The relationship between happiness and wealth

The relationship between happiness and wealth

The pursuit of happiness – sustaining human well-being

Tuesday, 26 August 2008

By Dr Steve Hatfield-Dodds and Anthea Coggan

Sustainable development is really about ensuring the planet is able to support human well-being over the long run: happy and healthy people, forever. This definition both affirms the importance of ê¢__‘–progress”, and reminds us that progress should not be taken for granted.

More money does not make us happier ê¢__‘Ô_A surprise from happiness research is that rising average incomes do not make people happier. Average income in the United States today, for example, is around five times higher than it was in 1900. Income in Japan has increased at a similar rate since the late 1950s. Australians, meanwhile, are around eight times richer than a century ago as GDP has increased significantly in line with economic growth (see Ecos 134, pp. 12-15).

Surveys measuring happiness only began in the 1940s, but show little or no general increase in happiness levels over the last five decades. In fact, Australians” happiness measure has arguably declined slightly.1 This weak relationship between happiness and income over time contrasts with results that indicate that, at any given time, people with higher incomes seem to be happier than those with lower incomes. In other words, happiness appears to be a function of relative income, or social position, rather than absolute purchasing power. While we are richer now we are not, by the same degree, happier.

ê¢__‘Ô_ but too little can be bad

The insight that ê¢__‘–more money does not make us happier” has two important caveats.

To read more – click here