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Lifestyle: Money and happiness

20 Mar 2018

Two world-wide studies on happiness have just been released. How did New Zealand fare?

In the first study, Purdue University at West Lafayette, Indiana, looked at the level of income an individual needs to be happy, across 164 countries. They measured happiness at two levels:

  1. Emotional well-being on a day-to-day basis, and
  2. Life evaluation. This was more intellectual and reflected an assessment of how one is doing compared to one’s goals and in comparison with others.

The study found that wealthier countries required higher levels of income to feel happy or satisfied than poorer countries, which seems reasonable, but New Zealand had the highest level of income required of all countries (first equal with Australia), although we are down the list in terms of average wealth. Why would that be? It seems we are not doing so well on converting our personal income into happiness compared to many other countries.

What was the level of income the report said we needed? It staggered me:

  • Around NZ$130,000 per annum per person for emotional well-being
  • Around NZ$170,000 per annum per person for life evaluation

The study was conducted by Gallop taking in 1.7 million people and it is for individuals, not families. Families would require higher numbers.

Quite unrealistic figures, was my first reaction. The American numbers seemed a lot more reasonable at $US75,000 per annum for emotional well-being and $US95,000 per annum for life evaluation. These sound like more realistic numbers, if one changes them, dollar for dollar, to New Zealand currency. I suspect the study may have got caught up in some currency nonsense. Being an American study, all the figures are quoted in US dollars, so we have converted them into NZ dollars at the current exchange rate. What I have tried to find out from the study authors, but haven’t succeeded yet, are the two levels of income for New Zealanders, in NZ dollars. That would make more sense and we wouldn’t have to do any currency conversions. If I find out, I will report back.

One variable that could result in an artificially higher level of income required and be pushing up the numbers in New Zealand could be the levels of personal debt. An individual requiring $130,000 a year for emotional well-being in New Zealand is paying off a big mortgage, I suspect.

The researchers found a reduction in levels of well-being as incomes rose above the higher level, past the point required for happiness on a life evaluation basis, suggesting that higher incomes can lead to unhealthy social comparisons and unfulfilling spending on stuff we don’t need.

They also mentioned that the quality of spending was more important than the quantity of spending. Spending on experiences rather than ‘things’ seems to make people happier in the studies I’ve seen.

As an aside, a separate study by the National Academy of Sciences found that when people spend money on time-saving services, such as a house cleaner, lawn mowing or grocery delivery, it can make them feel happier, especially compared to spending money on material purchases. Think of it as a way to buy back what has become a scarce resource: free time.

The second international study was conducted by the United Nations into well-being and it is up-dated every year. Finland is the happiest country, according to the report, and New Zealand was eighth on a world-wide basis. The good news was that we came in ahead of Australia at tenth. America was eighteenth and the UK nineteenth.

Finland are doing a great job of converting their wealth into well-being, given that their wealth per individual is lower than many other countries at number 37. The interesting finding was that Finns don’t strive to be extremely happy, and as a result, they seem to be, on average, very happy. There was a suggestion that cold weather might have something to do with it. On that basis, Southlanders would be happier than Aucklanders. Now, we know that is true.

The study discussed why one of the wealthiest people on average in the world (for a large country), being the Americans, can’t seem to turn their wealth into happiness. Once near the top of this happiness study but falling to eighteenth in this latest review, the authors suggested that the three crises in America of obesity, substance abuse and depression were the main culprits.

Keep asking great questions …

 

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