Continuing on the theme of the relationship between income and happiness (previous posts: 1, 2 , and 3), let me show you what Betsey Stevenson and I learned when comparing the happiness of rich and poor people.
Let’s begin with the most recent data from the 2006 General Social Survey, which asked: “Taken all together, how would you say things are these days?”
It sure seems like the rich are more likely to be “very happy” than the rest of us. Is this a big effect? In 2005, Robert Frank argued:
When we plot average happiness versus income for clusters of people in a given country at a given time, we see that rich people are in fact much happier than poor people.
It’s actually an astonishingly large difference. There’s no one single change you can imagine that would make your life improve on the happiness scale as much as to move from the bottom 5 percent on the income scale to the top 5 percent.
Let’s go ahead and draw the plot that Frank envisions, using all of the data from the 2006 survey:
Here’s the key point:
By comparing rich and poor people, we estimate a happiness-income gradient that has a slope that is similar to what we saw when we compared rich and poor countries.
OK, that’s the United States, what about other countries? We estimated the well-being-income gradient for over 100 countries in the Gallup World Poll. Rather than show you dozens of separate coefficients, we’ll let a picture tell the story (and let me admit, I love this graph).
The arrows in this figure show the slope of the well-being-income gradient for each country, while the dots show the average level of happiness and G.D.P. for each country. The dashed line shows the best fit through these dots.
The fact that the arrows all have a similar slope to the dashed line suggests that comparisons of rich and poor people yield very similar conclusions to comparisons of rich and poor countries. In the full paper, we document that this finding holds for many different datasets.
Why do we emphasize this finding?
Because it stands directly at odds with a key claim of Easterlin (see p.106 to 107):
… the happiness difference between rich and poor countries that one might expect on the basis of the within-country differences by economic status are not borne out by the international data.
Tomorrow I’ll describe what we learn from comparisons of countries through time.
and 
. You can also watch it on 
@ dnl2ba and David – Great points.
In a similar vein, wealth is typically correlated with hard work, a sense of earned success, and above-average skill in one’s chosen field. It may be these types of factors which actually account for the increased happiness of those with money. To test this, we could look at people who become wealthy through windfalls (e.g. those who inherit money (and don’t become successful in their own right), lottery winners, etc.).
I guess, overall, this correlation/causation question is pretty obvious, but I think Mr. Wolfers should address it, perhaps in later research.
That survey question and the answer choices seem bunk. But I WOULD expect economists to try to prove a link between income and happiness. That’s what they do.
Love the comments! If anything this exercise proves you can find data to support any position, especially ambiguous feelings like “happiness”.
This site is pushing the link/correlation between Wealth=Happiness pretty hard. Guilty feelings… If, in fact, economists have feelings?
Once again, what about mental illness, family violence, alcoloism, suicide… How do these correlate to general wealth?
Closer then “happiness” I suspect.
We, in Alberta, lead Canada in wealth, but also in many of the aforementioned un-happy catagories above.
“You cannot seek to find that which makes you happy for happiness comes from within and by your own choice.” TRUE WORDS from Dale USA.
Yesterday it said:
2) One interpretation of the 2006 Gallup data is that it is still all about relative income comparisons: In today’s global village, folks in Jamaica may be comparing their lot in life to the greater prosperity they observe when watching U.S. television shows. Countering this, it looks, to my eye, as though the income-happiness link appears about as strong in countries that are truly plugged in to the global village, as those that are less engaged.
Today it seems yesterday is ignored. What is “truly plugged in” and “less enganged” ??
tomorrow tomorrow
I was itching to comment about the difference between self-reports on satisfaction/ happiness and actual happiness, glad so many already did.
I think it is good to further examine the “comparative wealth” idea, which i guess is the goal of the article and not exactly to prove links between happiness and wealth.
Nevertheless i still hunger for a better discussion of “what is happiness” and “is it possible to measure it” and also “if so, to what extent?”…
I’ve know a researcher who actually specializes in “happiness” (Pedro Demo), though i did not check really his writings, and he does point examples of very rich people very sad and very poor people very happy. I guess this means that statistically there might be correlation (even strong correlation) between the two, but not causation, either way.
Though it does not make the correlation less relevant, i think it points to how risky it is to find moral points in this research.
Are rich people more selfish? Crude? Cruel? Ignorant? Republican? Happy?
Whenever I think of someone saying they’re happy, I start to wonder. Is there really any such thing? Is it possible to even declare oneself ‘happy’ without being completely selfish or deluded?
Meaning – if someone ever asked me, “Hey Peter, are you happy?”
My answer – “Well, you mean besides the murder and the mayhem and the torture and violence and oppression and all that? I guess. Happy enough? Not too sad? I mean, I have things in my life that make me happy, and things like U.S. war crimes that make me very angry and dissatisfied, and ‘unhappy’ I guess you could say. So, yeah, no, maybe, whatever. Stupid question. I just keep keepin-on, having fun when I can, and putting up with the bad stuff when I have to.”
If it was for an economic study I could probably provide some type of answer, straight up –
“Yes – it’s a 7.3 on the 10-point happiness scale – thank you for asking!”
Point is – to be rich or even well-off and self-proclaimed ‘happy’, I think it may require an individual to be ignorant (ignorance is bliss), and /or possess any number of attributes that would allow them to be happy given the current state of the world (like a Republican/Objectivist world view). And that’s not just rape and murder with your tax money on the other side of the globe, that’s the myriad social ills that you see every day when you leave your apartment – the beggars on the streets, the car noise and air pollution, etc.
But, the data makes sense. Why not? Everybody knows, anecdotally at least, that money buys you access to stuff – cars (BMWs), health care (few dead white babies), legal protection (no rich folks on death row), legal rights (you get to vote), social stature (vanity), etc.
Call no man happy until he is dead. – Herodotus
I don’t believe the analysis, for all of the reasons posters above have cited. Bad methodology, vague terminology, too-eager conclusions, and of course no mention of contradictory studies (of which there are many).
The misery of having money worries can seep into and poison every aspect of your life, certainly (especially if you are of the worrying disposition to begin with). Being unable to seek medical treatment, repair your car, keep the electricity on or a roof over your head (or buy healthy food) can seriously affect one’s happiness. Having enough money that you don’t have to worry certainly can take a load off.
But beyond that, I don’t see reason to believe that people with lots of money are that much happier than people with adequate money. Certainly my personal experience doesn’t accord with that at all.
I agree very much with #8 and others. 1/ Happiness is a relative concept. And 2/ rich people tend to not admit it when they are not happy. The approach to study the correlation between consequences of unhappiness (such as the number of suicides as suggested by Arthur) and incomes seems much more relevant (although suicide seems to me too extreme to be considered as being a consequence of unhappiness, maybe the rate of usage of anti-depressant drugs could also be seen as such less extreme proxy). Another possibility could be to do the same survey by showing instead the perception of happiness from the point of view of close friends or relative. Unhappy rich people could lie but most probably not the close people around them. Although I admit putting it in place such survey on a large scale basis may not practically be an easy task.