Will money make us happier?

More money helps, but does it make us happier? Richard Layard, one of Britain’s foremost economists in his new book “Happiness: lessons from a new science” examines from an economic point of view the implications of recent scientific advances in understanding happiness. He provides a fairly comprehensive discussion of the ideas below in his book (see books listed to right of the page) and to a lesser extent in this link to a lecture:

• Surprisingly, happiness can be measured using reliable questionnaires.
• The electrical activity and images of the brain in action relate well to subjective reports of happiness.
• Layard points out that while real income rose steadily from the late 1940s to the year 2000, the percentage of very happy people remained unchanged. Comparing happiness and income position across nations shows a similar pattern.
• After rising above poverty, having more money has a decreasing effect on happiness. In part this is because of a tendency to look at people above us in income.
• Seven factors affect happiness: 1) family relationships; 2) financial situation; 3) work; 4) community and friends; 5) health; 6) personal freedom and 7) personal values. He notes that the first 5 are in order of importance.
• Loss of important relationships tends has a relatively large effect on decreasing happiness, for example, divorce and separation. Loss of work and loss of health also have large negative effects. In general it seems that losing something has a larger negative impact on happiness than gaining has a positive effect.
• Across countries happiness can largely be explained by divorce rate, unemployment rate, level of trust, membership in non-religious organizations, quality of government, and fraction believing in God.

See the following posting for more on happiness.