Worked example - Topic: Can money buy happiness?

Given Text 1:
The measurement of happiness

Economists have recently begun to pay more attention to studying happiness, instead of just using
the more traditional GDP per person. They have found that in the last 50 years there has been no
apparent increase in personal happiness in Western nations, despite steadily growing economic
wealth. In both Europe and the USA surveys have found no rise in the level of happiness since the
1950s, which seems surprising given that wealthier people generally claim to be happier than poorer
people. In America, for example, more than a third of the richest group said they were ‘very happy’,
while only one sixth of the poorest made the same claim. Although it would be logical to expect that
rising national wealth would lead to greater general happiness, this has not happened. Individually,
more money does seem to increase happiness, but when the whole society becomes richer,
individuals do not appear to feel better off.

One possible explanation has been that people rapidly get used to improvements, and therefore
devalue them because they are taken for granted. Central heating is a good example: whereas 50
years ago it was a luxury item, today it is standard in nearly every home. Another theory is that the
figures for GDP per person, used to assess national wealth, do not take into account quality of life
factors such as environmental damage or levels of stress, which must affect people’s feelings of
happiness. The report of a commission set up by the French president recently claimed that the
French were comparatively better off than had been previously thought, due to their generous
holidays and effective health care system, factors which basic GDP figures had ignored.

A further explanation for the failure of wealth to increase happiness is the tendency for people to
compare their own position to that of their neighbours. Studies show that people would prefer to
have a lower income, if their colleagues got less, rather than a higher income while colleagues got
more. In other words, happiness seems to depend on feeling better off than other people, rather
than on any absolute measure of wealth. Further research suggests that having free time is also
closely linked to happiness, so that the pattern of working harder in order to buy more goods is
unlikely to increase well-being. Yet Western societies generally encourage employees to spend as
much time at work as possible.

Source: Penec, A. (2014) ‘The Measure of Happiness’ Applied Econometrics Vol. 44, pp. 18 – 27
Given Text 2

Can Money Buy Happiness?

Of course not! Or can it? Surprising new research sheds light on how you can (and can’t) spend your
way to a sunnier outlook on life.
You know that there must be some connection between money and happiness. If there weren’t,
you’d be less likely to stay late at work or struggle to save money and invest it profitably. But then
why aren’t your fast car, five-bedroom house and high salary cheering you up? The relationship
between money and happiness, it would appear, is more complicated than many thought.
Over the past quarter-century, economists and psychologists have researched the relationship
between money and mood. Scholars of happiness have arrived at some insights: Money can help
you find more happiness, so long as you know just what you can and can’t expect from it. Much of
the research suggests that before you can pursue happiness the right way, you need to recognize
what you’ve been doing wrong.
The new science of happiness starts with a simple insight: We are never satisfied. We always think if
we just had a little bit more money, we’d be happier, says Catherine Sanderson, a psychology
professor at Amherst College, but when we get there, we’re not. Indeed, the more you make, the
more you want. The more you have, the less effective it is at bringing you joy, and that seeming
paradox has long baffled economists. Once you get basic human needs met, a lot more money
doesn’t make a lot more happiness, notes Dan Gilbert, a psychology professor at Harvard University.
According to studies, going from earning less than $20,000 a year to making more than $50,000
makes you twice as likely to be happy, yet the payoff for then surpassing $90,000 is slight. And while
the rich are happier than the poor, the enormous rise in living standards over the past 50 years
hasn’t made Americans happier. Why? Three reasons:
You overestimate how much pleasure you’ll get from having more. Humans are adaptable creatures,
which has been an advantage during assorted ice ages, plagues and wars. But that’s also why you’re
never all that satisfied for long when good fortune comes your way. While earning more makes you
happy in the short term, you quickly adjust to your new wealth - and everything it buys you. Yes, you
get a thrill at first from shiny new cars and enormous TV screens, but you soon get used to them, a
state of running in place that economists call the hedonic treadmill.
Even though stuff seldom brings you the satisfaction you expect, you keep returning to the shopping
centre and the car dealership in search of more. When you imagine how much you’re going to enjoy
a Porsche, what you’re imagining is the day you get it, says Gilbert. When your new car loses its
ability to make your heart go pitter-patter, he says, you tend to draw the wrong conclusions. Instead
of questioning the notion that you can buy happiness in a car showroom, you begin to question your
choice of car. So you pin your hopes on a new BMW, only to be disappointed again.
More money can lead to more stress. The big salary you pull in from your high-paying job may not
buy you much in the way of happiness. But it can buy you a spacious house in the suburbs. Trouble
is, that also means a long trip to and from work, and study after study confirms what you sense daily:
Even if you love your job, the little slice of everyday hell you call the commute can wear you down.
You can adjust to most anything, but traffic jams or an overstuffed bus will make you unhappy
whether it’s your first day on the job or your last.
You endlessly compare yourself with the family next door. H.L. Mencken once quipped that the
happy man was one who earned $100 more than his wife’s sister’s husband. He was right. Happiness
scholars have found that how you stand relative to others makes a much bigger difference to your
sense of well-being than how much you make in an absolute sense. You may feel a touch of envy
when you read about the glamorous lives of the absurdly wealthy, but the group you likely compare
yourself with are the people who are similar to you; the people you work with, people you grew up
with, old friends and old classmates.
The tendency for comparing yourself with the guy next door, like your tendency to grow bored with
the things that you acquire, seems to be a deeply rooted human trait. An inability to stay satisfied is
arguably one of the key reasons ancient man moved out of his drafty cave and began building the
civilization you now inhabit. But you’re not living in a cave, and you likely don’t have to worry about
mere survival. You can afford to step off the hedonic treadmill. The question is, how do you do it?
If you want to know how to use the money you have to become happier, you need to understand
just what it is that brings you happiness in the first place. And that’s where the newest happiness
research comes in.
Friends and family are a mighty elixir. One secret of happiness? People. Innumerable studies suggest
that having friends matters a great deal. Large-scale surveys by the University of Chicago’s National
Opinion Research Center, for example, find that those with five or more close friends are 50% more
likely to describe themselves as ‘very happy’ than those with smaller social circles. Compared with
the happiness-increasing powers of human connection, the power of money looks feeble indeed. So
throw a party, set up regular lunch dates--whatever it takes to invest in your friendships.
Even more important to your happiness is your relationship with your aptly named ‘significant
other.’ People in happy, stable, committed relationships tend to be far happier than those who
aren’t. Among those surveyed by NORC from the 1970s through the 1990s, some 40% of married
couples said they were ‘very happy’; among the never-married, only about a quarter were quite so
exuberant. Just choose wisely. Divorce brings misery to everyone involved, though those who stick it
out in a terrible marriage are the unhappiest of all.
While a healthy marriage is a clear happiness-booster, the kids that tend to follow are more of a
mixed blessing. Studies of kids and happiness have come up with little more than a mess of
conflicting data. ‘When you take moment-by-moment readouts of how people feel when they’re
taking care of the kids, they actually aren’t very happy,’ notes Cornell psychologist Tom Gilovich. ‘But
if you ask them they say that having kids is one of the most enjoyable things they do with their lives.’
Doing things can bring us more joy than having things. Our preoccupation with stuff obscures an
important truth: The things that don’t last create the most lasting happiness. That’s what Gilovich
and Leaf Van Boven of the University of Colorado found when they asked students to compare the
pleasure they got from the most recent things they bought vs. the experiences (a night out, a
vacation) they spent money on.
One reason may be that experiences tend to blossom as you recall them, not diminish. ‘In your
memory, you’re free to embellish and elaborate,’ says Gilovich. Your trip to Mexico may have been
an endless parade of hassles punctuated by a few exquisite moments. But looking back on it, your
brain can edit out the surly cabdrivers, remembering only the glorious sunsets. So next time you
think that arranging a vacation is more trouble than it’s worth-or a cost you’d rather not shoulder-
factor in the delayed impact.
Of course, a lot of what you spend money on could be considered a thing, an experience or a bit of
both. A book that sits unread on a bookshelf is a thing; a book you plunge into with gusto, savoring
every plot twist, is an experience. Gilovich admits that people define what is and isn’t an experience
differently. Maybe that’s the key. Gilovich suspects that the people who are happiest are those who
are best at wringing experiences out of everything they spend money on, whether it’s dancing
lessons or hiking boots.
SOURCE: 2005 Happiness Study based on GfK NOP Roper Reports Worldwide survey, which includes
in-depth personal interviews with more than 30,000 people age 13 and older in 30 countries
between December 2004 and February 2005.
Reference:
Futrelle, D. (2014). ‘Can Money Buy Happiness?’ Solon City Schools [Online] Available at:
www.solonschools.org [Last Accessed 20.05.2019]
Student’s Text
Money really can buy happiness, say scientists
It is said that money cannot buy happiness, but according to scientists, it depends what you spend it
on.

New research suggests that using money to buy more free time - such as paying for a cleaner or cook
to take the daily chores off your hands - does actually improve well-being.

In contrast, spending money on possessions does little to improve happiness.

‘People who hire a housecleaner or pay the kid next door to mow the lawn might feel like they're
being lazy,’ said study lead author Dr Ashley Whillans, assistant professor at Harvard Business School
who carried out the research. ‘But our results suggest that buying time has similar benefits for
happiness as having more money.’

The researchers surveyed more than 6,000 adults in the United States, Denmark, Canada and the
Netherlands. Respondents were asked if and how much they spent each month to buy themselves
free time. They also rated their life satisfaction, and answered questions about feelings of time
stress.

Those who spent money on time saving purchases reported greater 23 per cent greater life
satisfaction. The effect held up even after controlling for income, although lowered to 15 per cent
happiness boost as people had less money to spend on buying back time.

‘The benefits of buying time aren't just for wealthy people,’ said psychology professor and the
study's senior author Elizabeth Dunn, of the University of British Columbia. ‘We thought the effects
might only hold up for people with quite a bit of disposable income, but to our surprise, we found
the same effects across the income spectrum.’

To test whether buying time actually causes greater happiness, the researchers also conducted a
field experiment. Sixty adults were randomly assigned to spend £30 on a time saving purchase on
one weekend, and £30 on a material purchase on another weekend. The results showed that people
felt happier when they spent money on a time saving purchase than on a material purchase. Despite
the benefits, the researchers were surprised to discover how few people choose to spend their
money on time saving purchases in daily life.

In a separate sample of 850 millionaires who were surveyed, almost half reported spending no
money outsourcing disliked tasks. A survey of 98 working adults asking how they would spend a
windfall of £30 also revealed that only two per cent would use it in a way that saved them time.
‘Although buying time can serve as a buffer against the time pressures of daily life, few people are
doing it even when they can afford it,’ added Professor Dunn. ‘Lots of research has shown that
people benefit from buying their way into pleasant experiences, but our research suggests people
should also consider buying their way out of unpleasant experiences.’

The research was published in the journal Proceedings of the National Academy of Sciences.

Source: Knapton, S. (2017) The Telegraph Newspaper 14th June 2017

Tabular notes format:

Text 1: Penec (2014) Text 2: Futrelle (2014) Text 3: Knapton (2017)

Overall position More money can make an Money can increase Using money to buy free
individual happier, but if happiness, but we need to time does lead to greater
everyone in society gets understand what you can happiness.
richer, effect diminishes. and can’t expect from it.
Key point Happiness should be Once basic needs are met,
measured by more than money does not continue
income. to make you happier.
Supporting evidence Despite significant Gilbert (Harvard Uni) –
increases in wealth in increasing income from
Western nations over past less than $20K to $50K
50 years – no increase in makes you twice as likely
happiness. to be happy, but over a
certain amount, ($90K)
happiness doesn’t
improve.
Supporting evidence GDP data alone does not Harvard research (6000
consider other factors adults in US, Denmark,
which affect happiness, Canada and Netherlands)
such as the environment suggests that paying for a
you live in and stress cleaner, or outsourcing
levels. chores you don’t like does
make you happier.
Supporting evidence Free time is closely linked People who spent money
to happiness, so working on time-saving purchases
long hours to earn more reported 23% greater life
money is unlikely to satisfaction.
improve happiness levels. - Also, benefits of buying
free time applied at all
levels of income, not just
the rich.
Key point Happiness levels don’t Humans adapt quickly –
increase as we get richer thrill of new purchase is
as people get used to short-lived.
improved circumstances
and demand more.
Supporting evidence Central heating – once Rather than realising
luxury, now commonplace. buying things hasn’t made
you happy, think the
purchase itself wasn’t
right.
Key point Happiness is measured We are never satisfied
against other people – (Prof. Sanderson –
happiness depends on Amherst College) – people
feeling better off than believe if they have more
 others, not actually money, they would be
earning more. happier – never
achievable.
Supporting evidence Studies show people Not being satisfied is a
would rather earn less if human trait, and has
colleagues got less, rather meant we have evolved,
than more if co-workers but in modern world, most
got more. needs are taken care of.
Key point Family and friends are the
key to happiness.
Supporting evidence Univ. of Chicago research
– people with 5 or more
close friends are 50%
more likely to describe
themselves as ‘very
happy’.
Supporting evidence People in stable
relationships are more
likely to be happy.
Key point Experiences are more Dunn – research suggests
important than material people believe they should
possessions. buy pleasant experiences,
but should actually buy
their way out of
unpleasant ones.
Supporting evidence Univ. of Colorado study
comparing pleasure from
things they bought to
experiences they spent
money on.
Supporting evidence Gilovich research – people
who are most happy know
how to fully enjoy the
experiences they have.
Can money buy happiness?

PLAN:
1) Intro – significant research into relationship between money and happiness, varying degrees of correlation.
2) Common agreement, money in itself is not the only factor – Other factors – stress levels, family and friends,
experiences affect happiness (Futrelle, Uni of Chicago research – importance of friends). Also evidence that once
basic needs are met, money doesn’t continue to improve happiness. But – money can improve happiness by buying
free time – important to use money to have experiences not things (Futrelle) and also to buy your way out of
unpleasant experiences. Futrelle – Gilovich research – happiest people know how to thoroughly enjoy all
experiences.
3) Expectations on relationship of money / happiness – compare ourselves to others (Penec). Futrelle – people
often misinterpret that; believe the purchase itself wasn’t right, not the act of buying something. Expect to be
happier if earn / have more, but never satisfied (Sanderson in Futrelle) and adapt very quickly to new circumstances
and demand more (Penec).
4) Conclusion – there is a relationship, but may not be positive – can cause people to compare/ dissatisfaction.
Essay: Can money buy happiness?

The relationship between money and happiness has been the subject of a significant amount of research, with as
yet, no clear agreement on the impact. Penec (2014), Futrelle (2014) and Knapton (2017) all report some correlation
between levels of wealth and happiness, but with different caveats. Penec highlights the fact that while money can
make an individual happier, the effect diminishes if society as a whole gets richer. Futrelle (2014) cites research from
Harvard University which suggests that there is a limit to the impact on happiness that money brings; while an
increased income does make people earning less than $20,000 per year happier, there is no evidence to suggest that
happiness levels continue to rise once your basic needs are met. Knapton, however, points out that money does
affect happiness, but not in the way expected; money can allow people to buy free time by outsourcing tasks they
find unpleasant, which is claimed to be essential to happiness.
There is common agreement, however, that level of income is not the only factor in determining happiness. Stress
levels and the environment you live in affect reported levels of happiness (Penec, 2014). Futrelle (2014) also cites
research from the University of Chicago, which places family and friends at the centre of happiness; people with at
least five close friends and those in stable relationships were more likely to describe themselves as ‘very happy’.
Experiences, rather than buying material goods is also identified as essential to happiness, with research by Gilovich
(cited in Futrelle, 2014) suggesting that the happiest people are those who know how to fully appreciate and enjoy
the experiences they have.
While it seems there is a clear relationship between happiness and how people spend money, not what they buy
with it, it seems that even here there are limits. Penec (2014) explain that people’s happiness levels are closely
aligned to their perception of others’ circumstances; as long as people feel better off than or peers, they are happy.
This happiness may be short-lived, however, as people quickly get accustomed to their improved circumstances or
elevated status and continually strive for more (Penec, 2014 and Futrelle, 2014).
It seems clear from the research that there is a relationship between money and happiness, but it may not be an
entirely positive one. The human tendency to adapt to improved circumstances and quickly become dissatisfied,
along with the habit of measuring our own success and happiness against that of others may mean that levels of
wealth may cause unhappiness and frustration. To ensure money improves your well-being, it seems the suggestion
is to use it to give yourself more free time, and to spend this free time with loved ones.

449 words

References:
Futrelle, D. (2014). ‘Can Money Buy Happiness’ Available on: www.solonschools.org [Last Accessed 20.05.2019]
Knapton, S. (2017) ‘Money really can buy happiness, say scientists’ The Telegraph Newspaper [Online] Available at:
https://www.telegraph.co.uk/science/2017/07/24/money-really-can-buy-happiness-say-scientists/ [Last
Accessed 18.07.19]
Penec, A. (2014) ‘The Measure of Happiness’ Applied Econometrics Vol. 44, pp. 18 – 27