Money Matters

The title for our first chapter is Money Matters

Here is a recent article from the New York Times about the importance of money. Let’s read this short article and answer some questions later. First, read this short article. Second, write a question about this article. Third, answer three of your classmates’ questions.

All questions and answers should be posted here. Do your best!
(also, there is a word cloud for this reading)

Money Changes Everything

By 

Depending on when you’re reading this column, economists have a pretty good guess as to what kind of mood you’re in. If it’s Sunday, you’re almost certainly happier than if you’re catching it on a Monday. Either way, there’s a good chance you’re in a lousy mood if it’s 7 a.m. (Sorry!) You’ll be happier around lunchtime, sadder at 2 p.m. but should perk up by 8 in the evening.

And economists will definitely have a theory about your happiness based on where you live. In collaboration with psychologists, a number of respected economists have spent much of the past decade or so mapping our levels of happiness across borders and daytime hours. Angus Deaton, an economist at Princeton University, is helping shape the movement to incorporate subjective measures of emotions into serious economic analysis. The goal is to use this new data to inform more traditional measures, like G.D.P. or the unemployment rate, and to influence government policy. Or at least that’s the idea.

Happiness quantification sounds a bit wishy-washy, sure, and through a series of carefully administered surveys across the globe, economists and psychologists have certainly confronted a fair number of sticky issues around how to measure, and even define, happiness. Still, some of the data make lots of anecdotal sense. Given that Nevada was ground zero for the housing bust, it’s not surprising that its citizens are less happy than Coloradans. Other findings, though, are more opaque. Why does western Long Island score several points higher on the happiness scale than most of Brooklyn? (Does being richer make you feel better than being cooler?) Why do Filipinos, who live in a relatively poor country, report such positive emotions?

Though still unrefined, happiness quantification has come quite a long way since 1974, when a University of Southern California economist named Richard Easterlin published an important paper that put the field on the map. His conclusion, known as the Easterlin paradox, stated that people do not become happier as they get richer. Around the same time, the Kingdom of Bhutan (population 738,000; average income, around $5,800) also began plans to measure what it called gross national happiness. These ideas might have had an impact, but nobody paid attention. “The general reaction of economists,” Easterlin told me, “was: ‘This is just subjective testimony that nobody puts any credit in.’ ”

Happiness studies became a hot discipline in the early 2000s, and France, Britain and other governments now conduct surveys of their own national levels of emotional well-being. It can be fairly instructive. Deaton, who advised the French government on its report, said, “The French are pretty miserable.” The United Kingdom’s Office of National Statistics reports only a slight happiness dip despite a deep recession. On the other hand, Bhutan’s happiness survey is so complex that I have no idea what the Bhutanese are feeling. Nonetheless, a United Nations committee has called upon the world’s governments to adopt happiness measures. A United States government panel is exploring the issue here.

As more data come in, however, many economists are becoming convinced of one significant change: the original Easterlin paradox doesn’t quite hold up. Broadly speaking, the data now indicate that as people get richer, they report getting happier too. Though it’s not quite that simple. Justin Wolfers, an economist at the University of Michigan who helps advise the U.S. government on happiness statistics, told me that poor people in poor countries are not unhappy simply because they don’t have wads of cash. They are more likely to have fewer choices, more children who die in childbirth and other grave problems. And while wealthier nations are generally happier, there is no evidence, Wolfers says, that an artist would be happier if she became a hedge-fund trader.

Happiness statistics may be most valuable in smaller, local discussions. Understanding how different sorts of programs affect the well-being of citizens would be enormously helpful to a mayor choosing between building a new bridge or offering a tax cut. I came across the very real role that money can play in happiness when I reported on Yvrose Jean Baptiste, a Haitian woman who lost all of her meager wealth in the 2010 earthquake. After the story was broadcast on NPR, listeners sent her nearly $4,000, which represents several years of wages to the average Haitian. When I visited Baptiste a few months later, I didn’t need any official statistic to tell me that her life had been transformed. She had paid for her aunt’s cancer treatments, sent her children to school and invested in a small market stall that provided a steadier income. She looked years younger.

Wolfers says that Baptiste’s story is typical of what happens when traditional agrarian societies give way to slightly less poor urban ones. As we ponder how to help the nearly three billion people who live on less than $2.50 per day, it is important to realize that seemingly small changes­ in income do lead to profound increases in happiness. In wealthier nations, of course, it takes a lot more money. Still, most rich countries have reported increases in happiness as they become richer.

There is one strange exception. The U.S. is nearly three times as rich today as it was in 1973, when Easterlin was collecting his data. According to nearly every survey, though, Americans are not at all happier than we were back then. This is explained, in part, by the fact that many Americans have not shared in the increased wealth. With the disappearance of pensions and the increased volatility of labor markets, many workers face more uncertainty than ever before.

But the decline in happiness may suggest a more deeply rooted issue. So much debate over government policy is based on economic statistics that come out of the market. But the goal of government is not just to maximize revenue. It’s also to make citizens better off. There is no standardized way for it to see how its decisions influence our well-being. What if government is spending money on things that don’t make us happy?

In this sense, happiness quantification is anything but wishy-washy. For much of what government does, Deaton says, it is far more rigorous to base decisions on whether they actually improve lives than on some other potentially misleading data. “It’s not like the economic data we’re collecting now is terrific,” Deaton told me. After all, nothing boosts G.D.P. like a debt-fueled housing bubble or a costly health care system. If happiness became a core part of government statistics, he says, we might figure out what it is Americans want. And then maybe, we could give it to them.

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51 Responses to Money Matters

  1. Pingback: Homework for March 21st, 22nd, 23rd, or 24th | HELP 332R

  2. Eri says:

    Question,
    When you lived in your country, were you satisfied with your life? If not, is the problem was because of money? Please explain.

    • haruka217 says:

      I was. But if I had had more money, I could had fun more, I think. because I could buy lovely clothes, watch many movies, and eat lots of delicious food. They should make me happier.

    • Jimmy Pan says:

      I was. But I cannot stand of rising prices and declining salary. Even I met a good boss who always allows the law to pay us (3 US dollars per hour, the lowest price in law.) I still want to earn more money for my future.

    • liying says:

      Yes, the problem is money. Because people’s salary is lower and living cost is high in China.

      • Sambath Yann says:

        Yes, it was. Most of Cambodian’s income is very low; but the their everyday expend is very high. I thing the main reason is all products on market are very expensive.

    • Sambath Yann says:

      Yes, it was. Most of Cambodian’s income is very low; but the their everyday expend is very high. I thing the main reason is all products on market are very expensive.

    • Kelvin Ng says:

      I was satisfied in my life in Malaysia, because the things in Malaysia is more cheaper then Hawaii. But I satisfied life in Hawaii too.

    • envyjpark says:

      I have a problem because of money.
      As you may know, Korea living expence is really high but people’s payment is not that high. Thus, it is hard to have a balanced income and outgo

    • emily0502 says:

      when I lived in Korea, I satisfied my life. I do not have enough money. But I was happy.
      I think More important , You did your best.

  3. victoryaripark says:

    Question 1. What do you think about the necessary conditions for happiness exponent? why?
    Question 2. Do you think G.D.P (Gross Domestic Product) level of the country is factor of the people’s happiness? Why or Why not?
    Queston 3 . What should the government do for citizens? and what should the citizens do for the government?

  4. Question 1. What do you think about the necessary conditions for happiness exponent? why?
    Question 2. Do you think G.D.P (Gross Domestic Product) level of the country is factor of the people’s happiness? Why or Why not?
    Queston 3 . What should the government do for citizens? and what should the citizens do for the government?

    • haruka217 says:

      Q2.
      No, I don’t think so. Because I heard the Kingdom of Bhutan is the happiest country in the world, but it isn’t the richest country. Japan is rich country but some people in Japan don’t think they are happy. they are very busy for their job. They may not have enough time to play with their children. They might say that they aren’t so happy.

      • Eri says:

        Q3, I think government provide health insurance for all citizens even they have no jobs. Health insurance is very important for living. In Japan, we have national health insurance so we can go to see a doctor when I am sick, however, in America they don’t have national insurance which is a big problem now. Because health insurance in the US is very expensive and some people cannot afford to pay it. This situation makes us living more difficult. So they should change some new system. And the citizen runs economy better. They can make good quality products for people then they make more money. Later on economy is become better.

    • Jimmy Pan says:

      Q3. The government should make its citizens happy. At least, it has to let people have hope of their future. The citizens should allow the law and tax honestly. If so, the country would have a peaceful environment to advance.

    • liying says:

      Q1
      I think it including people’s living cost, living place and health care for all family members.
      Because these things are basic conditions, if these things become a problem, I think people would not be happy.

    • liying says:

      No, I don’t think so. Because some countries are very poor, their GDP is lower, but their citizens’ feeling is happy. And some countries are very rich, but their citizens’ feeling is not very happy. I think this has some reasons, including the government policy, religion, money and cultures and so on.

    • emily0502 says:

      I think GDP level is not direct influence effect.

  5. I satisfied live in Korea beacuse I like 4 benefits of insurances. The Korea government basically covers for all Korean citizens, which are national pension, national health insurance, the employment insurance and occurpational health and safety insurance. If at least one member of family have to pay these insurances, all nember of family get these benefits. When Koreans get thier salary, except some monet of these insurances. If who cannot afford to pay thses insurance, the Korea government cevers them. For this reasons, we are not much worry about the hospitals bells. Actually, my major was nursing, I worked hospitals for over 2 years, and I have a licence of unrse’s aide. I believe that the national health insurance policy is the best in the world. In fact, USA president Obama and first lady ar vist to Korea, They impressed Korea national healty insurance. For example, when people see a doctor or dentist in first time, the bills is basicaly around 8 dollors. If people see a docotr for second vist consultation, the bills will cheaper than the first medical examination without special examination or operation. Also, Korean government provides free ambulance for emergency patients such as pregnant women, senior citizens, etc. For my experience in Hawaii. When I had an upset stomch and persistent vormiting on Sunday in the morning, I went to the Qeen’s medical center emergency. At that time, I got dextrose IV 2times, had a blood test and took a medicine dring 4 hours. when I checked the bills, I shocked, my heart sink a lot. The bills over $ 2,800. If I went to hostitals in Korea, the bills must be at most $300.

    • help2013rick says:

      Health Care and Health Insurance are important topics in the United States in recent years. Our health care and health insurance costs are extremely high. And though we have excellent hospitals, doctors, medicine, and services, too few people can afford to benefit from them. I hope that America will solve its health care problems by the time my children are born.

  6. If at least one member of family have to pay these insurances, all nember of family get these benefits.
    = At least one member of family have to pay these insurances ( it likes tax) , all of family can get these benefits.*
    When Koreans get thier salary, except some monet for these insurances.
    = When Korean get their salary, the government except some money for thses insurances in thier salary.*

  7. liying says:

    question: what is happiness quantification?

  8. haruka217 says:

    Why do you think the Kingdom of Bhutan starts to plan measure what it called gross national happiness?

    • Mana says:

      Hi, Haruka.
      Because the goverment should know how much citizen feel satisfied .
      I think this plan is good idea.

    • I think Bhutaneses believe that GNH is more important than GDP. Also, GDP is not not quatification of happiness. GNH criterion is Happiness, but GDP criterion is product. When they started GNH, nobody interested in GNH because a ot of countries regarded highly that GNP( Gross National Product) and GDP (Gross Domestic Product) were important. However, nowadays, a lot of people and countries are agree and following their thought and philosophy.
      GNH is that measures quality of life or social prograss in more holistic and psychological terms than only GDP. – from wikipedia-
      www.http://en.wikipedia.org/wiki/Gross_national_happiness

  9. Mana says:

    What is the name of the plan which started around since 1974 in the Kingdom of Bhutan ?
    Do you think should our country have this plan ??

  10. Jimmy Pan says:

    Question: Besides money, what do you think the most important things that make people happy are?

    • Ummm, your question is pretty difficult for me. I think it’s depends of people. religion, jobs, child,family, friend, sucess, honor, etc.. ^^ For me, love (my family, my friends, my boyfriend) is the most important for me. It sounds like I’m a romanticist! lol

  11. Sambath Yann says:

    I have some questions as the following.
    1. How can money influence government policy?
    2. What was the situation of the U.S in 1973?
    3. What is the G.D.P of the U.S today?

    • 1. I think the government has not enough money, it is difficult to hold for thier cirizens, so some policies will be reduce or abolish. For example, Greece, the government provided excessive welfare policy for thier cirizens, For this reason, the Greece government increases bad debt.
      2. I don’t have kmowlege of world history but, I remenber that In January 1973, the USA declared back down form Vietnam War and . The peace pact brought the war to an end. The long war brougt a lot of people death, and the US economic recession.
      In October 1973, Yom Kippur War occurred between the United Arab Emirates and Israel. OPEC raised the oil prices 17%, the US and all of counties shocked about it.
      http://en.wikipedia.org/wiki/1973_in_the_United_States
      3. G.D.P of the US is $76.67.34 billion.
      http://www.economywatch.com/economic-statistics/year/2013/

    • Kelvin Ng says:

      2. In 1973, many Americans have not shared in the increased wealth. With the disappearance of pensions and the increased volatility of labor markets, many workers face more uncertainty than ever before.

    • Eri says:

      Q3, GDP = private consumption + gross investment + government spending + (exports − imports) Today’s GDP of the US is15094 billion US dollars.The Gross Domestic Product (GDP) in the United States expanded 0.10 percent in the fourth quarter of 2012 over the previous quarter. GDP Growth Rate in the United States is reported by the Bureau of Economic Analysis. The United States has one of the most diversified and most technologically advanced economies in the world. Finance, insurance, real estate, rental, leasing, health care, social assistance, professional, business and educational services account for more than 40 percent of GDP. Retail and wholesale trade creates another 12 percent of the wealth. The government related services fuel 13 percent of GDP. Utilities, transportation and warehousing and information account for 10 percent of the GDP. Manufacturing, mining, and construction constitute 17 percent of the output. Agriculture accounts for only 1.5 percent of the GDP, yet due to use of advance technologies, the United States is a net exporter of food.
      http://www.tradingeconomics.com/united-states/gdp-growth

    • 1- if the covernment does not make the citizins happy

    • from 2000 to 4000 monthly

  12. Kelvin Ng says:

    When and where do they started the happiness studies became a hot discipline?

  13. envyjpark says:

    Hi, my question is

    What is the most important purpose that you spend money ?

  14. emily0502 says:

    1. Are you happay now ? why? or why not?
    2. Which country is highest GDP??
    3. Whici country is highest happiness?

  15. Haruka, I think Bhutaneses believe that GNH is more important than GDP. GNH criterion is happiness, but GDP criterion is product. When they started GNH, nobody wasn’t interested in GNH because a lot of countries regarded highly GDP and GNP. Howere, nowadays, a lot of people ans countries are agree and follow their thought.
    GNH is that measures quality of life or social prograss in more holistic and psychological terms than only GDP. – from wikipedia-
    www.http://en.wikipedia.org/wiki/Gross_national_happiness

  16. How can money change every thing?

    • envyjpark says:

      I believe that money can change everything. Some people might think that human life cannot and should not be measured in pounds. However, in reality, we can buy our health, job, and knowledge by using our money. It means everything possible if you have money even people’s love.

  17. Pingback: Remarkable Individuals | HELP 332R

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