serious debate

Hot Dates Are Better Than a Bigger Bonus April 23 (Bloomberg) – Money buys you a reasonable amount of happiness, but maybe not as much as sex. Sure, those with higher incomes are healthier and happier than those with lower incomes. But for the typical individual, a doubling of salary makes a lot less difference than life events like marriage or unemployment. A hot date is likely to make you happier than a few thousand dollars extra in bonus. There really is some evidence in this. A few years ago, my colleague Andrew Oswald and I found that to “compensate” for the loss in happiness of a major life event such as being widowed or a marital separation, it would be necessary to provide the average individual with $100,000 in extra income a year, or more than double their incomes. We can also use these data to calculate the money value of sex. On average, the amount of happiness bought by going from sex less than once a month to at least once a month is roughly equivalent to about $40,000 of annual income. Sex brings a lot of happiness, but diminishing returns from sex does set in after that. Some is a lot better than none. In the most recent survey data from the General Social Survey, conducted in 2008 by the National Opinion Research Center in Chicago, the typical adult American reported having sexual intercourse two to three times a month (among people under 40 years of age, the median amount of sex is once a week). About 6 percent of the population reported having sex at least four times a week. Forty percent of American women over the age of 40 say they didn’t have sexual intercourse in the previous year. The figure for men is 21 percent. These celibate folks are especially unhappy. Fewer Sexual Partners There is evidence that sex has disproportionately strong effects on the happiness of highly educated people. Highly educated females have fewer sexual partners. The number of sex partners men have is uncorrelated with their level of education. Money buys neither more sexual partners nor more sex for men or women. People with one sex partner over the preceding year are happier than those with multiple partners. Even with the iPad, the Blackberry and portable GPS devices that tell you how long your shot is to the flag, Americans are no happier today than they were in the 1970s. We know this from the answers to questions posed in the General Social Survey. Respondents are asked “taken all together, how would you say things are these days – would you say that you are very happy, pretty happy or not too happy?” ‘Very Happy’ In 1972, 30 percent of respondents said they were “very happy.” When the question was asked in the 2008 survey, 30 percent of respondents also said they were “very happy.” The obvious concern is that such qualitative responses tell you little or nothing about an individual’s level of wellbeing. It does seem, though, that they do say something. There is a large body of evidence now that shows these reports are strongly correlated with objective characteristics such as unemployment and ill health, as well as assessments of the person’s happiness by friends, family members and spouses. Happy people have a lower risk of coronary heart disease and lower blood pressure; they even heal faster from injuries. Happy people are demonstrably different from less happy people on skin-resistance measures of response to stress and electroencephalogram measures of prefrontal brain activity. Women’s Happiness Interestingly, in these surveys women report having higher levels of happiness than men, but the gap has narrowed sharply over time. Women’s happiness has fallen while men’s has barely changed. A similar story is found in the health data where women are now more subject to stress-related illnesses related to work than they were in the past. Hence, the feminist movement has made women more equal, but less happy. The finding that growth in incomes isn’t well correlated with growth in happiness is repeated across other Western economies, such as the U.K. and Germany. Rising incomes have brought more happiness in developing countries, but diminishing returns from income sets in at some point for countries. The happiness levels of the 10 countries that have joined the European Union since 2004 have risen rapidly since accession. Similarly, Latin American countries have become happier over time. But as standards of living rise, the increase in happiness will slow. This is the “Easterlin paradox” named for the father figure of happiness economics: Dick Easterlin at the University of Southern California in Los Angeles. Schwarzenegger’s Millions In terms of happiness, there are diminishing returns to countries, but also for individuals. Increases in income bring extra happiness for poor people but much less so for the rich. The reason is that for most Americans, relative things really do matter. Once I have the basic necessities in life covered, extra wealth accumulation doesn’t buy me much extra happiness. Arnold Schwarzenegger, possibly apocryphally, is reported to have said that his 30th million didn’t make him as happy as his first. Harvard University’s Erzo Luttmer has shown that an increase of 10 percent, say, in neighbors’ earnings, or a 10 percent decrease in one’s own income, have roughly the same negative effect on wellbeing. My happiness rises if I get a new BMW but doesn’t if my neighbors also get one. Here, neighborhood should be thought of broadly as any relevant comparator group, including colleagues and friends. A couple of hot dates will probably do more for your sense of wellbeing than a higher bonus. Money isn’t everything. Go and raise your happiness. Do it for the good of the country. (David G. Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, is professor of economics at Dartmouth College and the University of Stirling. The opinions expressed are his own.) To contact the writer of this column: David Blanchflower at