Cold Cash v. Warm Puppy

American voters are unhappy. Perhaps you've heard. About three-quarters say the country is headed in the wrong direction — the highest level in 15 years. Many believe we already are in a recession.

This being an election year, it's big news. Pundits and politicians are puzzled. Sure, the economy is soft and probably will stay that way for a while. Gas prices and unemployment are up from earlier in the year.

But a recession? Not yet, at least not technically. By historic standards, today's 5.5 percent national unemployment rate actually is relatively low, though St. Louis' 6 percent jobless rate is at a 15-year high. Still, compared with where they were a few decades ago, most Americans are better off. So why all the gloom?

The unspoken assumption among political pundits is that somehow, there is a link between money (and the goods and security it buys) and happiness. At least superficially, there's some evidence to support it.

’?®Surveys show people in richer countries report being happier than those in poor countries. That's probably not very surprising ("Would you prefer the air conditioning and running water, or the tsetse flies and African sleeping sickness?").

When researchers have asked people all over the world what would make them happier, the most common answer has been a change in material circumstances — a bigger home, nicer things, more economic security.’?®’?®

(We know that, by the way, thanks to something called the World Database of Happiness. We are just a little bit happier to know that there is such a database, but we digress.)’?®’?®

Researchers have asked people how much more money they'd need to be happy.

The answer is 20 percent. People say they'd be happier if their income were 20 percent larger than it currently is.’?®’?®

It turns out that's not true.’?®’?®

If you measure people's income and self-reported happiness over time, you find that while incomes may rise, the general level of happiness does not. That's called the Easterlin Paradox, named after economist Richard A. Easterlin.’?®’?®

He tracked groups of people over time as they settled into careers and reached their peak earning years. Easterlin found that, on average, per person income grew by 116 percent. But the percentage of those claiming to be happy stayed the same. In fact, it fell slightly as people aged and experienced health problems.’?®’?®

The paradox is not just an issue in the West. German researchers found that as China's economy exploded during the 1990s, the percentage of people who said they were happy actually fell.’?®’?®

Easterlin thinks that changing expectations and relativism lie behind the paradox. As people earn more, they want more.’?®’?®

Sure they think 20 percent more money would make them happier, but they picture their income growing relative to everyone else's. So if you get richer and everyone else does, too, you're in the same place, relatively speaking. Or so the theory goes.’?®’?®

So what does predict happiness? Health is one big factor. People who are in better health report being happier. So do married people.’?®’?®

It is perhaps interesting to note that on average, married people have higher family incomes, and poorer people report being in worse health.’?®’?®

Unfortunately for pundits and politicians, there's not a lot of useful election strategy to be gleaned from these results. But perhaps it's true that some people aren't happy unless they're unhappy.

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