Galbraith pushes on the seemingly paradoxical nature of wants and needs in affluent countries. Up till recent history our forbearers were primarily concerned with survival needs such as food, shelter, and water; in contrast, the impressive state of the US economy has made these concerns almost obsolete for most of society. However, our appetites for more do not appear to be satiated, which Galbraith argues is a result of the inherent human characteristics of emulation and envy. Galbraith describes this phenomenon, “Increases in consumption, the counterpart of increases in production, act by suggestion or emulation to create wants. Expectation rises with attainment” (129). Furthermore, this process is only exacerbated by advertisement and salesmanship, whose “central function it to create desires – to bring into being wants that previously did not exist” (127). This human tendency, the creation of desires when old ones are achieved, challenges the notion that more is always better. Galbraith states, “Wants thus come to depend on output. In technical terms, it can no longer be assumed that welfare is greater at an all-round higher level of production than at a lower one” (129). This argument raises an important question: are income and happiness correlated? And if so, by how much? Also, is there a threshold beyond which more money can no longer increase well-being?
Inglebeart and Kingleton conducted an international study measuring via “happiness surveys” different countries’ overall happiness rating. This outcome was then compared to GDP per capita to search for a relationship. Figure 1 demonstrates this relationship between income and happiness.
A recent study by Princeton University's Woodrow Wilson School found similar results. The study distinguished happiness into two separate categories, emotional well-being and life satisfaction. Specifically, “Emotional well-being (sometimes called hedonic well-being or experienced happiness) refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, fascination, anxiety, sadness, anger, and affection that make one’s life pleasant or unpleasant.” This subgroup of happiness was positively correlated with income, but only up to $75,000. After this amount, an increase in income no longer had an effect on their emotional happiness. The second result of the study regarding life-satisfaction found a distinct relationship. Life satisfaction, or “ a person’s thoughts about his or her life” were measured through a serious of questions regarding how one considered their life’s trajectory in general. This self-conception of success was positively related to money beyond the $75,000 limit. Deaton and Kahneman found that “People at every income level who see a rise in income consider themselves more successful. So for every 10 percent rise in income, people gain the same amount of satisfaction, whether they’re making $50,000 or $500,000.”
These studies shed important light on Galbraith’s claim in two ways. Firstly, they show that income is only positively correlated with happiness till a cutoff amount. This indicates that once people arise above a certain income level, making more money no longer makes them happier. Secondly, the idea that satisfaction continues to correlate with income beyond the aforementioned threshold supports the idea that envy and relative position play a role in our conception of well-being. While certain extremely high incomes may not provide us with more emotional happiness, our relative positions may continue to impact our happiness levels, as people develop new desires based on what they see around them.
Sources
http://www.washingtonpost.com/business/searching-for-the-real-relationship-between-money-and-happiness/2012/01/04/gIQAZoudhP_story.html
http://www.pnas.org/content/107/38/16489.full.pdf
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