Can't Buy Me Love....Or Can You?

Due to a furious debate in class on whether or not money increases happiness, we watched a debate on the issue.

In this debate Justin Wolfers and Bob Frank argued on whether or not money does correlate with happiness.

Justin Wolfers argued that an increase in absolute income did mean an increase in happiness. As an empirical economist, Wolfers used graphs and charts and examples to prove his point. First he disproved that Easterlin Paradox, which says that economic development is a zero sum gain so don't bother. He showed through countless graphs that happiness does increase with more money across countries and within countries. He showed that there is $15000 satiation law, a fake rule that claims people everything past $15000 is just extra money that does nothing to happiness.

Wolfers showed graphs that supported his view and disproved graphs that went against it. He showed new ways to measure happiness like numbers of time in a day you felt: enjoyment, depression, boredom, stress, pain, smiley, well rested, or ate good food. In all graphs more money increased the good attributes in a positive correlation.

Finally Wolfers talked about how happiness economics is not a radical idea. Politicians use it as their basis on all political platforms to get support. Politicians want to get more people money so they can be happy, healthy, and wise.

Frank claims that absolute income does matter but relative income matters more. We compare ourselves to our neighbors and that makes us happy. I am only happy if I am the only one with the mansion on the street. However, this posses a problem as people try to out do each other in an expenditure of arms races on goods. This causes everyone to build mansions making no one happy and creating a waste of resources.

Although Frank is a theorist and has no evidence to support his claims, Wolfers claims that he is right.

My questions about this debate were ruined by the questions the audience asked Wolfers and Frank at the end. However, Wolfers and Frank still didn't answer everything. I know that correlation doesn't always mean causation, there are other factors. Wolfers says there are other factors that correlation and causation aren't connected here. Does money mean happiness? If not what other factors are even in play here? Wolfers shows a graph that claims that as countries got richer they got happier. One graph, Belgium, got sadder. What happened here? What happened in Belgium of all places to make this outlier almost disprove Wolfers? This seems to show that not always does more money mean more happiness. Where are the graphs of Ebenezer Scrooge and grumpy old rich men? Finally where is all the evidence for Frank? Where is all the evidence that shows relative income creating happiness? This information shouldn't seem hard to get.

We watched this debate because Rizzo has tried to convince us over the past few weeks that we are richer than the past. Some students asked if we were happier also. The answer is yes, as this debate proves.