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>I don't really see how this new data contradicts the generally accepted view (mentioned in the article) that money increases happiness up to a point. The arti

by rm999 13y ago

>I don't really see how this new data contradicts the generally accepted view (mentioned in the article) that money increases happiness up to a point. The article shows a logarithmic trend (i.e. doubling your income increases your happiness by a fixed amount), which is a straight line on the log plot. This insinuates (if the trend continues, which is assumed from the results) that there is no point at which increased income won't make someone happier. The traditionally-held view is that there is an income (I've heard something like 70k in the USA) where the plot should become a horizontal line, i.e. increasing your income increases your happiness by zero. These are very different conclusions. The plot isn't really falling "significantly towards the top of the scale". Log is the correct way of looking at income, because people consider changes to their income proportionately to their current income (for example, a 5% raise to someone making 1M dollars a year is about as significant to his life as a 5% raise for someone making 100k, even though the actual additive amounts are very different).

ritchiea 13y ago
The data I've seen shows the income where happiness flattens is around 100k rather than 70k so cutting off at 128k doesn't seem high enough to disprove the established research.
- pyduan 13y ago
  Remember that both Easterlin's studies and the one in this article have been done in many countries and not just the US though. The $128k cap may seem limiting for the US but it is not for Nigeria or the other lower-income countries, yet they still show the same patterns.
  - pedrosorio 13y ago
    "The $128k cap may seem limiting for the US but it is not for Nigeria or the other lower-income countries, yet they still show the same patterns." And that's why the cap for Nigeria is at $8k... In fact, as someone else has commented: https://news.ycombinator.com/item?id=7047548 https://news.ycombinator.com/item?id=7047548 "According to the paper (page 13), they only look at incomes between the 10th and 90th percentiles. That's why they cut off at $128,000 for US residents" In my opinion, ignoring data from the top 10% earners is the perfect way to get plots that seem to disprove a paradox that states "Become rich enough, and a bigger paycheque no longer leads to more happiness".
auctiontheory 13y ago
a 5% raise to someone making 1M dollars a year is about as significant to his life as a 5% raise for someone making 100k Are you asserting that as fact? Where I live, someone making 100K is just getting by and not saving very much, even with the 5% raise (he certainly couldn't buy a house), whereas for someone making 1M, the extra $50K is "free" money.
- pyduan 13y ago
  This is precisely what Easterlin says: a relative increase in income has little effect on happiness past a certain point. This competing model (the one in the article) says that no, there is no saturation point and there is a logarithmic relationship between income and happiness where the effect of a %age change in income has a constant effect on happiness.
  - zanny 13y ago
    I imagine there is a threshold where percentile wealth increases make the ultra-rich happy again. Whenever it grants you a noticeable increase in power and influence to increase your wealth, you kind of want to maximize it to maximize power and influence. There is just a vast gap between the point where you stop spending money for consumption and when you can start spending money for influence.
  - auctiontheory 13y ago
    It is partly a fixed cost versus variable cost argument, although these guys don't express it that way. (And I realize that fixed isn't really "fixed.") If you can't afford decent housing, adequate healthcare, and a good education for your kids, of course more money will buy you happiness. And in the US, the income at which you can afford those three ... is high and increasing fast.
- btilly 13y ago
  WHERE you live, or HOW you live? I've seen many people complain about not making enough to live where they live, when I clearly see lifestyle changes that would fix the income problem, and I see people living alongside the first who make less and save more. I don't know you. Or your life circumstances. It might not be true for you. But "$100k/year isn't enough to survive" is the kind of claim that I've learned to be automatically suspicious of.
escape_goat 13y ago
I can see where you're coming from, but I also see two problems. Firstly, you're generalizing towards the origin from a relatively high section of the graph. Leaving aside the relative happiness, a 5% increase in income is actually much more significant in someone's life when they make $10,000 a year than when they make $100,000. There are thresholds established by absolute resource requirements. This makes it dangerous to reason from the 'flat' part of the curve downwards. Relevant analogy: transistor response curve. Secondly, insofar as income represents a portion of an absolute resource [ie to some extent], some information is obscured that would otherwise be intuitively and immediately available. It's remarkable that the money required to increase a person's happiness by one unit is, in every case, enough money that another person could share their initial happiness. A graph with a linear relation would demonstrate this as an (immediately obvious) diminishing return on a finite resource. A graph with a log relation presents a diminishing return as natural and efficient. In this way, the choice of scaling method significantly biases the meaning attributed to the data.
sliverstorm 13y ago
The traditionally-held view is that there is an income (I've heard something like 70k in the USA) where the plot should become a horizontal line, i.e. increasing your income increases your happiness by zero. This might seem like a strange view, but the notion is not that money ceases to increase happiness, but rather increased happiness costs associated with earning that increased income start to negate the gains. Anyway, this graph is self-reported life satisfaction. We would need to examine the metric used in the studies that came up with the ~70k number to see if we can even compare the two studies.
deleted 13y ago
[deleted]
brazzy 13y ago
> These are very different conclusions. They are not; in the real world, logarithmic growth and bounded growth are essentially the same because the possibilities for income growth are severely limited, and you reach a point where any realistic increase in income cannot yield a measurable increase in happiness.

by rm999 13y ago

ritchiea 13y ago

The data I've seen shows the income where happiness flattens is around 100k rather than 70k so cutting off at 128k doesn't seem high enough to disprove the established research.

pyduan 13y ago
Remember that both Easterlin's studies and the one in this article have been done in many countries and not just the US though. The $128k cap may seem limiting for the US but it is not for Nigeria or the other lower-income countries, yet they still show the same patterns.
- pedrosorio 13y ago
  "The $128k cap may seem limiting for the US but it is not for Nigeria or the other lower-income countries, yet they still show the same patterns." And that's why the cap for Nigeria is at $8k... In fact, as someone else has commented: https://news.ycombinator.com/item?id=7047548 https://news.ycombinator.com/item?id=7047548 "According to the paper (page 13), they only look at incomes between the 10th and 90th percentiles. That's why they cut off at $128,000 for US residents" In my opinion, ignoring data from the top 10% earners is the perfect way to get plots that seem to disprove a paradox that states "Become rich enough, and a bigger paycheque no longer leads to more happiness".

auctiontheory 13y ago

a 5% raise to someone making 1M dollars a year is about as significant to his life as a 5% raise for someone making 100k Are you asserting that as fact? Where I live, someone making 100K is just getting by and not saving very much, even with the 5% raise (he certainly couldn't buy a house), whereas for someone making 1M, the extra $50K is "free" money.

pyduan 13y ago
This is precisely what Easterlin says: a relative increase in income has little effect on happiness past a certain point. This competing model (the one in the article) says that no, there is no saturation point and there is a logarithmic relationship between income and happiness where the effect of a %age change in income has a constant effect on happiness.
- zanny 13y ago
  I imagine there is a threshold where percentile wealth increases make the ultra-rich happy again. Whenever it grants you a noticeable increase in power and influence to increase your wealth, you kind of want to maximize it to maximize power and influence. There is just a vast gap between the point where you stop spending money for consumption and when you can start spending money for influence.
- auctiontheory 13y ago
  It is partly a fixed cost versus variable cost argument, although these guys don't express it that way. (And I realize that fixed isn't really "fixed.") If you can't afford decent housing, adequate healthcare, and a good education for your kids, of course more money will buy you happiness. And in the US, the income at which you can afford those three ... is high and increasing fast.
btilly 13y ago
WHERE you live, or HOW you live? I've seen many people complain about not making enough to live where they live, when I clearly see lifestyle changes that would fix the income problem, and I see people living alongside the first who make less and save more. I don't know you. Or your life circumstances. It might not be true for you. But "$100k/year isn't enough to survive" is the kind of claim that I've learned to be automatically suspicious of.

escape_goat 13y ago

I can see where you're coming from, but I also see two problems. Firstly, you're generalizing towards the origin from a relatively high section of the graph. Leaving aside the relative happiness, a 5% increase in income is actually much more significant in someone's life when they make $10,000 a year than when they make $100,000. There are thresholds established by absolute resource requirements. This makes it dangerous to reason from the 'flat' part of the curve downwards. Relevant analogy: transistor response curve. Secondly, insofar as income represents a portion of an absolute resource [ie to some extent], some information is obscured that would otherwise be intuitively and immediately available. It's remarkable that the money required to increase a person's happiness by one unit is, in every case, enough money that another person could share their initial happiness. A graph with a linear relation would demonstrate this as an (immediately obvious) diminishing return on a finite resource. A graph with a log relation presents a diminishing return as natural and efficient. In this way, the choice of scaling method significantly biases the meaning attributed to the data.

sliverstorm 13y ago

The traditionally-held view is that there is an income (I've heard something like 70k in the USA) where the plot should become a horizontal line, i.e. increasing your income increases your happiness by zero. This might seem like a strange view, but the notion is not that money ceases to increase happiness, but rather increased happiness costs associated with earning that increased income start to negate the gains. Anyway, this graph is self-reported life satisfaction. We would need to examine the metric used in the studies that came up with the ~70k number to see if we can even compare the two studies.

deleted 13y ago

[deleted]

brazzy 13y ago

> These are very different conclusions. They are not; in the real world, logarithmic growth and bounded growth are essentially the same because the possibilities for income growth are severely limited, and you reach a point where any realistic increase in income cannot yield a measurable increase in happiness.