Money and Happiness
By Arnold Kling
Considerable evidence suggests that if we use an increase in our incomes, as many of us do, simply to buy bigger houses and more expensive cars, then we do not end up any happier than before. But if we use an increase in our incomes to buy more of certain inconspicuous goods–such as freedom from a long commute or a stressful job–then the evidence paints a very different picture. The less we spend on conspicuous consumption goods, the better we can afford to alleviate congestion; and the more time we can devote to family and friends, to exercise, sleep, travel, and other restorative activities. On the best available evidence, reallocating our time and money in these and similar ways would result in healthier, longer– and happier–lives.
In the past, I have criticized so-called “happiness research.” However, Frank’s article at least tries to address those criticisms, and it is well worth reading.
Frank uses an interesting example to illustrate his thinking. He says that most people would rather live in a society where houses are smaller and commutes are shorter than where we end up in a free-market equilibrium. In my case, I happen to spend less time commuting and live in a smaller house than is typical for my income bracket. So I like his example. But I’m still not comfortable with the notion that forcing other people to live like me would make them happier.
For Discussion. Assuming that government intervention is needed in order to move society to an equilibrium in which there is less conspicuous consumption and more inconspicuous consumption, how would happiness be affected by the loss of personal freedom, which is an element of inconspicuous consumption? How would we know whether people were truly happier?