Achieving Happiness on just $800,000

Guestblogger Marina Gorbis is executive director at Institute for the Future.

I don't know about you but I am feeling kind of bad about those poor Goldman Sachs investment bankers. Just a few months ago they looked so sad (remember those sad guys on the trading floor?). And now, in the midst of the worst economic crisis since the Great Depression, after taking money from American taxpayers, they earn huge profits as if the credit crunch never happened. The 29,400 Goldmanites are expected to take in on average around $800,000 in pay, bonuses, and benefit packages. I can only imagine what this means for the top 400. But I worry that this is just not going to make them happy. And this is because research on happiness reveals some surprising things:

• Wealth increases human happiness when it lifts people out of abject poverty and into the middle class but not thereafter (Daniel Gilbert, Stumbling on Happiness.)

• The bewildering array of choices that wealth brings not only doesn't make us happier but actually erodes our psychological well-being. (Barry Schwartz, The Paradox of Choice)

• Spending money on other people has a more positive impact on happiness than spending money on oneself. (Dunn et al., Spending Money on Others Promotes Happiness)

So I want to humbly suggest that for the purposes of ensuring Goldmanites' happiness, they give large portions of their money to those impoverished by the recession, thus making themselves and others a bit happier. Spread a bit of that happiness contagion. What do you think?

Previously:

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Takuan

he’s a richy! Kill him!
bklynchris

Dudette, That’s an average! (But, I see you knew that) Some of these wads are making millions dollar bonuses while most are nowhere near that number. I wonder what the compensation vs. no. of employee curve would like?

I agree with the finding of the first author, I would surmise that after leaving middle class behind for the further reaches of wealth; rather than happiness one would increasingly experience abject fear.
Anonymous

Ah, makes me think of the ending of Fight Club… Mebbe time for a grand reorg…
Neon Tooth

Um, I can’t recall someone from Goldman Sachs taking money from me, a taxpayer. What I do know (and have pay stubs to prove it) is the governments of George Bush and Barack Obama taking money from me for a “stimulus,” and CHOOSING to give it to Goldman Sachs.

Ha, and just why do you think that is? There’s where you’ll find your answer.

So, yes, you may have been robbed at gunpoint, but Goldman Sachs was the just fence. The federal government was the robber.

Your mistake is not seeing Goldman and the past few administrations as one in the same, working to enrich each other. This is a plutocracy.

Hank Paulson former secretary of the treasury *Bush* (CEO Goldman Sachs) Robert Rubin former secretary of the treasury *Clinton* (partner Goldman Sachs mentor to Tim Geithner) John Corzine senator (CEO Goldman Sachs) Stephen Friedmann advisor *Obama* (executive Goldman Sachs) Timothy Geihtner’s *Obama* chief of staff: Goldman Sachs lobbyist Mark Patterson. Lawrence Summers *Obama* chief economic advsisor (Goldman Sachs, millions in speaking fees).
glace neuf

i say the odds of that happening are probably less than 1 in 29,400….
Cicada

You’d have to bear in mind that to the Goldman etc employee, 800k a year might be the definition of middle class. It’s what their peers make, after all, and what most of the people they associate with make.
If someone from, say, East Timor (median income 500 bucks a year) suggested you trim down to Timorian levels of middle class to better be happy…
darth_schmoo

Ivan256 (#8) wrote:

Simply because somebody wrote it in a book does not make it true. If this is the conclusion Mr. Gilbert came to, I will say with 100% certainty that he used flawed methodology to reach that conclusion.

The science is sound, and Gilbert isn’t alone in his conclusions. What they’ve found is that whatever happens to us, we usually get used to it, and (as was mentioned earlier) people are bad at predicting how their happiness will be affected by most events.

Move into a bigger house? Expect to be made happier by it… for about a year. Win the lottery? Expect to be made happier by it… for about a year. But if you ask most anybody, they’ll say these things would make them permanently happier.

But moving from poverty to the middle class does generally lead to a permanent increase in happiness. Happiness and wages show a strong correlation, up to about $10K-$12K per year, then the correlation quickly evaporates.

I can also say with 100% certainty that my happiness would go up significantly if I transitioned from middle-class to moderately wealthy. I can see how some people might experience a decrease in happiness with the transition, but it is definitely *not* a given.

I can’t speak to how you would handle the transition, and it’s something to keep in mind. But the statistical correlations are real.

I would use the money for increased family time, and not to obtain additional possessions. This is probably untrue for the types of people that fit the quoted assertion. Of course, that’s the kind of attitude that keeps me from moving into the next level of the salary spectrum. Which leads to the question of correlation and causation. He found wealthier people are less happy. Is it the wealth that made them less happy, or is it what they need to do to obtain the wealth that makes them less happy?

Good question. A lot of the people earning those million dollar salaries justify their ridiculous profits by working 14 hour days. They also tend to resent that people resent them. Neither of those things are conducive to happiness.

If you put twice as many people into the jobs, and worked them half as hard, I think they might be happier overall. But they wouldn’t have such an easy time convincing themselves that they were getting properly rewarded for their hard work.

Keneke (#21) wrote:

But according to “The Long Tail” (written by that Wired guy the BBers are all chummy with), anxiety of too much choice can be alleviated with a proper search function. In essence, the book does its best to debunk the “too much choice” myth.

“Too much choice” isn’t a myth. But the dissatisfaction that comes from adding choices is highly dependent on a lot of factors. How well does the person understand the choice being made? How many choices are there, how are they grouped and displayed? How certain will the chooser be that the decision is the best? Is the chooser the sort of person who enjoys the present, or ponders the paths not taken?

All a search function does is change the way the choices are presented, usually in such a way that the chooser is moved from, “here are fifty songs, none of which you know anything about,” to “here are fifty songs, and we think you’ll like these two.”

Even if the two are chosen at random, the chooser will probably feel better about choosing them over the many others, because they feel like they have better information, and therefore feel more certain.

Shirkey illuminated another way of thinking about the paradox of choice, but he didn’t “demolish” it.
Stefan Jones

Money can bring security, which for many people is a prerequisite for happiness.

And for me, at least, part of happiness is having money to spare for gifts and charity.
Gilgongo

“So I want to humbly suggest that for the purposes of ensuring Goldmanites’ happiness, they give large portions of their money to those impoverished by the recession”

Thing is, people who earn that kind of money in the financial services sector are, basically, mentally ill. Even if you didn’t split your infinitives, suggesting to a stock trader or fund manager that they give some of their money away is like asking Rain Man to get on a plane. Every fibre of their being is aligned to accumulating wealth through the most obscure and abstract methods imaginable, and spending that wealth on themselves. I’ve no doubt that some of them give to charity, but I would guess the number of those people on Wall Street is vanishingly close to zero.
davedorr9

Daniel Gilbert makes a number of excellent points. I’d suggest all you who say he is wrong read the book. Your local library should have it, if you are concerned about his happiness / wealth ratio. You probably still will think he is wrong, but you’ll have to temper your response.

And yes, I think the data is pretty strong that most people do not find more happiness with wealth than those do with middle class incomes. I agree it seems absurd, but there seems to be a disconnect from the logical, rational idea that the correlation between wealth and happiness would have no ceiling.

Part of it really derives from how we define happiness: is it contentment? satisfaction? true joy? A lack of guilt or other negative emotions? It always makes me think of Tolstoy: ‘Happy families are all alike; every unhappy family is unhappy in its own way.’ Anna Karenina
wil9000

Oh, you know how I feel:

http://blacknewblack.blogspot.com/2009/07/yet-another-rant-about-rich.html

And somebody is going to accuse me of being an “Eat The Rich” liberal. I would never consider eating the rich. They would taste terrible, like a horrible mix of tobacco, bad (but expensive) wine, and testosterone. Ewwww..
ivan256

â€¢ Wealth increases human happiness when it lifts people out of abject poverty and into the middle class but not thereafter (Daniel Gilbert, Stumbling on Happiness.)

Simply because somebody wrote it in a book does not make it true. If this is the conclusion Mr. Gilbert came to, I will say with 100% certainty that he used flawed methodology to reach that conclusion.

I can also say with 100% certainty that my happiness would go up significantly if I transitioned from middle-class to moderately wealthy. I can see how some people might experience a decrease in happiness with the transition, but it is definitely *not* a given.

I would use the money for increased family time, and not to obtain additional possessions. This is probably untrue for the types of people that fit the quoted assertion. Of course, that’s the kind of attitude that keeps me from moving into the next level of the salary spectrum. Which leads to the question of correlation and causation. He found wealthier people are less happy. Is it the wealth that made them less happy, or is it what they need to do to obtain the wealth that makes them less happy?
Anonymous

Yes capitalism makes even the capitalists frantic and miserable. It’s also extremely resilient in the face of liberal exhortations to “be nicer”.

We need to use strikes, occupations, re-appropriations, riots, etc if we (the working class) are serious about getting that wealth back.
Cicada

As for wealth not making you happier, I guarantee you that it does if you take time on occasion to _notice_ that you’re wealthy.
I’m by no means rich, but I did and do work hard to be comfortable. It’s nice to be able to say “I don’t feel like cooking, let’s go dine out.” on a whim. It’s nice to hire a maid service so you don’t have to scrub a toilet yourself. It’s nice to consider changing gas prices an annoyance rather than a burden. It’s nice to know that if anything in the house breaks, you can just shrug and have someone fix it and move on like nothing happened.

I imagine if you kept on adding money, I’d find other things that’d make me yet happier. Nice to have a daily massage? Nice to have a driver so I don’t have to bother? Nice to complete that wine cellar to really give some options? Personal assistant so I don’t have to bother with any administrative tasks I didn’t feel like doing?

So, basically, anyone that didn’t get happier with wealth wasn’t paying attention to the increasingly large volume of aggravating crap that they are now free to buy their way out of.
Takuan

To be shelterless and alone in the open country, hearing the wind moan and watching for day through the whole long weary night; to listen to the falling rain, and crouch for warmth beneath the lee of some old barn or rick, or in the hollow of a tree; are dismal things — but not so dismal as the wandering up and down where shelter is, and beds and sleepers are by thousands; a houseless rejected creature. Dickens, Charles
ivan256

@WIL9000:

I won’t accuse you of being an eat-the-rich liberal. But I will accuse you of beating a strawman. Your “Rules for the Rich” are complete bull. Of course it’s easy for you to view the hypothetical people who live by them with such contempt.

As for your “tea parties” comment… Those types of protests tend to happen in areas with a high cost of living. Places were people make enough money to have a middle-class lifestyle in their region, but are considered rich when held up against the national average. Also, given our completely fucked-up marriage system, your family is considered wealthy for tax purposes at a certain level of income whether the money was brought in by one person working 40 hours a week, or by two people each putting in 70 hours a week. The trouble is that one of those families can lead a wealthy lifestyle, and the other would have to drop down below the middle-class level in order to have time to sufficiently raise a family.

Why do we have a uniform definition of “wealthy” across a huge (geographically) country where different regions have vastly different costs of living, anyway? (And no, you can’t just move to somewhere cheaper. Or people would be flocking to Detroit right now.)

You, like our leaders, carry on the same false debate over the wealth of imagined players. The same two sides of the argument are always presented, and nobody ever stops to think that everybody in the discussion is wrong. The real world is far more complex than our views of “left” and “right” can even come close to accounting for.
manicbassman

just get them spending again… so the rest of us can have jobs providing services etc. to them…

the BIG problem at the moment is that everyone has pulled their horns in and stopped spending
IamInnocent

You see Cicada, having people doing the crap work for me would make me feel bad. I for one think that everyone should clean their own shit, at least in your personal life.

But back to the topic, this is just another illustration, one of the most blatant to date, that our social system is just organized thievery.
pato pal ur

Marina, great post! This is perhaps some of the best advice I’ve ever seen on BB.

@ivan256
Daniel Gilbert’s conclusion is not a result of flawed methodology. Have a look at Fig. 2 in this article, which is a comparison of income levels vs. levels of happiness over the past 50 years.

The caption states: “American’s average buying power has almost tripled since the 1950s, while reported happiness has remained almost unchanged.”

Perhaps you yourself might be happier with greater wealth(as would I), but that’s apparently not true of most of the population. Your chicken-or-the-egg point regarding wealthy people is well-taken.
leviathan

$23,520,000,000 sure could provide a lot of health care, college tuition, or other things that are socially productive for the rest of us.

Then again maybe we don’t deserve it because all we’ve done is play by the rules, fended for ourselves, and been productive rather than parasitic.

Having an economy centered around finance capitalism really sucks.
Cicada

@34 Manicbassman- It’s hilarious in a grim sort of way. People bitch and whine about mindless consumerism. But look at what happens when people everywhere spend frugally…
If, say, half the population can provide all the goods and services the whole population _needs_…what happens to the other half if they don’t make and buy useless crap?
Takuan

http://trueslant.com/matttaibbi/2009/07/16/on-goldmans-giganto-profits/
Modusoperandi

Sceadugenga “Those of you who are saying that more wealth would definitely make you happy are making a prediction, and research has shown that these kinds of predictions should not be trusted.”
I, for the good of the nation, volunteer to take part in that double-blind trial. (Don’t be control group…don’t be control group…don’t be control group…)
flosofl

“Spending money on other people has a more positive impact on happiness than spending money on oneself.”

On a purely anecdotal note, I can verify that this has been my experience. I have a close friend who is going though a bitter and long divorce/custody battle and has found herself several months behind on many bills as a result. I’ve lent her some money (no interest, pay me back when you can) to get even and then sat down and made a budget with her.

You know what? It has definitely increased my feeling of happiness. Not from a patting myself on the back way, but because I’ve seen a visible reduction of stress in her. *That’s* what makes me happy.
IamInnocent

If, say, half the population can provide all the goods and services the whole population _needs_…what happens to the other half if they don’t make and buy useless crap?

The whole population could also work half as much and then start to actually live their lives? I know, frightening perspective to actually have to face oneself and decide what to do with our existences. Mindless consumerism is easier.
Anonymous

@ivan256

I can also say with 100% certainty that my happiness would go up significantly if I transitioned from middle-class to moderately wealthy.
I recently made this transition myself, and yes, my happiness went up significantly.

I would use the money for increased family time, and not to obtain additional possessions.
This is precisely why my happiness went up significantly.

This is probably untrue for the types of people that fit the quoted assertion.
Not sure if I agree or disagree in general, but I will point out that the reason I transitioned to moderately wealthy* is because of my wife’s job. She makes a lot. She also works a lot — more than she would really like to. While she doesn’t work anything like a stockbroker’s hours, her experience supports your conclusion.

* By “moderately wealthy,” I mean a combined income of about $250K in Pittsburgh (where the median house price is something like $125K). Others would call this very wealthy, and they might be right. Still others would call this middle class, but they are so blinded by their pursuit of money that they have no idea what they’re talking about.
Cicada

@Iaminnocent- Personally, I just really hate cleaning a toilet. Not too keen on mopping a floor, either, to say nothing of sinks. Noticing that, with any luck at all, I’ll never have to pick up a toilet brush as long as I live brings a tiny bit of warmth and a great deal of gratitude to my heart every time I think of it.
For the bit about working half as much…do you actually think you can stamp out ambition? Even if it’s not about money, how many people do what they do just to be able to say “I am more of (this good thing) than you are”? (Probably a holdover from attracting mates back in the day). At which point it just becomes a race to see who will expend more and more of their lives to get more (good thing).
Ernunnos

Goldman Sachs are welfare queens. You don’t exactly have to be liberal to oppose that.

More and more I think that the political issues of the day aren’t left vs. right, it’s hyper-wealthy vs. the rest of us.

The good news is, we outnumber them, the bad news is, they have a lot more money to spend convincing us to fight each other instead of them.
dbmerite

I wouldn’t hold my breath on that one. the odds are probably a little better at the black jack table in Vegas. It’s a sad reality of the current culture of corruption.
Anonymous

I think that trying to apply research about normal people and what makes them happy to Goldman Sachs investment bankers is flawed.

These people are truly wretched creatures, and I’d argue they’ve just done the only thing that makes them happy, merely on a grander scale: increase the value of their own wealth by destroying that of others. I’m sure vultures smile when they see the sick and dying for the same reason.
dculberson

Ivan256, you say you wouldn’t spend that money on luxuries *now*, but it’s the nature of humans that makes us adapt very well to changing circumstance. As soon as you were making $250,000/year, you’d be blowing the majority of it on a more expensive house or some other luxury. That’s just how it goes.
SamSam

ivan256: But you don’t have an extra $100k a year, so the fact that having more might make you happier is immaterial.

Put it this way: why might a person be earning $800,000 more than you?

Sure, they could keep winning the lottery, and so for sure they may be much happier and use their money to have more family time, as you suggest.

Or, more likely, they are at the top of the food chain in the dog-eat-dog of spending other people’s billions. They have a highly competitive streak and have always had one. They probably get extremely angry or stressed if things don’t go there way, or they are passed over for a promotion to VP. They are probably spending more of their time on business trips to Shanghai than spending quality time with their children.

So saying that the phrase “money doesn’t buy you happiness” isn’t true because in your case, if you were to magically get more money without having to do anything for it, you’d be more happy is akin to saying “who says that all the CEO of Fortune 500 companies are always old gray-hairs? If I were made a CEO, why, I’d be a 25-year-old CEO!”

It’s about the process of getting the $800 k/year, and of being the kind of person who wants to get $800 k/year and is willing to sacrifice other aspects of life for it.
Anonymous

could one of these guys chip in and pay my student loans off, its only 43k, you could pay in installments, no biggie!
thanks
Sceadugenga

But one of Gilbert’s main points in his book is that people are incredibly bad at predicting their future happiness.
Those of you who are saying that more wealth would definitely make you happy are making a prediction, and research has shown that these kinds of predictions should not be trusted.
Keneke

But according to “The Long Tail” (written by that Wired guy the BBers are all chummy with), anxiety of too much choice can be alleviated with a proper search function. In essence, the book does its best to debunk the “too much choice” myth.
Anonymous

Sure, money can’t buy happiness. But it’s not happiness I want, it’s money.
Anonymous

What do you think?

Well, I think that this…

Wealth increases human happiness when it lifts people out of abject poverty and into the middle class but not thereafter

…is probably one of the most ridiculous, biased, and outright BS-laden claims I’ve ever seen on the Internet. And I’ve been on the net for about twenty years.

Now, I will certainly grant you that if you have no idea how to handle money, you can make a real mess. But the problem isn’t money — the problem is you aren’t handling it right.

For one thing — as the article implies — spreading your money around to individuals and charities and technologies that are in need (correctly, taking into account taxes, accountants, thoughtful distribution) is very pleasurable. For another, ensuring security for your family (lawyers, trusts, thoughtful… etc.) is very pleasurable. For another, privacy and space and luxury are all very pleasurable and their availability is directly proportional to the amount of funding you can apply towards them.

And… as a famous wag once put it… “money can’t buy love, but it can buy you a yacht to pull up next to it on.”
Pantograph

I tend to agree that money alone doesn’t create happiness, but coke and strippers are expensive.

Spending money on other people has a more positive impact on happiness than spending money on oneself.

That’s what I’m talking about. Help out those poor girls.
Anonymous

The main point of Goldman Nutsacks is this, if you have money you can buy or influence anyone, any institution: government, corporation, ect as long as there are humans working there.
Anonymous

Tax them until the pips squeak! Then maybe everyone can have a little happiness…
WalterBillington

Besides, it’s Goldman’s recession – remember how they played BOTH sides of the CDO collapse and came out winners?

Pure filth.
jafree

I would not begrudge Goldman employees if I thought they were earning that money by creating value for society. Create something people demand or that makes people more efficient or happier, then you deserve to make billions if you can. But, as BB shared with us recently, Goldman makes most of its money off transfer costs – profiting from bubbles, influencing prices artificially through economic and political power instead of letting price match value. I suppose they would respond – if it is legal within the system that we operate, why shouldn’t we do it?
mccleary

A quick correction: “after taking money from American taxpayers, [Goldman Sachs] earn huge profits as if the credit crunch never happened”

Um, I can’t recall someone from Goldman Sachs taking money from me, a taxpayer. What I do know (and have pay stubs to prove it) is the governments of George Bush and Barack Obama taking money from me for a “stimulus,” and CHOOSING to give it to Goldman Sachs.

So, yes, you may have been robbed at gunpoint, but Goldman Sachs was the just fence. The federal government was the robber.
Anonymous

Welcome to the new reality:
The United States of America
A Subsidary of Goldman-Sacs
Anonymous

Spending money on other people has a more positive impact on happiness than spending money on oneself.

Well, that explains our huge desire to give big fat bonuses to these pricks, despite the strong objection by those in our government. :P
IamInnocent

We all do Cicada, we all hate cleaning them. Done once a week it take a total of 2 minutes each though. Also, I can’t help but imagine what kind of unsupportable brats children who were raised to believe that this chore is beneath them would become: investment bankers?

As for the ‘ambition’ of ‘being better than others’: I just sold my last car and rely on my bicycle mostly, public transit/car rental. This decision has been harder than stopping smoking, I swear, and the apparent loss of status was at the very heart of my irresolution.

By the way, do you know what? It is a mix package and for some parts there is a gain of status over being a fat commuter. Unexpected benefit of living free.

Enough on that though: I’ve always enjoyed your participation to BB Cicada. Contrasty POV are the only way to warrant that we don’t all go sleeping under a cover of stupid propaganda.
Takuan

new?
ivan256

@PATO PAL UR:

I still stand by my assertion that the methodology is flawed. He merely demonstrated correlation. We don’t know that the money was the cause of the change. It could very easily be that what was needed to obtain that money is the cause of the change. (Have to put in twice the hours to get the salary bump? The money probably won’t make up for that.)

Defining “wealthy” in terms of money earned per year also is flawed. Some wealthy people may choose to stop earning.

Now, regarding your chart. The chart *also* disagrees with the quotation, but in a different way. The assertion was that you *do* get happier when you transition for lower to middle class. The chart you linked suggests that isn’t true, and even that transition doesn’t make you happier. I still assert that there isn’t enough data there to draw a conclusion. What would the line look like when you normalize buying power for the average? What does the happiness value look like for different levels of earners instead of averaging it all out?
jphilby

This request may seem indelicate, but … does anyone have an actual *picture* of that ‘blood funnel’ ??
Cicada

@40- Nah, you’d probably want the kid to clean the toilets. It both lets them be happy if/when they no longer have to clean toilets, and makes them motivated to not have to one day. Sad to be happier as a child than as an adult, no?
Bear in mind that “better than others” works on more axes than just financial aggrandizement. Piety, altruism, self-effacement, and poverty are also things people have grabbed as status symbols and flogged to the point of abuse.

Congrats on the bike thing, though. I don’t think you can ride a bike to the funerals of fat people you know without being at least a tiny bit smug, though.
icky2000

It is shocking to me that on a blog where most comments push for logical conclusions and sane analysis, so many comments are of the “rich people are bad” or “people who work in this industry are bad” sort. Have we not learned anything about making horrible assumptions about people based upon knowing just one fact about them? (race, religion, color, salary, etc)

Sorry, but in my world people that make assumptions about individuals based on their salary are just as stupid as people who make assumptions about individuals based on their race.