Dictionary. Retrieved May 23, 2010, from http://www. merriam-webster. com/dictionary/happiness Reddish, D. (2010). How do you find happiness? Message posted to http://www. thehappyguy. com/define-happiness. html Easterlin, R. A. (2004). “The Economics of Happiness” Daedalus, 2004, 133, Issue 2 – on happiness, 26 – 33. Retrieved February 22, 2010 from: http://www-rcf. usc. edu/~easterl/papers/Happiness. pdf Lee, D. W. (2005). “Who Says Money Cannot Buy Happiness? ” The Independent Review v 5(3), Retrieved February 22, 2010 from: http://www. independent. org/pdf/tir/tir_10_3_05_lee. pdf