The Price of Happiness: Why Logarithmic Income Matters More Than Dollars
I explore how happiness correlates linearly with the logarithm of income, not raw dollars, meaning a 10% raise boosts joy equally regardless of wealth. While individual marginal utility diminishes, real-world income distributions offset this decline. However, collective happiness gains exponentially when lower-income individuals benefit, revealing a critical tension in how we approach philanthropy and tax policy.
Reasoning linearly in a situation that calls for exponential thinking, or vice versa, is likely to lead to conclusions that are flawed.
- throw0101d
Harvard has been running longitudinal studies for several decades:
* https://en.wikipedia.org/wiki/Grant_Study
and their findings lean towards good relationships with family and friends are highly correlation with happiness, health, and many aspects of financial success. The released a book summarizing many results a few years ago:
* https://www.goodreads.com/book/show/61273746-the-good-life
* https://archive.is/https://www.theatlantic.com/ideas/archive...
- yboris
A classic paper worth a read:
If money doesn't make you happy, then you probably aren't spending it right
by Elizabeth Dunn, Daniel Gilbert, & Timothy D. Wilson
https://www.sciencedirect.com/science/article/abs/pii/S10577...
Includes explicit recommendations (even in the short abstract)!
- billfor
Was this AI written? It seems confusing to me but I'm not an economist. I think another way to look at happiness and money is that while money doesn't necessarily buy happiness, it avoids unhappiness. So you remove a negative factor -- not having money, which is a position nobody wants to be in. This is similar to your overall health, friends, love, etc.. It's not that you need tons of them , but not having any of them is a problem, especially health.
"When you don't have any money, the problem is food. When you have money, it's sex. When you have both, it's health. If everything is simply jake, then you're frightened of death."
- derbOac
I wonder how much any of those associations are with income per se versus career satisfaction per se?
I imagine people who are making more money are probably a better fit for their career, feel more needed, and so forth and so on. I do imagine there's some relationship with income and accumulating more money per se, but I wonder how strong that relationship is once you remove the effects of career satisfaction independent of monetary gain, if such a thing is even possible.
I guess it's hard for me to interpret these effects because there's so much going on in the background in terms of meeting life goals, feeling welcome where you're at and feeling like you're able to contribute what you're best at, and so forth and so on.
The other thing is the ordinate axis is hard for me to make sense of. Like, in Figure 1, life satisfaction goes from say, 2.7 to 3.2 on a scale of 1 to 4? That seems like a relatively narrow range to me, even if it is statistically significant, and my guess is those dots are hiding a lot of variability.
So maybe that's what people mean by diminishing returns? Not that there's no actual continuing increase, but that the increase is incredibly small on some absolute scale of happiness? It's hard to know what to make of the happiness numbers — if, say, consequential changes in some measure of happiness occur far below anything on that ordinate axis, none of these increases with income are of any practical significance.
- marcuskaz
Every Thursday, the ice cream man comes down our street. The price is usually around ~$20 to buy happiness for a family of 4.