Archive for the ‘Economics’ Category

Here’s an intriguing thought — what if our leading economic indicators were supplemented with a happiness or well-being index? Would we have a different appraisal of the U.S. economy? Would we create different public policy?

Two of the leading psychologists in the field of well-being studies — Ed Diener and Martin E.P. Seligman — made that provocative suggestion several years ago in a highly detailed report.

Their observation? We should include it. They argued that income and wealth generation is only one indication of the overall state of a nation (albeit a strong one). For example, they cite that while economic output has risen steeply over the past decades, there has been no rise in life satisfaction during this period, and in fact there has been a substantial increase in depression and distrust.

In other words, we’re making more and enjoying it less. Shouldn’t we be measuring that and building policy around it?

The researchers argue that if we measured different factors, such as the well-being of workers, we would have much different outcomes and thus would be more willing to take steps to improve them. Thus, perhaps U.S. policymakers would be more inclined to consider legislation or incentives that rewarded companies for improving the overall well-being of their workers, even if it meant initially higher costs or lower profits. (Ironically, happy workers are productive workers. Thus, a business should promote well-being.)

A different perspective might also motivate policymakers to fund programs that reduce mental disorders or generate more positive social relationships.

The U.S. economy has evolved and matured. Shouldn’t we do the same with respect to our appraisal of it?

Source: Beyond Money: Toward an Economy of Well-Being, Ed Diener, Martin EP. Seligman (2004) Psychological Science in the Public Interest 5 (1), 1–31

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Psychological studies have consistently linked materialism or financial aspirations with unhappy and unsatisfied lives.

But recent research shows a more complex picture.

For example, one study found that the financial aspirations of those more highly educated leaned towards higher happiness levels compared to people with low educational levels. At the same time, people with high materialism and strong religious beliefs had lower subjective well-being levels compared to people with higher financial aspirations but a lower religious commitment.

Adding to the complexity — research suggests that while financial aspirations do pull life satisfaction down, household income tends to pull it up. That begs the question — how do most people achieve higher household incomes? Through financial aspirations, of course.

A classic Catch-22.

Aspiring to financial success won’t contribute to your happiness, but a higher income will. No wonder improving happiness through money often feels like a land mine.

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Here’s something that doesn’t make sense (cents) — paying your taxes can be satisfying.

Researchers at the University of Oregon gave 19 women participants $100 and then scanned their brains with functional magnetic resonance imaging (fMRI) as they watched their money go to the food bank through mandatory taxation, and as they made choices about whether to give more money voluntarily or keep it for themselves.

They found that two regions in the brain – the caudate nucleus and the nucleus accumbens – fired when subjects saw the charity get the money. The activation was even larger when people gave the money voluntarily, instead of just paying it as taxes. These brain regions are the same ones that fire when basic needs such as food and pleasures are satisfied.

The study, according to one of the researchers, reflects the balancing act that every society must face. “What this shows to someone who designs tax policy is that taxes aren’t all bad,” Ulrich Mayr, professor of psychology, said. “Paying taxes can make citizens happy. People are, to varying degrees, pure altruists. On top of that they like that warm glow they get from charitable giving. Until now we couldn’t trace that in the brain.”

For a more complete description of the study, click here.

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