5 ms·

Why We’re Still Happy

17 points by veteran 18y ago

jmtame 18y ago
Makes sense, especially when you consider the example of racism in history.
petercooper 18y ago
As the economists David Hemenway and Sara Solnick demonstrated in a study at Harvard, many people would prefer to receive an annual salary of $50,000 when others are making $25,000 than to earn $100,000 a year when others are making $200,000. I find it more surprising that everyone didn't choose the first option. Even though $100,000 is more than $50,000, in terms of purchasing power it's all about relativity. The more other people earn given the same productivity, the higher prices will be overall and the less purchasing power you'll have. For example, if you gave everyone $10m and I only got $2m.. I'd still be a "millionaire" but inflation would go through the roof and I'd still end up with rather little compared to everyone else.
- ShardPhoenix 18y ago
  I think it's assumed that these are "real" dollar values (ie in the latter case the overall economy would be larger). The point of the study is that people care more about relative status than absolute wealth.
  - Herring 18y ago
    I must be missing something. Do people regularly turn down jobs paying double their current salary ... because others in the new department are getting more? I understand the cost of living in the new city might be higher, or that they prefer shopping around for a better deal, but that's not what the study's saying.
    - Retric 18y ago
      In many cases it's relative value that's more important. Take housing, if you make twice the average person in your area housing is not a problem if you make 1/2 it's a major issue. It works the same way for education and other services. The only advantage to an increased economy when you fall behind is hard goods which are not that important. I don't care if I can buy a 70" TV if I can't pay for housing. etc.
    - yummyfajitas 18y ago
      I know of one example where someone turned down extra money out of jealousy, albeit under slightly different circumstances. A friend of mine was meeting a guy for a potential arranged marriage. She had a good job working for a large investment bank. A deal killer for the potential husband: the wife can't make more money than him. This was VERY important to him, literally the second or third question he asked her. (Him being a jackass was a deal killer for her.)
    - asdflkj 18y ago
      People do regularly choose not to immigrate to a richer country because of similar reasons.
  - petercooper 18y ago
    If they were real dollar values and everyone else were earning double what you were, you might be able to maintain a good lifestyle by current standards, but by the standards of this significantly larger more advanced economy you'd still be relatively "poor" while earning twice today's income. I think the study shows people are inherently aware of this (or at least wired to act in such a way).
- scott_s 18y ago
  The last time I heard about a study like that (maybe the same one), they explicitly stated that $1 had the same purchasing power in both circumstances.
  - andrewf 18y ago
    That's a paradox. At that point surely the survey becomes garbage in, garbage out.
    - yummyfajitas 18y ago
      It's hardly a paradox. It describes the following two situations: a) I live a postdoc lifestyle, everyone else lives a grad student lifestyle. b) I live a full professor lifestyle, everyone else lives an investment banker lifestyle. World b just has more goods in it than world a. That's not a paradox; Earth 2008 has far more goods in it than Earth 1908.
      - cia_plant 18y ago
        Rich people throughout the world, and throughout history, have had good housing, leisure time, and a sense of security. They've had the opportunity to socialize with other successful people, a group which includes politicians, entertainers, etc. Poor people have lacked these things even in extremely affluent societies like USA 2008. The question is just too hard to interpret. "Standard of living" is very complicated and can't really be reduced to "purchasing power", nor to "purchasing power plus envy". There are a lot of things which money can't buy, or which money can buy but which are scarce no matter how affluent the society is.
        yummyfajitas 18y ago
        Poor people in the USA (at least by the official definition of poverty) do not lack good housing or leisure time. In fact, the poor have more leisure time than the rich. http://www.heritage.org/Research/welfare/bg2064.cfm http://www.heritage.org/Research/welfare/bg2064.cfm I won't comment on their feelings ("a sense of security"), or their ability to socialize with Angelina Jolie. In any case, by "lifestyle" I simply meant "material standard of living". I.e., $25,000, $50,000, or $100,000 worth of consumer goods and services as measured in 2008 dollars.
lallysingh 18y ago
I'm not sure I see the real insight here, but the data point is nice. AFAIK, Social standing, group health/status are all innately part of humans, but our economic status is quite synthetic. If it was all the food we had for 3 months instead of income, I think we'd see something different.
TweedHeads 18y ago
This is a fake recession, an induced depression that won't last a year. Wake me up when there isn't any bread in the bakery.
ced 18y ago
Social status is a zero-sum game, so if happiness correlates strongly with it.... Then an egalitarian policy could be the best choice even if everyone would individually be worse off. I think this is a crucially missing point from most analyses about the income gap.
- tl 18y ago
  So, basically this is the same point that 1984 made (make everyone's quality of life suck to protect the inner party's welfare, even if they're not better off than an above average person pre-Ingsoc) applied to at an individual level?
pg 18y ago
Obsession with status isn't the only explanation for this. A problem that affects only you probably is one that you should worry more about. Whereas something that affects everyone is probably not something you can easily fix.

17 points by veteran 18y ago

Makes sense, especially when you consider the example of racism in history.

As the economists David Hemenway and Sara Solnick demonstrated in a study at Harvard, many people would prefer to receive an annual salary of $50,000 when others are making $25,000 than to earn $100,000 a year when others are making $200,000. I find it more surprising that everyone didn't choose the first option. Even though $100,000 is more than $50,000, in terms of purchasing power it's all about relativity. The more other people earn given the same productivity, the higher prices will be overall and the less purchasing power you'll have. For example, if you gave everyone $10m and I only got $2m.. I'd still be a "millionaire" but inflation would go through the roof and I'd still end up with rather little compared to everyone else.

ShardPhoenix 18y ago
I think it's assumed that these are "real" dollar values (ie in the latter case the overall economy would be larger). The point of the study is that people care more about relative status than absolute wealth.
- Herring 18y ago
  I must be missing something. Do people regularly turn down jobs paying double their current salary ... because others in the new department are getting more? I understand the cost of living in the new city might be higher, or that they prefer shopping around for a better deal, but that's not what the study's saying.
  - Retric 18y ago
    In many cases it's relative value that's more important. Take housing, if you make twice the average person in your area housing is not a problem if you make 1/2 it's a major issue. It works the same way for education and other services. The only advantage to an increased economy when you fall behind is hard goods which are not that important. I don't care if I can buy a 70" TV if I can't pay for housing. etc.
  - yummyfajitas 18y ago
    I know of one example where someone turned down extra money out of jealousy, albeit under slightly different circumstances. A friend of mine was meeting a guy for a potential arranged marriage. She had a good job working for a large investment bank. A deal killer for the potential husband: the wife can't make more money than him. This was VERY important to him, literally the second or third question he asked her. (Him being a jackass was a deal killer for her.)
  - asdflkj 18y ago
    People do regularly choose not to immigrate to a richer country because of similar reasons.
- petercooper 18y ago
  If they were real dollar values and everyone else were earning double what you were, you might be able to maintain a good lifestyle by current standards, but by the standards of this significantly larger more advanced economy you'd still be relatively "poor" while earning twice today's income. I think the study shows people are inherently aware of this (or at least wired to act in such a way).
scott_s 18y ago
The last time I heard about a study like that (maybe the same one), they explicitly stated that $1 had the same purchasing power in both circumstances.
- andrewf 18y ago
  That's a paradox. At that point surely the survey becomes garbage in, garbage out.
  - yummyfajitas 18y ago
    It's hardly a paradox. It describes the following two situations: a) I live a postdoc lifestyle, everyone else lives a grad student lifestyle. b) I live a full professor lifestyle, everyone else lives an investment banker lifestyle. World b just has more goods in it than world a. That's not a paradox; Earth 2008 has far more goods in it than Earth 1908.
    - cia_plant 18y ago
      Rich people throughout the world, and throughout history, have had good housing, leisure time, and a sense of security. They've had the opportunity to socialize with other successful people, a group which includes politicians, entertainers, etc. Poor people have lacked these things even in extremely affluent societies like USA 2008. The question is just too hard to interpret. "Standard of living" is very complicated and can't really be reduced to "purchasing power", nor to "purchasing power plus envy". There are a lot of things which money can't buy, or which money can buy but which are scarce no matter how affluent the society is.
      - yummyfajitas 18y ago
        Poor people in the USA (at least by the official definition of poverty) do not lack good housing or leisure time. In fact, the poor have more leisure time than the rich. http://www.heritage.org/Research/welfare/bg2064.cfm http://www.heritage.org/Research/welfare/bg2064.cfm I won't comment on their feelings ("a sense of security"), or their ability to socialize with Angelina Jolie. In any case, by "lifestyle" I simply meant "material standard of living". I.e., $25,000, $50,000, or $100,000 worth of consumer goods and services as measured in 2008 dollars.

lallysingh 18y ago

I'm not sure I see the real insight here, but the data point is nice. AFAIK, Social standing, group health/status are all innately part of humans, but our economic status is quite synthetic. If it was all the food we had for 3 months instead of income, I think we'd see something different.

TweedHeads 18y ago

This is a fake recession, an induced depression that won't last a year. Wake me up when there isn't any bread in the bakery.

ced 18y ago

Social status is a zero-sum game, so if happiness correlates strongly with it.... Then an egalitarian policy could be the best choice even if everyone would individually be worse off. I think this is a crucially missing point from most analyses about the income gap.

tl 18y ago
So, basically this is the same point that 1984 made (make everyone's quality of life suck to protect the inner party's welfare, even if they're not better off than an above average person pre-Ingsoc) applied to at an individual level?

pg 18y ago

Obsession with status isn't the only explanation for this. A problem that affects only you probably is one that you should worry more about. Whereas something that affects everyone is probably not something you can easily fix.