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Does Wealth Equal Well-Being?

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This study has found that the link between level of income and “well-being” (by which it seems they mean ‘being in a good mood’) is highly exaggerated.

“If people have high income, they think they should be satisfied and reflect that in their answers…Income, however, matters very little for moment-to-moment experience.”

In a way, this seems to make sense. Obviously, most people equate having more money with feeling better, since more money means a) more luxuries b) more time for recreation and c) not having to worry about subsistence.

More money means a better quality of life, by standard metrics – literacy, nutrition, etc. Because of our in-built quest for progress, by which I mean ‘bigger, better, more’, we have an unavoidable desire to increase our quality of life, and the best way to do that in the world today is by earning more money.

This in-built desire for ‘more’ is evolutionary — in the constant battle to adapt and survive, any species that was content to sit back and relax faced a higher chance of extinction. It is this fundamental desire that has led to the wheel, to the harness of electricity, to, in fact, all humankind’s increase in sophistication since we learned to stand upright.

So why, then, might people with a higher quality of life (due to higher income) not be significantly happier (or rather spend more of their time in a better mood) than people with a lower income and therefore a lower quality of life?

Perhaps the answer lies with the fact that this in-built desire for progress never goes away, even with progress. People will always want more, even if they have it good already. Thus, even a rich man with all his luxuries will have the same desire to progress as a poor man, who makes enough money to get by and that’s it.

Perhaps it is because the wealthy are faced with more dilemmas than the poor. A subsistence farmer in India doesn’t really have many options. He goes to work every day, because he has to. He eats what he grows, because that is all he can afford. His is a simple life, free of choices and dilemmas.

In contrast, a wealthy factory owner (ooh, I’ve come over all Marx-y) has choices — what should he do with his money? Should he invest it? The money hangs like a burden on his shoulders, because it gives him options, and with options come dilemmas. Perhaps an abundance of money also comes with guilt at the unequal distribution of quality of life.

Perhaps it can be explained by that old phrase, “appetite increases with eating.” Let’s take, for example, Bob. Bob is not so well-off, but he gets by. Every night, he rests his head on a mattress on the floor. Not so comfortable, but he has gotten used to it. Then, one day, he finds $500 on the pavement, and he decides to spend it on a proper bed — the EZDreama 3000. When Bob goes to sleep that night, he is more comfortable than he has ever been. He wonders how he ever managed with a mattress on the floor.

Now, let’s take Bill. Bill is relatively wealthy — he made a lot of money at the stock market and has retired early at 45. Bill goes to sleep every night on an EZDreama 3000 — it is comfortable, and Bill rarely has problems getting to sleep. Then one day, he goes out shopping in LA and sees through the window the newest model, the EZDreama 3000 Deluxe Edition, complete with the latest in boudoir technology. Bill has to have it. He arranges for it to be delivered to his house, and installs it the same day. When he retires that night, he feels all warm inside and wonders how he ever coped with that horrible old EZDreama 3000 (now lying in the scrap heap).

The question is, was the “well-being” felt by Bill at his new EZDreama 3000 Deluxe Edition greater than the “well-being” felt by Bob with his new EZDreama 3000?

The level of “well-being” is, by its very nature, very hard to measure (almost as hard as it is to define). But from my experience, the levels of well-being wouldn’t be so different (and any difference between them wouldn’t be down to the difference in the quality of the beds).

So, assuming as fact that the Deluxe Edition is better than the standard edition, we are left with the conclusion that Bill/Bob’s well-being does not depend completely on their quality of life (symbolised by the quality of their bed). Does quality of life have any impact?

Yes, it does. If Bob had moved straight from a mattress on the floor to an EZDreama 3000 Deluxe Edition, his well-being would probably have improved more than his move from mattress to the standard EZDreama. Conversely, if Bob had been told he would get an EZDreama Deluxe (perhaps he went on a game show?) but then, due to some misunderstanding, actually received the standard edition, his level of well-being would almost certainly not improve as much. Indeed, it may even decrease. Why is this?

The answer would seem to lie with expectation and its fulfillment. Bob, having slept on a mattress on the floor, does not expect to be able to sleep on an EZDreama 3000 Deluxe. Why should he? It is so far beyond what he is currently able to afford that to expect it would be unreasonable. He does expect to be able to sleep in a bed, because although currently it is out of his reach, it is not by much. If his expectation to sleep in a proper bed is fulfilled, his level of well-being will increase. But, and this is key, only for a while. Once the novelty wears off, Bob’s level of well-being will have adjusted to his new expectations — to sleep in a better bed.

It is helpful to picture it as a ladder, where each successive rung is a step up in quality of life. So the bottom rung would be no bed at all. The next rung up might be a mattress on the floor. This is where Bob is currently at. The next rung up, say, is an EZDreama 3000. This is what Bob expects — he, like everyone else, expects to be able to move to the next rung up. Thus, when this expectation is fulfilled, his well-being increases. However, after the novelty period wears off, his expectations have now adjusted to the next rung up — an EZDreama 3000 Deluxe Edition. Bob’s well-being is now the same as it was when he was sleeping on the mattress on the floor, since in both situations the reality met his expectations.

Thus, “well-being” is increased when the reality changes to fulfill expectations, and it increases further when reality exceeds expectations (which is why Bob would be in an even better mood if he moved straight from a mattress to the Deluxe Edition).

The reason, then, why Bill’s well-being when he got the EZDreama 3000 Deluxe Edition was not much (if at all) greater than Bob’s when he got his EZDreama 3000 is that in both their cases, the expectation to move one rung up on the ladder was fulfilled.

How, then, can we live a life where we always have a high level of well-being — that is, where our expectations are always being fulfilled? Well, it seem to me that there are two ways:

1. We can try to live a life where, as soon as the novelty period wears off, our adjusted expectations are fulfilled, or

2. We can try to never expect more than we have, so that the novelty period never wears off.

Unfortunately, neither of those options is viable. Regarding #2, we must turn back to that innate, unquenchable thirst for progress that all humans share, built in to our nature.

As to #1, the problem is twofold; firstly, the ladder is not infinite, and secondly, many people do not have the means to fulfill even their quite modest expectations. Bob just got lucky by finding a $500 note.

The ladder is not infinite because the possibilities are not infinite. There are only a limited number of beds in the world. Multi-billionaires who have hit this limit usually start spending their money on football teams, parties, and other extravagances that do nothing to improve their quality of life. In other words, they spend their money on distractions, that is, objects or activities that distract them from the fact that their expectation for more can never be fulfilled. These activities don’t improve well-being, but they can make the person forget for a while about their lack of well-being. The expectations of these people are not fixed, like with Bob and Bill. Bob’s expectation was quite specific — he wanted a better bed, and the next model up was an EZDreama 3000. A multi-billionaire who has everything already still has the desire and expectation for ‘more’, for progress, but has nothing to fulfill it with.

Incidentally, it is not just multi-billionaires who have everything that spend money on distractions. Poor people who feel they have no chance of ever being able to fulfill their expectations may also turn to distractions to help them forget about their lack of well-being (but only temporarily). For example, we have drug users. There are always drug users where there are poor people who feel they have no hope, because poor people will want distracting from the perceived fact that they have no hope of fulfilling their expectations.

I think it is fair to say that the more ambitious a person is, the more unreasonable his expectations are. If Bob was very ambitious, then despite the fact that he was only sleeping on a mattress on the floor, he might expect to sleep on an EZDreama 3000 Deluxe Edition. In this scenario, even if he got the EZDreama 3000, Bob would be unfulfilled and his well-being would not improve significantly, because his expectations would remain un-met. It therefore appears that the more ambitious a person is, the less likely they are to be fulfilled. After all, even if Ambitious Bob somehow did manage to get his hands on a Deluxe Edition, once the novelty period wore off his new expectations would again be unreasonable and harder to fulfill than Non-Ambitious Bob.

If Ambitious Bob did make it to the top of the ladder, his frustration and feelings of unfulfillment would likely be greater than Non-Ambitious Bob in the same situation. For an example, see Scarface. Tony Montana was very ambitious — right from the start he knew what he wanted. Despite being very poor and finding himself in a new and foreign country, Tony Montana from the start wanted everything. More than wanted, he expected everything. He expected to be rich, he expected to have a beautiful wife, he expected to have immense power…in the end, he had all those things. He reached the top of the ladder, and had nowhere else to go. So what did he do? He destroyed himself with cocaine – a distraction from the fact that his ambitious expectation for ‘more’ could no longer be fulfilled, by anything.

But perhaps Scarface teaches us something else as well. Earlier on I made the comparison between Ambitious Bob and Non-Ambitious Bob, investigating how they each might cope with reaching the top of the ladder. But the fact is that Ambitious Bob is much more likely to reach the top of the ladder in the first place, because of the fact he is ambitious. What, though, does this get him if it does not improve his well-being? Well, perhaps Ambitious Bob would, on jumping straight from a mattress on the floor to a, EZDreama 3000 Deluxe Edition, experience a longer novelty period, accompanied by a greater feeling of achievement than Non-Ambitious Bob would on moving up just one rung to an EZDreama 3000.

In any event, it is quite unimportant since Ambitious Bob can no more change the nature of his expectations than any of us can change ours. So, in summary, the apparent lack of connection between income and “well-being” isn’t so surprising at all.

I don’t think there is any real question to be asked here, other than for academic purposes, since the truth is that even though upgrading to that EZDreama 3000 Deluxe Edition, if you’re Bill, or that EZDreama 3000 if you’re Bob, won’t, in the long-term, make your, erm, ‘being’ more ‘well’; it will provide that temporary happiness, that short break from the constant striving for expectations. And that, my friends, is what it’s all about.

(Hat Tip: NormBlog)

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  • http://insiderealestatejournal.blogspot.com Mr. Real Estate

    Great article. Well-being is clearly a state of mind. For Donald Trump or Paris Hilton well-being is much more than it likely is for you and I.

  • http://heathlander.wordpress.com Jamie Stern-Weiner

    Thanks.

    “For Donald Trump or Paris Hilton well-being is much more than it likely is for you and I.”

    If by that you mean that for Donald Trump to achieve the same level of well-being as Donald Tramp, then I completely agree with you.

  • http://heathlander.wordpress.com Jamie Stern-Weiner

    Ahem. Let’s try that again:

    Thanks.

    “For Donald Trump or Paris Hilton well-being is much more than it likely is for you and I.”

    If by that you mean that for Donald Trump to achieve the same level of well-being as Donald Tramp it would take a lot more, then I completely agree with you.

    (damn mind thinking ahead of my typing)

  • Mohjho

    I would rather be lucky than rich.