The value of happiness

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The value of happiness.

Happiness has loomed large in my personal reading this week. One article considered whether money can make us absolutely happy or just relatively happy, while another questioned whether happiness can ever be used to measure overall wellbeing.

An article in The Economist cited a study where randomly selected Kenyan households were given varying amounts of cash (averaging around $500 each). Researchers then monitored the happiness of the cash recipients via questionnaires, tests for clinical depression and saliva tests (to check cortisol, a hormone associated with stress).

The recipients' happiness was measured relative to their pre-cash happiness and relative to those households that didn't receive any cash.

It was no surprise there was an immediate and significant happiness boost on receipt of the cash. Recipients felt happier than before the cash payment and they felt happier than those villagers who missed out.

I was not surprised to learn the happiness boost was short-lived — we're told often enough money does not buy long-term happiness.

The phenomenon economists call "hedonistic adaptation" means the effects of a change in circumstances wears off as people get used to them. The villagers' happiness (recipients and non-recipients) returned to its initial level within twelve months.

The more interesting aspect of this study was the happiness of those villagers who did not receive the cash.

Their happiness fell sharply as their neighbours' fortunes improved. In fact, their unhappiness at seeing their peers get richer was larger than the happiness felt by the recipients. The larger the handouts, the more unhappy the non-recipients were.

It wasn't the inequality overall that bothered them; it was the decline in their own wealth relative to others.

The researchers surmised that, as humans, we compare ourselves with everyone else but pay particular attention to those who have more than us. Put simply: we are never happy, because there is always someone who is better off than us.

The second article discussed the notion promoted 30 years ago by the fourth King of Bhutan, that GNH (gross national happiness) is a better way of measuring a country's living standards than gross domestic product or GDP. Since 1971, Bhutan has rejected GDP and, in its place, has championed a GNH index which measures prosperity by reference to the spiritual, physical, social and environmental health of its citizens.

In recent years, economists have become more interested in considering non-economic "happiness factors"; the OECD now has an index that measures and compares the living standards and wellbeing of its 34 member countries.

However a Bloomberg editorial last week questioned the concept of GNH on the basis that happiness can never truly be measured.

The problem is we all view happiness differently. Some people reside at either end of the happiness spectrum; generally happy with their lot or generally prone to grumpiness.

Our notion of happiness can be relative rather than absolute — we might be happy compared to two years ago, or as per the Kenyan example, happy relative to others in our village but not altogether happy on an absolute basis.

A recent study by a Nobel-prizewinning economist showed there was no correlation between happiness and suicide. The Bloomberg article concluded that, if we can't even predict how likely people are to kill themselves, we shouldn't be putting any weight on how people perceive their current state of happiness.

Emotions — including basic ones like happiness — are complex, subtle and hard to measure. While we all clearly value happiness, a bit more work is required before we can truly say we understand happiness, let alone put a quantitative value on it.


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