I would like you to consider the final chapter of Stiglitz’ Freefall book in the context of happiness, shortsightedness, and trust. Stiglitz asks the question “Are we creating an economy that is helping us achieve [the kind of society we would like to have]”. There is plenty of research and insight on happiness, shortsightedness, and trust with respect to the U.S. economy. I would like you to find some applicable research and use it in your comment.
You should not only think about how happiness might be measured, but what might be the problem with only looking at happiness. Can we attain a happier and healthier society, and how can we be sure we have done so? Or, should we simply focus on GDP and income since that is an easy and somewhat effective way of measuring economic activity? We have talked a lot about inequality this semester, and a recent speech by Richard Wilkinson looks at what happens when we examine inequality instead of just GDP. It appears as though well-being has a lot to do with inequality and social status rather than just average national GDP. Thus, does the “rising tides lift all boats” mantra really hold true?
You might also think about the incentives in our economy which have created a sense of individualism without responsibility. Stiglitz notes that there are many situations where success is attributed to the short-sighted aspirations of an individual, but failure is attributed to luck (think of his CEO examples). However, we might be able to avoid many of these failures if we were to give incentives that promote long-run planning. In order to plan for the long-run, we might have to sacrifice some of the instant gratification that typifies today’s culture, but it might be worth it to regain some sense of stability. I would also like you to think about some of the immediate and long-run consequences of switching to a long-run view on the economy. You might also consider discussing how punishment for irresponsible behavior could help or hurt changing to a long-run view of the world.
Finally, you might also consider discussing how the issue of community and trust can lead to a better (or worse) economy. How might the government provide the proper incentives to encourage a greater sense of community? Or should this be left to the markets? You might think about trust and community with regard to banks, firm behavior, or whatever you choose. Think about any possible negative unintended consequences that might result if the government did promote a more trusting and community based economy.
Please try to think about all of these issues from several alternative perspectives. If you believe these are all great ideas, I want you to really consider how we should go about creating change and the consequences that might result from change. I also really want you to consider if these changes are possible in the United States.
64 thoughts on “GECON200-Topic #4: Happiness, Inequality, and Shortsightedness”
Most people will tell you that money won’t buy happiness, yet we suround ourselves with things (IPods, cell phones, fast cars, big houses, and so on). So can we truly say money doesn’t buy any happiness (1)?
According to a study done in 2010 money does buy emotional well-being and happiness, up to about $75,000 reports The National Academy of Sciences (2). This study does bring up an important point, a person’s well-being. There are people all over the world who live right above poverty that may be considered happy, but what about their well being (3)? Do we consider the fact that one family is able to send their child to college while another family is not a disparity or do we accept that as the their problem? There is much more that must be taken into consideration; than just GDP and happiness. In the U.S. for example, we need to consider things such as: access to education (including supplies needed), access to affordable transportation, health care, entertainment, food, clean water, and so on. There are many basic needs in life that are taken into account, but there are other needs in life that don’t get factored in.
Is our economy helping us create the aspirations that we as citizens strive for? Standard economic theory assumes that we are born with fully formed preferences but are shaped by all that happens around us. Those who earn high salaries influence most individuals because society views them as making the most important social contributions which makes them willing to agree with all that those individuals have to say. This is why the best students go through undergrad in majors such as science, teaching, humanities, or medicine. They cannot resist the megabucks they will receive, and they like to know that they will be looked up to in society. If you ask the common question, “does money buy happiness?” almost everyone will answer No. Actions speak louder than words however, and our economies behavior tells a different story. If you look at the local headlines of books, magazines, and TV programs they all deal with every imaginable nuance of all things money. People compete with each other for the biggest houses, nicest cars, and are constantly trying to outdo each other. It is nice to have nice things, but money cannot buy everything. Money cannot buy you health, friendship, and relationships with your family. It also cannot buy you the satisfaction of a job well done, where you worked hard because you wanted to succeed rather than knowing you can earn extra money for it. Joseph E. Stiglitz recalls his parents telling him as a teenager “Money is not important. It will never bring you happiness. Use the brain that God has given you and be of service to others. That is what will give you satisfaction.” If individuals in our society could understand those wise words, there would not be as much competition in our society today for who can have the nicest things.
Measuring happiness with GDP reinforces a cycle or materialism. People judge their happiness mostly based on possessions and social status which is strongly, if not solely, connected with income and personal wealth which can be quantified. Health is another aspect of happiness that can be tested and quantified. However even healthy, wealthy people are not guaranteed to be happy. There are still intangible elements that make up total happiness. Yet, these elements are impossible to measure, leaving GDP as the virtually the only way to measure the nation’s happiness. This perspective emphasizes the fact that people, Americans in particular, define their happiness based on their possessions and purchasing power. This attitude prevails despite studies such as one by David G. Blanchflower and Andrew J. Oswald that show that this is inaccurate (1). People can’t “buy” their happiness, no matter how much they think it is possible.
This has lead to the problem, as Stiglitz describes it, of “creating a society in which materialism dominates moral commitment” (2). In the US, though we try to measure the happiness of the country as a whole with GDP, we compare that measurement to our own lives. This makes us more and more individualistic and causes us to put our personal happiness above that of others. We ignore the people we affect with our actions, especially those people that would most benefit from our help. Perhaps another area of happiness to turn our attention to is that of charitable donations and service. According to the Charities Aid Foundation, “the link between giving money and happiness, CAF found, is stronger than the one between giving money and a country’s GDP” (3). So there is actual evidence that charity benefits the happiness of both those that give and receive it and should factor into studies done on the subject.
2) Stiglitz, Freefall
When Stiglitz asks the question “Are we creating an economy that is helping us achieve [the kind of society we would like to have],(1)” it raises several questions and ideas to think about before one can answer. One question is in our society’s level of happiness. But how can happiness of a nation be measured? It can be argued that it’s too subjective and individualized a subject to measure on a large scale. Merriam-Webster’s Dictionary defines happiness as “a state of well-being and contentment; joy.(2)” The problem is that everyone gets contentment and joy in different ways. Some governments look at the “state of well-being” part of the definition as an argument that GDP per capita is a good measure of their citizens’ happiness. However, the Telegraph, a British newspaper, states that “in the past 50 years, average happiness has not increased at all in Britain or in the United States – despite massive increases in living standards.(3)” This idea is supported within Richard Wilkinson’s speech on socio-economic inequality being at the root of well-being issues, not income. He presents data that shows that the index of health and social problems within a nation are considerably worse in the nations where there is the greatest income inequality. He explains that “If you look at that same index of health and social problems in relation to GNP per capita, there’s nothing there! No correlation anymore.(4)” He uses many more statistics to prove that GDP does not have much effect on life expectancy, math and literacy rates, infant mortality, homicide and suicide rates, imprisonment, obesity, and other factors of society. What affects these things is inequality within that given nation. The countries with the worst inequality are the US, UK, and Portugal. While the best in this index are Japan, Norway and Sweden. These very different countries correct inequality differently. “Sweden has huge differences in earnings, and it narrows the gap through taxation, generous welfare states, and benefits…Japan starts off with much smaller differences in earnings before tax, so it can still have lower taxes and a smaller welfare state.(4)” This shows that it doesn’t matter how inequality is reduced, as long as it is reduced somehow. Now, it’s been proven that more equality will reduce health and social problems, but that doesn’t necessarily mean it will make people happier. I believe it will help with the happiness issue for most though, and could be a significant part of making our nation more “happy.” Trust could also be a factor of economic stability and individual well-being. Personal trust of others and of companies was a factor Wilkinson included in his calculations and showed that countries with higher trust were the ones with less of a gap between rich and poor.
What is happiness and how is it defined for each person? A Canadian political philosopher defined happiness as a balance of individual and community interests (1). If asked the question, “Does money buy happiness?” many would answer “Yes”. MOST people do not work because it is fun or they enjoy it. They work to pay off bills and buy accessories that they need and want to fulfill their idea of ‘happiness’. According to Richard Wilkinson, between countries, life expectancy has zero correlation to the Gross National Income (per head). However, within the countries themselves, the richest have a higher life expectancy and the poorest have the lowest (2). People are looking at relative income and social status to define the size of the gap between each other. In wealthy countries such as the United States, the average well-being of society is not dependent on national income. It is dependent on themselves and where they are in relation to one another. On the other hand, in poor countries the average well-being is more dependent on the national income. People are in a competition for happiness with their neighbors. Trust plays a similar role as national income in wealthy and poor countries. In more unequal countries (such as the USA and the UK), 15% of the population feel like they can trust others while in the more equal countries (such as Sweden and Norway) it rises to 16% and 17% (2). Where did this gap come from and how is it going to be solved? It seems to be that the only appropriate answer to the question “Does money buy happiness?” is: Only if I have more money than the guys sitting next to me!
GDP alone is a very poor indicator of a nation’s happiness. There are simply too many factors that can play into someone’s life that may make them happier or sadder. There is stress at work, income, family life, their education, etc. GDP cannot be completely ignored, as has been previously stated by Dean Stubbs. Money can “buy” happiness up to about the time someone is making $75,000 (1). But, it would seem that the society in which we live and our own personal outlook on life would be the greatest factor in determining happiness (2). So in my eyes, the only real way to ensure a happy life for all people is to create a trusting community. We only need to look as far as the current Occupy movement to see the lack of trust that is apparent in the country today. The Occupy movement, although they have no established platform, wish to reduce the power of big banks and corporations (3). Basically, they wish to remove so much of the power that is given to so few people.
This country would be much better off if people trusted each other and respected each other. In my eyes, I can never see this sort of change happening in this country however. Even though it would most likely be for the best, to create an economy based on trust and a strong sense of community would require a large overhaul of the economy but also the government. Unfortunately, with the two party system we have, there is far too much polarization for much to get done quickly and effectively. I would expect that this sense of there is a small percentage of powerful people who can manipulate the system to benefit them at the expense of others will persist for many years to come.
The saying you can’t always get what you want is becoming less and less true in the world that we live in. Many people that live and work in this world work for what they want now and not what they need in the long run. Just like the example that Stiglitz uses about the CEO and his compensation (1), we are in many cases now more then ever looking to reap the benefits for ourselves and leave others in the dust. The question that I was proposed with, whether or not the economy is helping us achieve happiness, would have to be simply answered with no. Our economy has turned into a machine that strictly helps people to achieve personal goals and forget about the importance of our coworkers and even our communities. There have been studies done that say “voluntary giving triggered activity in the same part of the brain that responds to a tasty dessert.”(2). I believe that giving to charities and things of this nature are good but I don’t think that our economy is “geared” towards prompting this type of behavior. Just like the research says, it stimulates the brain like a tasty dessert would, which for many people could be seen as a guilty pleasure. Just like when people feel bad about having that extra scoop of ice cream, giving money to charities might be rich peoples subconscious way of saying, “ Sorry for screwing you over in the financial world, let me give you money in order to support a cause”. I’m not trying to make it seem as if all people rich and successful people act in this manner, but there definitely are those types of people out there.
In order for the economy to be geared toward happiness and to satisfy people, we need to stop looking at how much revenue a company can churn out but instead look at how people within that company get a share of its profits…equally.
There is no way to measure just one aspect of anything in modern day economies. Methods like approximating the level of GDP or CPI have so many different variables that it is near impossible to get a single measurable number. For instance, when trying to measure the level of inflation an economist can use the consumer price index, producer price index, or the GDP deflator to try and find one measurable quantity, but the use of these different formats yield different answers. The problem with this is that economist must analyze these different results in order to be able to estimate what the rate of inflation could be. If economist cannot precisely measure rates specifically related to their fields then it is farfetched to assume that they can measure happiness as a result of GDP or standard of living. Happiness doesn’t correlate to numbers or a specific lifestyle but instead is a unique level of satisfaction that an individual looks at compared to his or her life. The measurement of happiness is different for everyone and does not follow specific patterns. For example a poor person could be happy with his or her life while a wealthy person might not.
Though happiness cannot be measured with numeric variables, it is safe to assume that people in different regions of the world who live different lifestyles could be content more easily with their lives than others. Residents of Switzerland might be happier with their lives because they can just step outside their front door and view the awesomeness of the Swiss Alps and citizens of Amsterdam might derive extra satisfaction in their lives as a result of the decimalization of prostitution and marijuana; however, these are unique levels of satisfaction specifically derived by these different people. If you put an American who is afraid of heights on the Swiss Alps he or she most likely will not derive the same level of happiness as the Swiss person. All in all, what a government can do to elect a greater level of happiness out of its people is limited because different people respond to different things.
What is happiness for one may not be happiness for another, which is why it’s sometimes difficult for people to survey and measure. I believe happiness comes from within; it does not stem from the amount of money in our bank accounts or the amount of power we have over others. As humans we see happiness as a thing to be discovered or found, when the ability to be happy is always with us. Harvard psychologist Dan Gilbert holds the belief, with many factual arguments to support him, that peoples’ beliefs about what makes them happy are often incorrect (1). In one study he found that after a year lottery winners of millions of dollars reported the same happiness as paraplegics (1). He explains that as humans we have a “psychological immune system” which helps us adapt to situations and makes us happy even given horrible circumstances (1). We make the best out of what we are given if we have no other options. The richest person in the world is not necessarily the happiest.
Now, I understand that in order to live at least a relatively happy and healthy life money is necessary, however it’s definitely not the only thing to consider. Community and relationships are extremely important for the well being of individuals. As Lisa Covert has stated it’s also held true that “the link between giving money and happiness, CAF found, is stronger than the one between giving money and a country’s GDP” (1). Having a job in which you help and influence the lives of other people not only affects your own happiness but also increases the happiness of the lives around you. In Live Science, Tom Smith says, “The most satisfying jobs are mostly professions, especially those involving caring for, teaching and protecting others and creative pursuits” (3). However, most of these jobs don’t pay three figures, which let’s be honest, most people strive for. The problem is that we live in a very individualistic culture in which people put their own needs ahead of everyone else’s. You hear things along the lines of, “Don’t be concerned with their problems, worry about yourself and how you can get what you want.” People strive to be the best and be at the top, but this often times comes at the price of losing social relations, one of the most important things a person can have. Therefore, I don’t think our economy is one that helps us achieve the society we want to have. In countries with a more equal distribution of income, like Denmark and Japan, the people have smaller income gaps that lead to less deterioration of social relations, human capital, and health (4). Those individuals in such countries have also reported a higher level of trust among people (4). Trusting things such as firms and banks makes all the difference in the amount of faith and money people put in their country’s economies.
To address the simple question of “Are we creating an economy that is helping us achieve [the kind of society we would like to have]?” I don’t believe so. There are obviously different aspects that could be focused on when addressing this question, but one point I shall dwell on pertains to society’s perception of materialistic values and it how it affects those with jobs that help people but do not get paid enough to support themselves (for example: teachers, firemen, police officers, etc. essentially government jobs). As Stiglitz’s states:”I saw too many of our best students going into finance, they couldn’t resist the megabucks” as we are “creating a society in which materialism dominates moral commitment” (a). Going off what the previous comments state, it is a common conception that “money can buy happiness”. Nowadays, there is a shortage of teachers according to The National Commission of Teaching and the shortage of teachers isn’t due to the availability of teachers, but more so the very low turnover rate (b). The economy doesn’t build for a good living for teachers. Thus, they find themselves unable to support themselves in the profession they studied for years to receive their licensure in. If the salary of teachers were to increase, obviously, that could perhaps change the shortage and dedication of teachers. Seeing as how teachers are the one who essentially teach the future generation, they play a large role in helping the wellbeing of the younger generation. As far as increasing their pay goes, it is easier said than done to do so because that would involve restructuring the way the tax dollars are distributed or maybe even raising taxes. As far as measuring happiness goes, happiness will always vary person to person, but being able to support yourself financially, will always bring some sort of contentment. Simply measuring GDP is black and white, but the world isn’t that way. Happiness will vary but measuring the well-being of the citizens can depict what type of society we live in as a result of the economy.
We have the building blocks for an economy that I think we would be happy to have because it allow us to give unfortunate people by having tax breaks on charities and non-profit organizations and also gives people the chance to start their own business and move up in industries. However, most are not given the chance too. The government allows too many corporations to get away with moving their businesses out of the country, allowing corporations to give CEO’s “bonuses” while the government is bailing them out, and also allowing people such as Bernie Madoff to get away with stealing billions of dollars in a ponzi scheme and cases such as Enron scandal. It is cases like these that breaks down the trust in the government and big corporations from the community. 1) “In a Roper poll conducted from July 28 to Aug. 10, 72 percent of respondents felt that wrongdoing was widespread in industry;” If communities trusted big corporations and banks it would to better economic growth because people would not be as hesitant to spend money and invest it into corporations which in turn could lead to economic growth and more jobs. 2) “Trust in government recovered during periods of high satisfaction and strong economic growth. Both trust in government and satisfaction with the state of the nation remains quite low today.” When people trust in the government is shows directly in the economy. I feel like government does not need to step in and take more control of businesses but they should look more carefully at business to see if there is fraudulent activity that could cost investors billions of dollars and people there jobs. If the government can build trust and get the community going we could have the economy that will give us the society that we want.
While money does not buy happiness, up to a certain point it can make achieving happiness much easier. Simply put, people pursue careers and act however they must in order to generate the largest income. When one chooses how they would like to spend the rest of their professional lives, it usually boils down to an internal argument of opportunity cost. Stiglitz states that he sees “too many of our best students going into finance. They couldn’t resist the megabucks.” (1). He goes on further elaborate how people use to want to change the world with their brains, but I don’t think morality is the issue here. People try to be happy but at the same time, they like to be rich. With low incomes for most teaching, scientific, and other professions seen to ensuring the future of the nation, its obvious why there is a lack of interest. The opportunity cost of teaching a room of high schoolers or taking ones talents to lead a big company on wall street is for most people to great. An increase in wages in these lower paid sectors, either directly from the government or less directly in the form of things like tax credits, the opportunity cost for working these jobs would decrease and in turn would be more viewed more positively. Interestingly enough, these lower paying jobs do tend to be the most satisfying (2), with careers in firefighting, cleaning, and teachers being in the highest level of happiness. This shows that no, our economy does not create a happy society. Until the salaries of these fields increase our greatest minds will continue to avoid them, which will continue to have a negative effect on our economy and society.
The mantra of a rising tide lifts all boats can be said to be true and false; it’s really in a grey area to be honest. The advancement of society, both socially and economically, can be attributed to an increase in technological advances seen in better medicine, foods, and equipment. These advancements have given people more time to pursue leisure activities/recreational activities; some prefer to go hiking while others prefer to spend it on booze and women.
What a person spends his time doing during non working hours is based on his upbringing and experiences in life. This generalization can be applied to nations as a whole as well, although slightly bastardized.
My belief is that countries are generally happy based on three important factors: 1) cultural factors, 2) geographical factors, and 3)social factors) (1). Rankings of countries show that those nations with the highest amount of happy people were generally the nordic nations (2).
In regards to the cultural factors, Nordic nations revolve around the idea of socialism and benefiting the community as a whole (collectivism), rather than the idea of individualism. For example, Danes and Swedes pay a higher amount of taxes from their incomes than Americans do (2). It should also be noted Denmark has a gdp per capita of $54,000, which is higher than the US’s $47,184 (2). Could the higher amount of income per capita be the reason why Danes are happier than Americans?
Let’s not jump to conclusions just yet. When taxes are taken into account it should be noted that danish households hold less than Americans do in disposable income and wealth (assets minus liability). Also to be looked at is the fact that prices in these countries are often at times MORE EXPENSIVE THAN AMERICAN PRICES for things such as food and clothing!
Yet, how are they happier? Could it be that the culture of nordic countries is based on collectivism and helping others, hence high taxes, and this results in people in these countries feeling more “satisfied” with themselves? Yes, that could be a possibility. Another possibility may be the fact that these countries are most often at times located in some interesting geographical areas.
To be noted is their proximity and availability to the ocean and the vast amount of un altered landscapes apparent in these lands! Availability to the ocean allows them to have a diet consisting of seafood which is rich in omega 3 fatty acids, which has been shown to scientifically alter moods (3). People having a high diet of omega 3 fatty acids have been shown to have less mood swings and be more content (3). Aside from the plentiful sea food, the availability of unchanged lands allows the people of nordic countries to escape from the hustle and bustle of the cities and pursue the activities of hiking, camping, canoing, and ect. And it should be noted that though there may be a greater amount of unaltered landscapes in the US, it’s primarily due to the fact that the US is MOST DEFINITELY larger than Denmark or Sweden; therefore when this is taken into account, Nordic countries generally have a higher percentage of natural land than the US.
Urban sprawl, which is most definitely associated with economic development, is thus a factor to be blamed for unhappiness. But this brings into contradiction the GDP per capita fact brought up before of Danes versus Americans. The fact that Danes have a high gdp per capita shows that they’re economically developed country. So how can they be happy yet be so developed?
This leads us to the third factor, social issues. Nordic countries tend to be highly homogenized, meaning that they’re people generally are of the same cultural, beliefs, and language (2). Basically, they all look the same and talk the same. Highly homogenized countries such as Denmark and Sweden have citizens that are more likely to feel the need to help one another because of their shared upbringing and skin color/looks (2). I’m not saying that having a homogenous society will be a better thing, I’m just pointing out a fact. Thus, the greater willingness to help one another, in the form of higher taxes, in nordic lands is associated to their homogeneity.
To wrap it up, I believe the US isn’t capable of becoming the happiest country in the world. Why? It’s mainly because of Social views (collectivism vs individualism), destruction of the natural landscape and the lack of access to these landscapes and the foods associated with them (US is far too big, so not everyone is capable of traveling to the coast or to the mountains because of economic constraints and distance and seafood is expensive in the US so the lower income class can’t afford it), and controversially societal makeup (homogeneity vs diversity). I don’t necessarily believe the last point because my parents are immigrants themselves. And also, this proves the rising tide mantra isn’t necessarily false or true.
We are not creating a society that can help us to achieve. Due to the neglect and ignorance of many bankers the U.S. economy has gone through its worst recession since the great Depression. Stglitz notes that we are creating a society focused only on material wealth. He said when he was graduating college the best and brightest in his class were going into fields of medicine or engineering. Now he says they are all going into finance to make the “big bucks”(1). More and more people believe that depending on how much a person makes in their career directly impacts how society views them. Many people are worried that economic equality is bad for a society. But, Richard Wilkinson notes that countries with a more equal wage scale have a higher life expectancy. Our society of the rich get richer and the poor stay poor is accurate. There is data that shows that the U.S.‘s top 20% is 8.5 times higher than the poorest 20%(2). In Comparison to Japan’s country of only 3.4 times nearly half even though Japan’s GDP has been expanding rapidly in the last few decades. This economic inequality also marks the U.S. as the worst well developed country of high mortality rate, drugs, and homicides, and teen births. Not only is this inequality affecting life expectancy and poor economic conditions it is also leading to many other negative effects. Our society needs to balance the wealth and close the gap between the bottom and top 20% to increase in economic productivity and the welfare for every American citizen.
Human kind has evolved into a self-centered kind, where one looks out for one’s self, and one’s own happiness. A philosophical analysis of this is known as Hedonism, or seeking the most amount of pleasure within one’s life span. So, my argument is that there is no way possible for Governments, Societies, or Cultures to focus on the happiness of the people. Pleasures and happiness vary from person to person, so the idea to focus on the GDP and the job of getting individuals the ability to be able to fulfill their pleasures and become happy is the only way for Societies to be prevalent.
Also, in a study from the University of California, the more freedoms one has, the “happier” they are. By providing the freedoms of speech, religion, and other civil rights, happiness can be “achieved”.
Governments can provide a greater community this way, by allowing for more and greater freedoms. The more the community can be “individualized” in their freedoms, the easier it is for them to unite as a community, as a people. Though the United States may be in a less than fortunate economic situation as of yet, the amount of freedoms provided by our Government allows for the citizens to unite as one people, one United States of America. Within these freedoms and rights, the people of the U.S. feel secure. It also helps that the U.S. military is at the ready to defend the U.S. from all enemies, foreign and domestic.
“What is happiness? In the United States and in many other industrialized countries, it is often equated with money” (1). Today, the United States is known as a materialistic society. The majority of Americans consume expensive and many times unnecessary products to fill each and every “essential” void. However, according to the masses, “money doesn’t buy you happiness.” If, according to this cliché, money doesn’t buy you happiness, then why is it so essential to Americans? Ultimately, the products that money buys make us happy.
Due to the current state of our economy, it is certainly difficult to attain a happier and healthier society. Based on the capitalist “American” example, you get what you earn. Unlike other economies, especially those run by communist regimes, you are successful based on opportunity and devotion to your job. This foundation of our economy definitely prohibits many citizens from achieving a happy and healthy lifestyle, due to the fact that many lack a substantial work ethic or are incapable of working. The very fact that the economy alone establishes distinct social classes proves that not everyone can nor will be satisfied. Our economic system creates jealousy, for example the poor envy the rich for their possessions, and the rich are never completely satisfied because, in the end, money cannot buy you everything-including happiness.
“Traditionally, economists and others measure a nation’s progress and prosperity by looking at Gross Domestic Product (GDP), that is, the total output of goods and services a country produces for its own inhabitants or for sale to other nations (2)” If we continue to measure happiness through GDP, Americans will continue to be reinforced as an individualistic society. According to the New York Times, “Economists measure consumer confidence on the assumption that the resulting figure says something about progress and public welfare. The gross domestic product, or G.D.P., is routinely used as shorthand for the well-being of a nation (1).” GDP, however, reinforces the materialistic aspect of the United States, as well as social classes. Measuring GDP enables Americans to measure their happiness based on their value (wealth). GDP is certainly an effective way of measuring economic activity; however, if we are yearning for a happier and healthier society, GDP may not be the best measure because it creates inequality. “The industrialized countries should … use a broader conception of well-being than the height of a pile of dollars (2). One way to gravitate towards another measure is through the Human Development Index (HDI). “Published every year, the HDI is a score that amalgamates three indicators: lifespan, educational attainment, and adjusted real income” (2).
Like many of the prior posts, I to believe that GDP and CPI are not the best indicators for a country’s happiness. In reality, there is no possible way to make every single person in a country happy because happiness is a term that cannot be explicitly defined or universally experienced. Just because a country produces more goods than others or has more power on an international scale does not even begin to address the idea of citizen’s happiness with a nation. I believe that the only way to understand a nation’s happiness on a wider scale would to be to find a way to measure quality of life (The U.S. only ranked 7 is quality of life despite having the highest GDP ). By doing this, you could see the scale of “happiness” that is experienced by citizens in different social standings and regions. I think the more important issue is the range that would be seen if the country was to measure happiness levels. Shortening the gap between the unhappiest citizens and the happiest ones is something that economic success alone cannot do. Happiness is a state of mind and does not rely solely on what’s in your wallet. Everyone has a different definition of what happiness is whether it is a life where you are married with children, living the single life in a bachelor pad, or sharing a small apartment with 20 cats. Due to the fact that happiness cannot be specifically defined, it is hard to say if economic standings are important to every citizen’s happiness levels. Although economic success would surely help one feel happier, I do not think that economics and happiness can be measured in mathematical matters alone.
“Surveys show that religious people think they are happier than secularists, and secularists think they are happier than religious people. Liberals believe they are happier than conservatives, and conservatives disagree. In fact, almost every group thinks it is happier than everyone else” (Brooks, 2011). With this statement, there is obvious controversy on who has found the source of happiness. How are we to tell who is actually the happiest? People have their own standard of happiness. People who are in poverty can be just as happy as people who are wealthy simply because they are grateful for what they have and can find joy in the little things. People who are wealthy can also be happy because they find their joy in expensive, material things. Money can buy some sense of happiness because it can give people some sense of worth in the world. However, true happiness can only be found in being content and grateful for what you have. If you keep seeking more and more you will never be satisfied.
Another thing that can bring happiness is helping others. It is odd to think, but most people find more joy in giving than receiving. Yes, it is great to be given a gift, but think about the person who gave it to you. Or, if you were to give a gift to a friend or even a perfect stranger and get to watch them thoroughly enjoy and use it, you know that you have made an impact in their life.
Happiness does not always come from you receiving or gaining success. It comes from working hard, being grateful, and helping others. When you give of yourself and your earnings to those in need, the society as a whole will be “happier.”
Although money cannot technically buy happiness, “rich people, unsurprisingly, are typically happier than poor people” (1). Related to happiness, achievement can also dictate how satisfied people are. The feeling of receiving a paycheck shows that hard work has paid off, and is often a great feeling. Another surprising revelation from Brooks is that people are still generally happy if they are working, whether they are wealthy or not. However, I think that the greater the paycheck, the greater the feeling of happiness and success. Simply having a job does provide workers with a sense of security, but in today’s economy that is not necessary enough due to high unemployment. It is not advisable to trust the government so much that you simply rely on each paycheck to get by and survive. Another way to “buy” happiness without actually purchasing it is through charity. Those who donate to charity are 43% happier than those who do not (1). This is a large indicator that people enjoy helping others, which creates the type of society we desire.
It is hard to answer weather we are creating the kind of economy our society is achieving to have simple do to the fact that we, as a whole, are achieving various different types of economy. It would be easy to create a certain kind of happiness if everyones views on what happiness is were the same, but this simply isn’t so. Does money buy happiness, or doesn’t it?
GDP and income have for a long time been a way of measuring ones happiness and healthiness. We have created a society believing that the more money you have, the happier you are. Unfortunately, some of the jobs that provide the most to others are the least paying. Such jobs such as a Chef, Architect, or University Research Scientist earn less than 50K a year(2). Although this is quite low paying, many of the people working in these jobs are satisfied because of their passion for what they do.
Also, as GDP increases, we have expected health care to rise as well but this is not so. As GDP has increased, our society has grown more unequal and the money put to healthcare hasn’t shown increasing outcomes in our societies health or life expectancy as a whole. “It’s time we admitted that there’s more to life than money and it’s time we focused not just on GDP but on GWB – general wellbeing”(3). Our society should focus more on our security, culture, and relationships; from this wellbeing our society will then find happiness.
How does economic behavior affect happiness or a person’s well being? According to the Department of Economics, University of California being happy is all about the choices you make. People of our generation are unhappy because they think that they will have no social security for when they retire. According to The Coming Depression Editorial Staff 92% of americans are unhappy with our economy as it stands today. The problem with measuring happiness in an economy is that it does not capture all of the aspects of human life. I agree with with Jefferey Sachs, author of The Economics of Happiness, when he says that it is time to reevaluate the basic sources of happiness in our economic life. We cant make everybody happy so is our goal just to make the majority of the populatioin happy and at what costs? You can try as hard and long as you want but it is impossible to make everybody happy in a society. Having said that I think that focusing on GDP and income would be practical. Im not saying that we should forget about the happiness and well being of our citizens, we should just focus a little less on the different aspects of happiness and more on the national income. Since measuring GDP and income is an effective way to measure economic activity I feel that is more efficient to do so rather than focusing more on happiness.
When considering Stiglitz’s question of “Are we creating an economy that is helping us achieve [the kind of society we would like to have]”, it is tough to come up with a definite answer. While the United States has the highest national GDP in the world, the United States is also considered one of the worst countries on the index for health and social problems. After listening to Richard Wilkinson’s speech on inequality and its harm to society, it is clear that equality is the best measure of a society’s well-being. Wilkinson points out that the difference between the top 20% of the population makes about 8.5 times more than the lowest 20% in the United States.(1) This difference in equality of income throughout the country correlates with a large number of social health problems. When answering Stiglitz’s question, one either has to make their judgment upon national GDP, where the United States ranks supreme, or look at our nation’s equality and social health issues.
Happiness is a feeling that I feel cannot be expressed properly through a number like the GDP; however, one contributor to happiness that I feel most recently has taken over society is the large gap of inequality in the United States. When looking at recent data, the large gap in inequality has been confirmed as the OECD recently came out with numbers that state, “in the United States, the average income among the richest 10% is 14 times greater than the average income among the poorest 10%, up from a 10 to 1 ratio in the 1980s.” (1) I feel attaining a happier and healthier society is possible, but it comes at a cost of the need of incentives because just like you can’t come out of a recession overnight, you can’t change the feelings of Americans from upset to happy overnight. Words cannot cure the pain that some American’s are feeling about the gap of inequality and I feel that incentives like possible tax breaks and numerous other contributors will soon be necessary in order to change the emotions of some of society today. The middle class frustration can be appointed to the higher social class above them because “the process begins with the completely unremarkable fact that top earners have been spending at a substantially higher rate than before. They’ve been building bigger mansions, staging more elaborate weddings and coming-of-age parties for their kids, buying more and better of everything.” (2) The overall happiness of people is affected by inequality and social status because that type of feeling of being higher or lower compared to others is a personal feeling that is a part of each individual. With the Occupy Wall Street Movement, I think the idea of inequality has been escalated to a whole new level as Americans really began to think about the “99%” even if they didn’t act, the idea may have struck their mind and “As Politico’s Ben Smith has shown, the mentioning of ‘income inequality’ in print and web media has quintupled over the course of the Occupy protests (from 91/week to over 500). So there can be little doubt that the movement has raised long acknowledged issues and has given them a legitimate place in the public. That is a success – no doubt.” (3) Unlike inequality, GDP is something that everyone in the economy has to deal with. Different people don’t have different GDP’s and the economy as a whole, including all social classes, contribute to the level of GDP; therefore, I feel that inequality holds a much greater effect on American’s happiness as the inequality is vastly different among American’s.
I strongly agree with Stiglitz’s statement, “We have gone far down an alternative path- creating a society in which materialism dominates moral commitment, in which the rapid growth that we have achieved is not sustainable environmentally or socially…” In today’s society, more and more people are entertaining and pursuing get rich quick schemes. Typically, these schemes involve the development, manufacturing and rapid distribution of items deemed ‘necessary’ to simplify tasks in everyday life. Most, if not all of these items, are generally overpriced in order for the producers to quickly make back all operational and startup costs, while anticipating large sums of profit. This is very unfair to the modern day consumer, who already is suffering from the lasting effects from the recent recession and damage to the economic system. The supply and demand principle helps to keep price levels and quantities reasonable while protecting consumers from monopolies, but it is only so effective in keeping company profits low. What then is the solution to this problem of corporate gluttony? ”The least disruptive approach would be changing the tax code to be more progressive. This could be modifications to the income tax, or imposition of either wealth taxes or consumption taxes.”1 These suggested plans will definitely face extreme oppositions from many wealthy and individualistic Americans, but a combined effort by the majority of less wealthy citizens can succeed. One of the most important things to remember is that,”… any plan that is going to shift the balance of wealth has to deal with issues of extracting real value from the accumulations of the wealthy without causing a drop in the marketability of the assets.”1
Money doesn’t buy happiness. Variations of that phrase have been thrown around since humans started the art of trade. But, does money have any effect on happiness at all? “The effect of money on happiness has been shown to plateau — that is, once people reach the point of being able to meet their basic needs, more money leads to marginal gains at best — or even less well-being as people worry about “keeping up with the Joneses.” (1). According to this article, money seems to have little to no relationship with happiness and so we can conclude that money, for the most part, is independent of happiness. We encounter a problem when we try to define a relationship between the two because money is measured objectively through something like net income on a balance sheet while happiness is measured subjectively. One’s happiness can only be measured by that person and there are no units to accurately measure it.
This is why you cannot assume that a country’s citizens are happy because the country’s GDP or CPI. Richard Wilkinson presents a lot of graphs depicting relationships between aspects of numerous countries such as GDP and income on the money side and trust on the happiness side (2). In a good number of these graphs, the points are scattered across the entire graph. The scattering points in the graphs show that there is little to no relationship between money and happiness.
To put it simply, GDP is a horrible measure of well – being for a country. It is one of the only ways of measuring economic activity and may on the surface seem to make sense, but there are so many things it does not take into account. A country, such as the United States, may have a high GDP but that does not show inequalities, or health, or even child well being. GDP creates a skewed understanding of how a country is doing economically and otherwise. Inequality is very extreme in the United States. In fact, the richest 20% in the US are 8.5 times as rich as the poorest 20%. That is an enormous gap that cannot be shown by a simple measure of GDP. So why does this incredible gap exist? I think it is partially due to the government but business people and entrepreneurs also have some part in this gap. Stiglitz discusses corporations and their unmoral actions. To an extent, it seems that many corporations will due whatever is necessary to make money, regardless of it is fair towards everyone involved. Over the years, the United States has grown into the “every man for himself idea” which stems from the American dream. To become successful, one must work hard, and do whatever is necessary to become prosperous. This notion disregards others and causes an incredible gap between the rich and the poor. The government is also to blame for this because they do not create enough laws and regulations that would not allow for such unmoral actions to be carried out. In the end however, I believe it comes down to each person’s moral values, and in business, morality is scarce. It seems that there is no sense of community in the U.S. Most people look to the government to do what they need to do to fix economic inequalities and because the inequalities are so large, distrust with the government is also very large. The only way this can be changed is if the government begins to create plans to fix this gap. The U.S. needs to stop looking solely at GDP as a measurement of well-being. Statistics show that well –being in the U.S. is great for some, but horrible for others – and there is no fairness in that.
I do not believe that in today’s world we are creating an economy that is helping us achieve. After reading the last chapter of Stiglitz’ Freefall, it is obvious that we live in a very selfish society that is primarily focused on ways to get more money. The CEO’s of the big companies that run much of our government are saying that they are “incentivized by pay which increases with performance.” (1) They are basically saying that if you want them to work hard, you need to pay them a lot of money. If a CEO is involved in a failure of some sort, they put the blame on other factors so that they will not have to deal with the problem or having to worry about receiving less money. If CEO’s were to be punished, or blamed for their mistakes they would be more cautious to avoid making those mistakes in the future. The CEO’s in the United Kingdom will resign if their firm is failing which makes it possible for the US to step up and do the same. (1) In an ideal society everybody’s happiness would depend on the same variables; but seeing as we don’t, it would be very difficult to measure people’s happiness since the variables change with each individual. The United States has a large gap between the poor and the rich; the richest 20% is 8.5 times richer than the poorest 20% of the population. (2) This large gap in society makes the U.S.A. have some of the most homicides, obesity, teenage births, imprisonments, and drug and alcohol related mental illnesses when being compared to other countries with a much smaller gap such as Japan and Finland. (2) The average well being of our societies are no longer dependent on the national income, or the GDP which means that money is not playing a role in our society’s growth. (2)
According to Stiglitz, “no man is an island.” However, the country’s general lack of intranational trust has led our economy to act as if that assertion were completely untrue. In my opinion, the underlying issues of trust may have been inevitable in a country once run from abroad. England’s tight clasp on America’s policies and governance during their conception may have been a harbinger for what has developed today. On a smaller scale, I believe that current generations have broken free from certain familial traditions because those traditions suppressed their own freedom – such as preplanned marriages. Applying that concept to America and England, America may have become such a materialistic and consumptive place because it has reacted to the suppression from England’s mercantilism and Navigation Acts.
On another note, America is known for having a deficit in regard to unifying culture. I believe this contributes to the problems with trust. Our culture has begun to revolve around consumerism, with the imminent winter holidays as an archetypal scenario. According to a 2011 Gallup poll, Americans planned to spend $712 on average on Christmas presents. Additionally, 26% plan to spend $1,000 or more. This may make people happy, but it also exemplifies Stiglitz’s assertions regarding the nation’s issue with shortsightedness. People overextend their financial limits for one occasion, possibly without considering future burden.
In my opinion, a more trusting nation must start with more transparency from the government, corporations, and banks. However, this is not an easy feat. Americans need to be well educated and responsible for themselves before they can be considered responsible for more information from those that run our country.
Trust in the United States financial institutions by the American people is lower than in most countries in the world. In fact, “the United States ranks near the bottom of 23 countries in terms of trust in major institutions.” (1) There are some major negative effects that come out of this lack of trust. One result would be people are less likely to put their money into investment funds such as the stock market, bonds, mutual funds, etc. Also, companies such as those in the banking industry may be losing out on potential clients because of this lack of trust. Especially when it comes to putting up loans for housing. People looking to buy a house may not trust what the bank says the value of the house is which can lead to problems. However, on a positive note, it makes consumers more aware and they become more skeptical of the financial institutions. This in turn will cause them to “do their homework” before deciding to put their money toward a product, service, or investment.
One way to fix this lack of trust is if the government stepped in and set up regulations to fix this. In the case of home ownership we may have already seen this. The government offers money to people who are first time house buyers. The reason may be because those people are probably the most skeptical of buying a house. They have both already been wary of the banking system and have never gone through the process before. However, interestingly enough, quite the opposite might be true. A survey showed that 80% of respondents “indicated that government intervention made them less confident in the market.” (2) Why is that one might ask? Possibly it is because people view the government as a type of financial institution to some degree. Not only has fraud and embezzlement happened in businesses, but in the government as well. Consumers may not be sure that what the government is doing is beneficial to them.
Can money buy really you happiness? If it does, are people living in rich countries happier than people in poorer countries? But then what about the paradox of unhappy growth, which says that if people can stay happy with less money, they can also become discontent with more (1)?
So how can we quantify happiness? Can it be measured by our life-satisfaction? If this was the case then what you desire is what you have, because the benefits outweigh the costs to you. But a shortfall in measuring satisfaction like this goes back to then having the money to afford what you desire. However, according to the Economic Times “neither life-satisfaction nor happiness can fully capture the progress that mankind has made over the past say 100 years in terms of lowering infant mortality, morbidity, raising life expectancy, and other indicators of the quality of life (2).”
So then does economic growth lead to happiness? In his book Freefall, Joseph Stiglitz reports, “An increase in violence in society decreases our sense of security” (3). Then we build more prisons and hire more bodyguards, and our GDP goes up, but who says society is better off now? Is it those who are spending more to protect themselves against this increasing violence? But they too are losing welfare, because their purchasing power on other goods decreases all because they feel insecure (3). So even in developed countries the trend to measure happiness in GDP can be very easily flawed by the interpretation of the smallest of factors.
There are many aspects that predict economic growth, but that doesn’t necessary correlate them with an individual’s or societies emotional fulfillment. Although GDP growth creates an illusion of progress even when there is none, only using self-reported happiness or life-satisfaction cannot prove its effectiveness. Perhaps governments should utilize more than just this single dimension to measure development and well-being. Some countries use the “gross national happiness” as its preferred measure of progress (3). However, calculating this is very difficult. To assume that all economic activity is in the pursuit of happiness or maximum “utility” says that happiness should be measured by “age, gender, education, income, marital status, and country characteristics” (4). But identifying all these variables as either positive or negative is simply only writing them down in an equation about happiness, measuring them accurately is another. It will be a very hefty task for our government to implement happiness as a national policy, because this requires understanding the notions from which the concept stems from first.
After reading the chapter from Stiglitz’ Freefall, it seems that most of the blame could very well be put on the backs of CEOs directing the company. The CEOs have no concern for any side effects or outcomes from their decisions, they are simply ‘doing their jobs’. (1) They [CEO’s] hold no responsibility for their actions, making it completely unnecessary for them to have any consideration for anyone’s gains from the company but their own. This, meaning that they may have short-term goals that give them large gains, but may cause the company to tank later on. Stiglitz gives an example of this short-term consequence in the Japanese CEO, which he claims was responsible for allowing his company to be destroyed, causing thousands workers to be laid off. (1) Because CEOs are focused more on their short-term gains than long-term goals, individual officers of the companies may gain but there may also be negative consequences following those gains quickly, like that in the failure of the Japanese company which left thousands of workers jobless. When CEOs only focus on their personal gains with no regard to the effect on others, it may also create a larger gap in inequality and social status which may lead to an overall drop in happiness. (2) If CEOs were focused more on the long-term growth and gains of the company rather than their own personal gain, more workers may be employed or those workers may gain more, not only potentially increasing overall GDP but also potentially shrink the gap in inequality and social status. Overall, this change in focus has the potential to create a happier more economically stable economy.
I’m going to play devil’s advocate here. Money does and always will buy happiness, unless we join into some commune like government. Money, in today’s world buys all the essentials that create happiness and “peace of mind”. One can’t live without food, shelter, and water. It’s a given fact and how can you have happiness without life? Sorry to be so logical but it’s true. As a struggling college student I worry every single month if I’m going to make my electric bill and have enough money for college (in fact I was calculating these costs today). Although my parents would step in if necessary, I still don’t have the ease of mind that others do where they have, what seems like, an unlimited supply of cash from their supporters. If I were guaranteed that all my groceries and electricity would be paid for worry free each month I can guarantee you that my personal utility would increase. Speaking of utility, in economic terms it’s the measure of value something is to us as humans. Each person’s utility for the same object could be different, so how are we to say that a warm house and food every day does not equal great happiness for one being.
With all that said I do believe that GDP is a huge indicator of a countries well being. If someone can afford to buy shelter, food, and water and all the other extras that American’s see as essential I believe they are going to be a lot happier than a country that is struggling to survive. Although I don’t believe endless supplies of Xboxes and Iphones make us truly happy I do believe when the basics for life are ensured we as a country are a lot happier.
Our generation has been brought up to believe that hard work will always pay off in the end. Whether it’s being paid in money, respect, or stature, we almost always look for an output for all our input. However, the way that our society has evolved in recent history, it seems as though that money dominates our happiness and the life that we live in general. Even Stiglitz says it himself (1), “if you only pay me $5 million, I will only give you a fraction of my effort. To get my full attention, you have to give me a share of the profits.”
However, measuring GDP and happiness wouldn’t really bring accurate results as many cultures have different ideas of happiness. Quoting Robert Schumann, (2) “The question that I was proposed with, whether or not the economy is helping us achieve happiness, would have to be simply answered with no. Our economy has turned into a machine that strictly helps people to achieve personal goals and forget about the importance of our coworkers and even our communities.” Although it may seem grim that people are giving up on their community, it isn’t true. (3) The Corporation for National And Community Service has data that proves that in Virginia, the number of volunteers has remained steady over the past four years. Also, Virginia has a higher volunteer rate than the rest of America. I do agree with Schumann in that our economy is more geared towards a self-fulfilling concept, I still believe that America has kept its unity through the trying times.
Finally, I believe that the economy is geared towards happiness. We, as Americans, tend to make not only a difference in our country, but the entire world. We watch a 60 second commercial with abandoned pets and depressing music as we reach for our wallet and phone to donate as much as we can afford. Americans do want to see people happy; that’s why we tend to have happy endings in movies, instead of watching movies with a depressing/sad ending. Of course money buys happiness. (3) An article in The American said that happiness isn’t linked to money, but it is linked to success, but who doesn’t dream as a child to be a success? The article even goes on to say that Americans might be happier if their money was taxed away since people are happier when they have less money, according to America’s past. (5) A ludicrous statement to make since so many people in today’s world would be furious over a 2% tax increase or even letting the Bush Tax Cuts expire.
When it comes down to it we should not simply focus on GDP and income. Although both of these numbers are factors in how well off our country is, they provide weak generalizations of the happiness, equality, and as Richard Wilkinson’s video shows the United States has the highest income inequality and the worst index of health and social problems . According to the book Happiness and Economics, “ a number of economists see an advantage in measuring subjective well beings as expressed by individuals themselves,” . As the study of economics grows, economists are looking at other variables to consider and measure, such as happiness. The definition of happiness is broad, but especially when it comes to economics, it is very hard to make everyone happy. Likewise, sacrifices have to be made in order for someone to be happy. Incentives in the long run to help stabilize the economy would be great, yet today’s society is full of instant gratification “I want it now” people and it would take a lot to change that. If we switch to a long run view of the economy, the short run may fall apart. If the government places the focus of trust and community on the banks, the economy will be a better place because they will never feel hesitant to take out a loan, invest their money, etc. Yet, community and trust could inevitably lead to a worse economy because the first time the trust gets broken (such as a bank raising interest, foreclosing, etc) the community would easily fall apart and be worse than the beginning.
In a research done by UVA’s psychology department, it was shown that in years where income distributions were less severe, people were happier. In other words, a more equal society is a happier society. But making a society more equal doesn’t actually mean forcing everyone to go the full Communist route where everyone is forced to have the same income. Happiness is bound with inequality but the link between them isn’t money and goods. The same research found that it’s actually perceived distrust and unfairness. “When national income was more equal, people stated that they felt happier. However, the research also states that “the negative link between income inequality and the happiness of lower-income respondents was explained not by lower household income, but by perceived unfairness and lack of trust.” 
Increased confidence and trust in others is the key to society as a whole increasing in happiness. I think one of the better ways of instilling a greater sense of trust in the community is through some good regulations and increased transparency in government and businesses. Just telling someone “oh don’t worry, [business/government] isn’t going to screw you over, trust me” isn’t very convincing. “Oh don’t worry. [business/government] isn’t out to get you. We have regulations in place to ensure that they won’t take your power or rights away from you. The process is transparent enough so that we can see what they’re not actively lying, cheating, or stealing from you or committing other sorts of fraud.” is a more compelling argument that might actually put people at ease.
The downside to that is that regulation and transparency can be hard to enforce and, because they’re extra hurdles that will affect how a firm operates, might slow down business. (I personally think that increased regulation and transparency might increase consumer confidence and negate some of that business slow-down though.)
 http://www.psychologicalscience.org/index.php/news/releases/income-disparity-makes-people-unhappy.html an article on the results of the research
It is difficult to claim that one can measure well-being through numbers, statistics, or charts. GDP alone cannot determine the well-being of the people. There are flaws to this because it does not measure the output of an individual: “GDP per capital (per person) measures what we spend on health but not the output” (1). For example, a nurse takes care of a mother and that is calculated in the GDP, however; if the mother takes care of her baby, the GDP only counts if she buys the milk from the store but the well-being and her care does not count (2). The society nor the economy cannot decide whether a family is considered happy. There are more variables to consider. In Joseph Stiglitz’s article, he emphasizes how the economic system in America is not effective. He uses sarcasm when he explains the role of the government in the economy: “here is nothing wrong with helping the cigarette companies as they knowingly produce increasingly addictive products that kill.” (1) The government is morally unstable and is basically controlled by the corporate businesses. Stiglitz mentioned how the the economic system is corrupted because “corporations have tried hard to get legislation to protect them from ordinary liability” (1). This increases the power of the businesses which can damage the society because the money and the “well-being” would not be allocated to the poverty. People need to “feel” the sense of well-being. A family could be rich and center around materialism but the intangible, abstract things are the the ones that are considered to determine well-being. The economy is also centered around the idea of “now”. Especially since we are Americans, we tend to focus more on our present satisfaction than what to expect in the future. This creates shortcomings and is the reason why we need to have vision. Although economy fluctuates and is unpredictable, we need to come with alternative solutions and be prepared.
Happiness cannot be measured by money, but by contentment with one’s life. Instantaneous gratification seems to be the main focus of happiness for the average American. Instead of pursuing careers that provide others with a better life, which in turn affects the giver’s demeanor positively, there have been many great minds going into finance because they have been lured by “mega-bucks”(1). Not only do we live in a world where money is much more important than what was once perceived as happiness, but many feel it’s a necessity. The Occupy movements taking place right now embody this. Yes there is a lack of “economic equality” (the main focus of their protests), but now people feel they are entitled to jobs with better-than-average salaries because they received a college degree (2). These are the people who have been coddled all of their lives and now aren’t happy when they find out the world isn’t fair. Of course there are people on Wall Street with a lot of money, but in most cases they worked for it instead of complaining. This suggests that GDP has no correlation with happiness. If the US ranks 11th in the world for GDP per capita, shouldn’t that mean that we would be the 11th happiest country (3)? Instead, we’re the forefront of a whining group of unmotivated workers.
Stiglitz asks the question “Are we creating an economy that is helping us achieve [the kind of society we would like to have]?“ (1) Since the Great Depression, our society has become more and more dependent on the government. Many Americans rely on the government’s redistribution of wealth just to make a living. Bailouts and government run programs have affected our economy greatly because they are based on socialist ideas. “If the United States is to remain the world’s largest economy, the world’s number one innovator, and the world’s biggest exporter, we also have to make certain this country is always the world’s best place to do business.” (2) Therefore, the United States government should allow a free market to exist with few rules and regulations so that people can determine where exactly they want their money to go based on their own personal morals and convictions. This coincides with the founding idea of democracy and freedom in the United States. Many of the bailouts and government run programs are very socialist ideas. Americans need to stay true to their founding ideals with a free market. This way, they can control their own spending without the government telling them what to do. In any economy, some businesses fail and some succeed. But, without competition and threat of survival through government bailouts, the chances of these companies having corruption issues increase and socialist methods are placed on the economy because people have to choice as to where their money goes.
To answer Mr. Stiglitz’s question, no, America is not creating an economy that is helping us achieve the society we would like to have. Our economy is broken as is our society.
America has definitely created a sense of individualism without responsibility. When things are copasetic- banks, CEOS, and companies take credit- however. When something goes awry whether it’s bad decision-making, embezzlement or “unknowingly” selling toxic assets to another bank, it is of course, beyond their control. This can also be applied to CEOs. For example, when profits, dividends, and overall success are good, incentive pay is given out. But when performance is weak, they still get rewarded with something called retention pay. A reason they might give is that they were just doing their job. Banks and CEOs do not have the integrity to take responsibility for their actions. People and businesses that embrace this type of moral philosophy give capitalism and individualism a bad name.
In the financial sector, people do whatever humanly possible and within the law they can to make a quick buck. Their reasoning behind this is that if the government has not banned a said activity, they have “every obligation to its shareholders to provide funds as long as it’s profitable to do so.” For example, bankers will, within the law, exploit homeowners and borrowers to increase profits for their bank while getting a sizeable paycheck. By maximizing returns, there also has been a lack of trust between the banker and borrower. If citizens don’t have trust in their economy or their government, problems will occur. Shortsightedness is the main reason both parties lack trust in each other nor is it taken into account. The recession of 2008 is a perfect example. The bankers took for granted and were ignorant when knowingly selling and trading toxic mortgages which has ever more weakened trust w/ing the community.
In order to change our economy and society for the better, trust must be re-incorporated back between businesses/banks and the people. The U.S. economy has had a near death experience so it’s time to re-evaluate, restructure the economy and government.
Happiness cannot solely be achieved by making large sums of money. Money is what someone needs to feel comfortable. I comfortable would be having the ability to pay for food, clothes, water, and all of life’s necessities (1). Life’s necessities could be argued as things that bring happiness and to an extent that is true. Based on a study conducted researchers found that people surveyed were considered happy when reaching up to $75000. (2) The $75000 represents the amount of money needed to live comfortably. The study showed that once a person hit the 75K mark the level of how much happiness money brought them leveled off. (2) The study states, “not surprisingly, someone who moves from a $100,000-a-year job to one paying $200,000 realizes an improved sense of success. That doesn’t necessarily mean they are happier day to day” (2). When someone feels accomplished they feel happy. The amount of money involved in that accomplishment is more of an incentive.
The main player in a person’s happiness is “driven by whether or not you have good relationships, whether or not you have strong ties, whether or not you have strong community bindings” (1). I find it hard to believe that people can base our happiness off of GDP. GDP measures the basket of goods we buy, but not what our heart feels. If I purchased a new television that doesn’t mean I am happy. That same day I could be feeling anxiety and just is overall unhappy. So sometimes money may factor in with happiness and others it does not.
Mr. Stiglitz asks, “Are we creating an economy that is helping us achieve [the kind of society we would like to have],“ and I would contend that that is exactly what we have been doing. Firstly, we have created a happy society, or at least as far as I’m concerned. Happiness in the classical sense is far too hard to define, largely due to the subjective nature of humanity, so I feel a more objective way to look at happiness is as being that standard of living which produces well-being. Money can’t necessarily buy happiness in a literal sense, but it certainly brings a sense of comfort (1). Being able to afford all the necessities in life – clothes, food, housing, bills, car payments – provides for peace of mind, and only once we have reached that level of comfort can we begin to find out what makes us individually happy. Fortunately, people trust in our economy to work properly, and thus our economy has prospered. For example, between 1980 and 2000, the US experienced fairly constant positive growth of GDP, save for two instances in the early 1980’s and one instant in the late 1980’s (2). It should also be noted that GDP levels serve as indicators of national standards of living – when our economy is prospering, we experience more security in living, and therefore are happier. If our economy has grown and prospered in such a way that it allows us to not worry about the basic aspects of existence and instead focus on the proverbial pursuit of happiness, isn’t it then helping us create the kind of society we want to have? Sure, shortsightedness can put a halt to the forward progression of society – hysteria over economic downturns perpetuating panic, etc. – but in the long run, I feel that our economy has allowed us to create an ideal society.
GDP should be thought of more as a measure of potential happiness in a society. It is much too difficult to measure happiness with any sort of relevancy in a broad sense, so GDP is an efficient way to estimate social well-being. While it does not always work out this way, the larger the GDP that a country can create, the greater CHANCE of ‘happiness’ per capita. Stiglitz notes a problem with GDP in that “GDP per capita… measure what we spend on [a program], not the output” (1). When the outcome of a program, such as health care, is not effective, the measurement is misleading. With the higher amount of spending on that program however, there is a greater likelihood that in the long run the program can be reformed and succeed. Richard Wilkinson claims that economic inequality is the more important measure to consider. His studies show that in the United States, the top 20% earn 8.5 times more than the bottom 20%, more than double the rate in Sweden, Finland, Norway or Japan (2). Those figures are not surprising if you look at them over time. Data from the Organisation for Economic Co-operation and Development (OECD) shows that Economic Inequality rates over the past 30 years have increased almost across the board, including 20% increases in Sweden (3). This is all while GDP in both the US and Sweden have roughly doubled in the past 30 years (4). The mantra “rising tides lifts all boats” does indeed hold true.
In the United States, it is clear that happiness revolves around belongings and money. The media has a huge influence, pushing on everyone that smart phones and Ipads are necessary for survival. Women need the highest, most expensive heel they can find to show off their wealth and social status. The phrase “money can’t buy happiness” seems to be obsolete. Everyone is so caught up with their shiny screens that many aren’t looking at the big picture.
It seems that our economy and government are struggling. We use GDP to measure happiness and well-being of people which seems inadequate. Stiglitz says that “if GDP is a bad measure of societal well-being, then we are striving to achieve the wrong objective.” (1) I agree with this statement, but this is not to say that I have a better idea for measuring this. However, Stiglitz mentions that Bhutan is trying to measure GNP (Gross National Happiness) (1). This seems interesting and as if it should be more important than financial well-being, especially today when Congress’ approval rating has sunk to 9% (2). Something definitely needs to change, and it seems that it is up to our generation to figure it out.
As of now economists use GDP to measure a country’s “happiness”. However, this is not an accurate account by any means. Happiness is not a quantifiable object. There is no unit of measurement for happiness, so we attempt to create an index by using average GDP per capita. Since so many variables are omitted from this equation, GDP per capita does not give us an accurate answer.
Stiglitz gives the example of health care as a misconception of American happiness. In GDP we measure input, but not always the output. For this reason we look at how much money we spend on Health Care, but not things like Americans’ status of health or life expectancy. (1) This usually leads us to believe that we are happier than we actually are. If we spend more on health care, causing GDP per capita to go up, but people aren’t as healthy, than we become misconstrued in our perception of happiness. (1)
Another example would be how American’s take advantage of things that cannot be replenished, such as clean water and natural resources. This is a debt for future generations that we do not calculate into the GDP equation. (1) Things like a citizen’s confidence in the financial system cannot be quantified. Today’s unstable economy causes much stress to the American public. Stress cannot be measured, and it is one more thing that disguises a citizen’s unhappiness. (1)
Lynpo Jigmi Thinley, former prime minister of Bhutan, suggests that when calculating human well being, “Material well being is only one component. That doesn’t ensure that you’re at peace with your environment and in harmony with each other.”(2) In Bhutan they have created the concept of GNH, or Gross National Happiness. This calculation, while not yet perfected, attempts to add variables such as, “access to health care, free time with family, conservation of natural resources and other noneconomic factors,” into the equation.(2) The main problem with GDP is that it only measures material things. In 2005, Britain developed an “index of well being” which attempted to integrate material factors into calculating happiness. However, because these are tangible items, it is still difficult to determine the accuracy of the results. (2)
While GDP measures a nation’s assets, that is all it is capable of. We can use this to create a rough estimation for a nation’s well being, but because there are so many variables that contribute to happiness, which cannot be counted, measuring by GDP leaves a lot of room for error.
1. Stiglitz, Freefall
Money isn’t the sole factor in determining happiness. Obviously people want to succeed and will continue to pursue for the “Big Bucks” but it isn’t what makes our nation happy. While deciding where to go in your career Stiglitz says that he sees our most talented students are going to find big money jobs in finance instead of following there talents and what they love to do. Stiglitz means that people who are gifted in other fields such as science, teaching, etc. are choosing not to go to those fields because they pay less then the big time financial advisors. Money is a huge persuasion when deciding jobs. Everyone wants to have a lot of money but when you sacrifice your passions and talents you can’t be happy. People try to be happy and rich but it is difficult in our current economic situation to go into specific career fields that people love and make a lot of money. Money can only buy you so much. At some point you want to be able to wake up every morning to go do what you love, not just make money.
Determining how happiness is measured depends on how happiness is defined. Are we looking at the short-term thrill we get from scarfing down a box of Krispy Kreme doughnuts, or do we mean the pride we feel from raising children who grow up to become autonomous, bright adults? Money cannot buy love. But, money can buy things, and people in this country love things. Materialism thrives in individualistic cultures like the one we have in the United States as well as other westernized nations because people are encouraged to seek their own happiness (1). In collectivist nations, like Japan, people are, instead, more concerned with improving society as a whole and feel much more connected to each other as a group than Americans typically would. Although money cannot directly buy happiness, it can allow us to get what we think will make us happy, which in America means lots of material possessions. Our economic atmosphere fosters materialism, selfishness, and capitalism, and we love it. The problem lies in people’s perceptions of achieving happiness. Does what people think will make them happy actually make them happy? Short-term, probably. Long-term, probably not. In actuality, people are surprisingly inaccurate predictors of their future moods (2). So, are we wasting our money on short-term splurges in search of happiness? Yes and no. It may not be productive in the long run for you, the average American, but as long as the money is being spent somewhere, it still stimulates the economy by making and keeping jobs. Therefore, it is not really wasted because it benefits society. That dollar spent on your lunchtime Big Mac ends up in other people’s paychecks eventually, which then allows them to fritter away their share of your dollar elsewhere into other people’s paychecks. Kids go to college so that they have access better-paying jobs where they will have more disposable income to use on their short-term happiness needs. However, well-being does not just deal with a country’s national gross domestic product. In fact, well-being involves even more than just the inequality of social status that Richard Wilkinson described (3) because a person can have lots of money and still be unhappy, or have very little money and be quite happy. It is simply a matter of perspective. In individualist countries like the US, we are trained to want the utmost social status because it will beget us power. We ignore happiness to focus on occupational success, assuming that the two coincide. Everyone wants to belong to a happy, thriving society, but we are not seeking that idealistic standard of life in a way which will ensure happiness for us currently or for our posterity.
I see our government and it’s programs as a need because of the programs it provides to the homeless and poor. Although, I believe our government drives the laziness of the people in the country. Everyone wants to turn to the government when their own well being/ status isn’t going the way they planned or wanted it too. Our citizens need not to fall on the government expecting it to catch us and save our lives but instead lean on the government benefitting from the benefits it provides(social security, medicare). A sense of community is driven by trust and respect of who’s in charge. I feel like a lot of the times people do not trust the government because history has showed us that the government may not be able to be trusted at times. So, the government needs to provide incentives of values, and morals in order to have a better sense of community around the country. If the government did not promote a sense of community and trusting based economy then the unintended consequences would be no patriatism toward our country and faith in voting for our governmental officials. Our government needs to be able to be trusted and our citizens need to be able to be more indivualistic with responsibility. Striving for instant gratification is what thrives in today’s culture when we really should be looking down the long run and making decisions that will better off your life down the road. Happiness should be attained through the lens of hard work and determination. We will be sure that we have attained a happyier healthier society when people stop trying to cheat the system and start believeing in themselves and relying on other people to get things done for them.
I hope these changes are accessible to the United States although our ignorance seems like it keeps growing. Our country needs to look up to people and examples of how to do things the right way. We will not be able to advance as a country/ community if we can not look up to/trust the people who we elect into office. Everything starts with the trust of people in power including banks and other companies that have significant influences to many US citizens. If we cannot trust these people, then we need to restructure our buisnesses and whole governing system in place.
America is considered an individualist country, but that does not mean the individualists need to be selfish. Business should be conducted with a certain ethical code and social capital. Honesty, fairness, and a good handshake used to be the standard in business morality. In recent years, however, these moral scruples have been warped or lost completely. Sure, the business climate is highly competitive and every dollar counts, but is it absolutely necessary for businesspeople to be willing to screw each other over without a second thought? Much of trust in business and in life is about trusting people to take responsibility for their actions. If one guy messes up, then he needs to take responsibility for that mistake, not blame it on someone else and hope that person gets fired or bears the brunt of the burden, whether monetarily or otherwise. This is an everyday occurrence in America and the trust between businesspeople that once existed is now gone; replaced by deceitful and devious practices.
Stiglitz uses Enron as a perfect example of a lack of responsibility. They lied about their finances, cooked their books, and went bankrupt. Their investors lost everything they had invested in the company because the money Enron claimed to have did not exist. People were devastated by these deceitful practices in accounting (Stiglitz, 281). The crash of 2008 resulted from the underhanded business practices of the pillars of the American economic system. America obviously has yet to completely recover from those irresponsible actions. Enron and the 2008 crash are prime examples of why a return of ethics and social capital is desperately needed in the business world.
According to Soumyananda Dinda, an economic climate that promotes ethics and social capital will be productive (Dinda, Abstract). The application of the triple bottom line to business practices is another important factor in returning morality to business. It promotes social responsibility, economic prosperity, and environmental responsibility. If these ideals are widely accepted and taught to the younger generations, then morals and ethics will return to business, making it a more prosperous and productive part of society.
However, if American society, which is currently based on deceitfulness and irresponsibility, does not change, it will be devoid of happiness and productivity. If people are constantly watching their backs, how can they be looking ahead to the future?
(1)Soumyananda Dinda (a, b. (2008). Social capital in the creation of human capital and economic growth: A productive consumption approach. Journal Of Socio-Economics, 372020- 2033. doi:10.1016/j.socec.2007.06.014
(2)Stiglitz, Joseph. Freefall.
“Many people get sucked into the belief that having more money is the key to a better life. But it’s not. The key to a better life is increased happiness.” (1) I feel that in order for one to lead a happy life, they must first be happy with themselves before they can be completely happy. And in this instance, GDP does not accurately measure a person’s true happiness. If someone had a death in their family, the GDP would probably be lower, since the person affected is in mourning, and not currently feeling happy. “When we focus on monetary goals, we run the risk of becoming trapped on the “hedonic treadmill,” working harder and harder to make more and more money. This does not lead to happiness.” (1). Wealth and happiness are not mutually exclusive, but sometimes money does buy happiness; it just isn’t the only path to happiness. Being financially stable will probably improve your overall well being, since money will no longer be an overwhelming concern. It will also allow you to pursue other passions, since you now have the freedom to do so. This could make most people very happy. Spending quality time with family and friends can make you happy. Since you will be spending less time stressing about your finances, you will have more time to see those you care about.
But, “the best things in life are free” (2). You do not need money to be happy, yet some will say that having money will make you happy because you don’t have to worry about supporting your family and paying your rent and credit card bills. Doing a good deed for someone can make one happy at no cost at all. Getting a good grade on a math test can make one happy, at the cost of your studying, but money wise, absolutely nothing. There are other ways to be happy that don’t involve money, like doing a good deed for a neighbor and helping someone in need.
GDP only counts activity that happens inside the money economy (3). If happiness were to be included into GDP, it would not be a good measure because happiness and money do not go hand in hand with each other. One can be happy at no cost at all.
Would our society be better off if we focused on solely happiness or GDP and income as well? Is there one definition of happiness or is everyone’s different? Some people might say that “money buys happiness,” so if one’s GDP and income are high, then they are generally happier people. Research shows however that this is only true to a small extent. While studies show that happiness grows as GDP increases, it’s also shown that this is only to a certain level. “Beyond this level, GDP increases do not lead to more personal happiness. In ever country studied, reports of personal happiness level off after GDP continues to grow” (1). Everyone’s definitely of happiness may vary because some people may be happy only with material things in their lives, and others may be happy to have a loving and supportive family. Others may be happy just to be getting by. It would extremely difficult to measure the well being of our society for this reason. “Traditionally, wellbeing has been identified with a single objective dimension: material wellbeing measured by income or GDP” (2). Is it possible however to solely measure wellbeing by GDP? This as well is not the best way to measure wellbeing, since GDP and happiness don’t correlate. “The fact that GDP is the sum of consumption and investment should, by itself, give an indication that GDP may not be the ideal yardstick of wellbeing” (2). Since happiness alone and GDP alone will not successfully measure wellbeing of society, there needs to be another way that combines this aspects. According to McGillivray, “It is now widely accepted that the concept of wellbeing is multidimensional: encompassing all aspects of human life” (2). With the combination of happiness, GDP and income, as well as social and environmental aspects, wellbeing can be measured most accurately and successfully.
Although GDP is a good measure of wealth, it cannot be the sole factor when figuring out the happiness of a country. In general, developed countries with strong economies have a happier population then poor countries in the midst of political turmoil, but the wealth of a country is not the only determinant in the happiness of its people. The United States has the highest GDP of all countries with over $14 trillion (1). However, in an index by 24/7 Wall Street, the United States did not crack the top ten in happiness. The World Values survey had the United States ranked 16th in happiness. Denmark tops the list as the happiest country (2). However, Denmark comes in 50th when looking at countries with the highest GDP (1). The Danes are in the bottom half of developed countries when ranked by wealth. Even though wealth plays a role in happiness, it is not the most important factor. A good balance between work and leisure time as well as a high overall life satisfaction are common themes in the happiest countries.
Denmark is a prime example of how material things are not as important to a person’s happiness as less tangible aspects are. The Danes have an excellent sense of friendship and community; they also enjoy more than 16 hours each week with leisure time, far more than Americans (2). The governments and media of countries can affect happiness by programs that they support. For instance, the United States government protects the rights of entrepreneurs and the media pushes the American dream as one being founded on wealth (3). However, the Danish government offers an entire year of fully subsidized maternity leave for new mothers (2). This leads the Danish people to more leisure time, which can greatly impact the happiness of the individual. Money cannot buy happiness; although it may help, there are many more important contributing factors to happiness.
The economy is an important factor to consider when measuring our well-being, but counting it as the only factor is a mistake. The saying “money doesn’t buy happiness” isn’t exactly true. It’s true in that money won’t prevail over basic human emotions. However, it’s false when people interpret it to mean that wealth has no effect on our state of mind. This is shown in a recent study that said that money does buy happiness up until a certain point (about $75000/yr.) . Both high-income and low-income individuals feel emotions such as joy, anger, and sadness. However, only one of those groups of individuals has to worry about putting food on the table or paying medical bills in addition to grappling with their emotional state. Once you reach that point where you can easily cover every problem that can only be solved with money, then the saying is true. Yearly salary isn’t the only thing that measures well-being, however. Also essential to the well-being of a society are access to both basic and higher education, access to quality healthcare, a political system in which its citizens can make their voice heard, living in a place you feel safe in, and many other nonmonetary factors.
In my opinion, the answer to Stiglitz’s question is no. We have not created an economy to help build the type of society that we had hoped for. In our society, the wealthy seem to get off easy while it feels like the middle class is constantly struggling. I thought our goal was to achieve a society where the rules are fair. If our economy provided more help for the lower classes instead of benefits for the rich such as tax write-offs for luxuries for example yachts, multiple vacation homes, and subsidies on estates. (1) Wealthy people but these things as a means of feeling happy and accomplished but in reality happiness cannot be measured in material goods. I’m happy and I don’t have a yacht. There are certain things that can make one’s quality of life better such as a house to live in, running water, and an education. Other luxuries, which may be considered “instant gratifiers” are goods and services that may cause happiness in the short term but what makes a person truly happy are things that they have to work for. Michael Hoerger, a graduate researcher at Central Michigan University, said, “People who seek instant gratification are more likely to experience a broad array of life problems, including higher rates of health problems, relationship problems, and legal problems.” (2) These things do cost money, which shows that in a healthy economy when one can afford such things, people might be happier. If the economy improved, the upper class would likely remain the same while the middle class would benefit proving that in many cases, “rising tides lift all boats”. The government could help make the economy something that leads to a fair society by redistributing wealth and tax benefits. Instead of rewarding the wealthy for impulsive and useless purchases, the government could provide tax cuts for struggling middle class workers
In regards to Stiglitz’s question, I believe the United States is continuing to create an economy that over values its lone achievement, its size. Sure, there are not many nations who measure up to us in terms of GDP and performance, but these other nations are succeeding when focusing on the other sectors that are more important to their people. When matching ourselves against these countries it becomes very clear that we rely too heavily on GDP as a metric of our country’s well being. It fails to measure the well being of the typical individual and makes generalizations that lead to skewed data. For example the success of corporations and the upper elites can lead to the assumption that everyone is prospering while in reality there is a struggle. Another example seen in Stiglitz that shows the fault of GDP is the deceptive numbers before the economic crisis. At that time bubble prices were inflating the value of investments in real estate and profits. In reality these were just distortions and we failed to see the success that was projected (1). We can continue to boast about our sometimes-distorted levels of GDP but it’s hard to hide our faults when it comes to quality of life. The cold reality is that American incomes have fallen 7 %, almost 1 in every 4 American children lives in poverty and we are experiencing a higher level on unemployment than most of our peers (2). Our objective should be to improve the numbers in these sectors. An improvement in these numbers would most likely lead to an improvement in “happiness,” a concept that we try too often to quantify. Happiness in my opinion is still too complex a concept to measure in numerical terms but I feel that shifting the majority of our economy’s focus on quality of life measures such as economic equality, social mobility, conservation, education and health will help us achieve the kind of society that we would like to have.
In Joseph E. Stiglitz, “Freefall” he attempts to ask many questions about the economy and how it pertains to happiness. Such as how is happiness measured, how can we as a society achieve a happier society, and more. Stiglitz does this by looking at various examples in the history of finance where people try to elude the system in order to attain more money, such as in Bernie Madoff’s Ponzi Scheme . He also attacks the idea of GDP being a good measure of a society’s performance. Arthur C. Brooks in “Can Money Buy Happiness?” says “Money doesn’t buy happiness, but success does. Capitalism, moored in values of hard work, honesty, and fairness, is key.” (1) This relates specifically to one of Stiglitz’s statements who would also agree that success plays a vital role in determining a person or societies performance, “In a performance-oriented society such as ours, we strive to do well- …” (2) Being from the United States, we have grown up in a Capitalist society, whose ideas are constantly surrounded with by money. The quote by Brooks suggests that although money might not exactly be the key to happiness, success and what that entails does gain fulfillment. And a stereotypical view point of success in most cultures would be how much money you have or what nice things you have. In other words happiness is measured by success, whether its what society deems as successful or what you yourself deem. Later in the article Brooks sates “In 1972, 30 percent of Americans said they were very happy, and the average American enjoyed about $25,000 (in today’s dollars) of our national income. By 2004, the percentage of very happy Americans stayed virtually unchanged at 31 percent, while the share of national income skyrocketed to $38,000 (a 50 percent real increase in average income).” (1) As shown by this statistic the country’s happiness stayed the same over time, yet the average income rose over that same period of time. Therefore we base much of what we believe to be successful on cultural biases, such as having an income above the average national income level. In conclusion, happiness can be measured by culturally biased success, which means money my in turn buy happiness. Yet we can achieve a happier society based on success as deemed by society, but we cannot achieve happier society just through money or measure it just by calculating GDP.
The rate of GDP in a country in no way should be indicating whether or not a country is happier than another. Happiness comes from much more then money, such as friendships and love. However, having a wealthy amount of money does solve some struggles that middle-class or poor people have. Its my opinion that the end of those struggles will not bring people long lasting happiness. Maybe short bursts of it though. “Psychologists have spent decades studying the relation between wealth and happiness,” writes Harvard University psychologist Daniel Gilbert in his best-selling “Stumbling on Happiness,” “and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter”(1). People are always waiting. They are waiting for something new to happen that brings happiness, but then once they achieve that goal, will then wait again for something even more new forgetting about the happiness they had once had. Happiness comes and goes financially, but lasts forever with love and relationships.
In regards to Stiglitz’s question, I believe the United States is continuing to create an economy that over values its lone achievement, its size. Sure, there are not many nations who measure up to us in terms of GDP and performance, but these other nations are succeeding when focusing on the other sectors that are more important to their people. When matching ourselves against these countries it becomes very clear that we rely too heavily on GDP as a metric of our country’s well being. It fails to measure the well being of the typical individual and makes generalizations that lead to skewed data. For example the success of corporations and the upper elites can lead to the assumption that everyone is prospering while in reality there is a struggle. This shows that increased GDP numbers fail to improve society as a whole. Another example seen in Stiglitz that shows the fault of GDP is the deceptive numbers before the economic crisis. At that time bubble prices were inflating the value of investments in real estate and profits. In reality these were just distortions and we failed to see the success that was projected (1). We can continue to boast about our sometimes-distorted levels of GDP but it’s hard to hide our faults when it comes to quality of life. The cold reality in recent census data is that since 1999 American incomes have fallen 7 %, almost 1 in every 4 American children lives in poverty and we are experiencing a higher level on unemployment than most of our peers (2). Our objective should be to improve the numbers in these sectors. An improvement in these numbers would most likely lead to an improvement in “happiness,” a concept that we try too often to quantify. Happiness in my opinion is still too complex a concept to measure in numerical terms but I feel that shifting of our economy’s focus on quality of life measures that often equate to happiness such as economic equality, social mobility, conservation, education and health will help us achieve the kind of society that we would like to have.
Over the years, many organizations have discussed the importance of measuring happiness in economics. In the United Nations Human Development Index of 2011, the United States placed 4th in the world’s happiest countries (1). This study, which includes aspects such as life expectancy, education and healthcare, goes beyond GDP to analyze the overall well -being of citizens of various countries (1). In the CNN article, Bhutan is discussed. In Bhutan, the government places higher emphasis on a Gross National Happiness (GNH) index as opposed to their GDP (2). The survey covers 9 keys areas for their index (3). “These key areas of GNH fall within the domains of psychological well -being, health, time use, education, culture, good governance, ecology, community vitality and living standards (3).” However, despite Bhutan’s emphasis on the happiness index, the country placed very low in the United Nations Human Development Index (number 141 in the index out of 187) (1). Also, Bhutan has a significantly lower life expectancy than places like the United States (66 years of age in Bhutan compared to 78 in the United States) (4)(5). Literacy rates in Bhutan are also significantly lower than in places like the United States (4). Bhutan’s GDP ($1.52 Billion) is also significantly below the United States ($14.58 Trillion) (6). Obviously, these two countries are very different in a plethora of respects (including development, culture and size). However, it is beneficial to point out that happiness is not necessarily the best indicator of the overall health of a country. There are many other aspects of culture that need to be considered when discussing the well -being of citizens of any country. Happiness may have a place in considering the success of countries but by no means should happiness be an exhaustive measure of prosperity. Happiness is very important (and should be considered in the economy); however, only analyzing happiness would not accurately predict the success of a country.
Can happiness be measured? “What makes you happy? The smell of new-mown grass on a spring morning, perhaps; or the laughter of your children. Maybe it is watching an England winger running 80 yards to score a try against Australia at Twickenham, or the thought of winning the lottery. For many of us happiness is spiritual, individual, difficult to define and ephemeral. A Buddhist monk with no possessions beyond his clothes and an alms bowl might consider himself happier than a City financier with homes on three continents. For people afflicted with mental or physical health problems, happiness may be unattainable” (Johnston, Philip). Can happiness be found in a high GDP? According to Johnston, probably not. To some, happiness may be measured by the number of zeros in their Swiss bank account, yet to others, happiness may be a post card from a friend traveling overseas. Trying to find the happiness of an entire country may be impossible, especially in the eyes of an economist. Yet an economist may still be able to look into the people that make up the economy. Much of the economy in the United States revolves around the individual. Individualism has long been an inherent value of being American. While many other societies revolve around the ideals of the group, Americans have long been in a perpetual cycle of standing on their own two feet. This may be good, and it may be bad. The good in it comes out when looking at the ability for people to make anything over themselves. The bad comes out when people begin taking advantage of those below them. The economic system in the United States (by and large) does nothing but perpetuate this. It rewards those who are at the top and allows them to take from any they choose. These discrepancies are what allows for the crisis of Enron and WorldCom. However, amidst the commotion of the damned Americans “pulling themselves up by their own bootstraps,” is a sense of community. Throughout the country, people all come together through thick and thin. As a nationwide community, Americans are-overall-concerned with their own wellbeing. Acting as one, Americans have a part in controlling how the economy acts. Although the actions of the government, large companies, and the foreboding 1% have a large hold on the economies ups and downs, the people can always choose to do more or less of a certain activity, buy more or less of a product, etc. Do these communities have trust in one another? Maybe. Do they trust the aforementioned economic powerhouses? Probably not. The powerhouses want the peoples trust, but too much happens to betray it. Can we reach an equilibrium of trust, economic stability, and happiness? In a perfect world, that would not be a question. In this world however, we will just have to wait and see.
Throughout the years of American history, many leaders have proven that when the American government provides incentives to the people they respond positively and a sense of community is built. During the Great Depression, FDR’s New Deal and economic stimulus plans (1) helped not only the economy and job situation but also the morale of the country. The New Deal plans gave citizens the resources needed to aid each other in recovery and to initiate the change that was necessary for people to become hopeful once again. FDR’s “Fireside Chats” were used as a way to instill hope in the country as well. Hearing your president speak so optimistically about the future in a time of depression can have a big effect on the sense of pride one has in their community and their fellow American citizens. While leaving it up to the market is a reasonable option, history has shown that people look to their Government as a source of inspiration and hope. Taking a laissez faire (2) approach would not be as effective in creating a sense of community as government incentives would. In Stiglitz’s final chapter of Freefall he quotes “No man is an island.” He says afterwards, “What we do has large effects on others; and we are what we are at least partly because of the efforts of others.” We wouldn’t have the sense of pride for our country today if it weren’t for the effort of government intervention and incentives.
That being said, there are, unfortunately, multitudes of people who use these incentives carelessly and without responsibility. During the financial crisis of 2008, Goldman Sachs received funds from the Federal Reserve to help bail out AIG. However, due to the size of the payouts, there was much speculation as to whether firms, including Goldman Sachs, benefitted personally from the bailout. (3)
In the end, what needs to happen is the creation of a plan that helps us to help ourselves, rather than have money help us. FDR’s New Deal gave us tools to help ourselves, whereas the bailouts during 2008 let money do the work.
There is another interesting view of the happiest country’s economies conducted by 24/7 Wall St. (1). They looked at economic stability in the happiest nations (1). They found that many of the countries with top happiness ratings were also economically stable. Also, long-term economic strength can provide many services that can contribute to this overall happiness (1). This brings up long-run planning and how it can lead to stability.
In the words of the late Notorious B.I.G. “Mo money, mo problems”. While a growing GDP may show signs of increased consumption and reduction of unemployment and poverty, it still has potential to cause problems. With the recent occupy movement, it has been brought to light that the rich continue to get richer and the poor continue to get poorer. The top 1% may have all most of the money, but are they happy? Does having a Lamborghini or Ferrari, or any other expensive material item make one happy? It is really in the eye of the beholder.
You do make a very valid point. However, if happiness can be thought of as being content with one’s life, wouldn’t that mean the country with the highest GDP would have the lowest suicide rates? The U.S. has the highest GDP, but is ranked about midway for suicide rates. Happy people have no reason to kill themselves(1).