Adam Davidson (of Planet Money at the NY Times Magazine's It's The Economy column), turns his eye to recent happiness research, and finds that "money actually does buy happiness." That's the headline, anyway. In fact, and as usual, Davidson's reporting shows that it is a bit more complex than that.
The headline-grabbing findings come from the work of Betsey Stevenson and Justin Wolfers, who show that this is a broad correlation between GDP per head and levels of life satisfaction (and refer to previous posts for the distinction between "happiness" and "wellbeing" or "life satisfaction" that are often conflated):
This seems to contradict the Easterlin Paradox that more income doesn't produce more happiness between countries. Yet, as Davidson points out, there are some exceptions, including the U.S. over the last forty years (where income has tripled while happiness levels have not gone up).
It is also the case, as Davidson hints at, that high levels of income are often associated with other things that produce wellbeing and life satisfaction, such as access to opportunity, security in personal safety, and mechanisms to mute inequalities. More income and a booming economy often do open new opportunities and increase folks' abilities to lead the lives that they value. But they don't have to; it isn't a case of direct causation. And that means that public policy would do well to pay attention to how growth can nurture the conditions that lead not just to more income for income's sake but to overall wellbeing. (As Tony Schwartz argues in the same issue of the Time's as Davidson's article, working longer and harder is not always the answer, in terms of wellbeing and productivity.)