L4 Income and Money Flashcards
The economist model
People make choices to maximize their utility
Higher income maximizes the number of choices people can make and things they can get and experience, therefore they are able to make better choices
Income = happiness (utility)
Declining marginal utility
The more you have, the more it takes to make a difference Income and SWB in different groups - US probability sample 0.12 - Calcutta slum dwellers 0.45 - Calcutta sex workers 0.67
The wealth of nations
Money matters, 0.83 correlation with life satisfaction
Why are rich nations more satisfied?
Healthcare, more possibilities, security
Easterlin’s Paradox
Income and rising aspirations in the US
Most findings show that more nations increase in SWB as income rises, but there are many exceptions
As the comparison standard increases, based on wealthiest nations, and as the world gets richer, people are barely more satisfied, they want more
Frustrated achievers
Happiness and money
Difference between basic needs and modern conveniences / luxuries - both affect life satisfaction Basic needs (like food, shelter, health) - can be fulfilled- finite - can be satisfied Beyond basic- aspirations - can be limitless- infinite - can always be dissatisfied
The Law of Expanding Expenditures
Herbert Hoover
Just when the ends meet, someone moves the ends
Two types of wealth
Psychosocial wealth-- enjoyment - ex. friends you can count on Monetary wealth-- life satisfaction - ex. electricity, basic needs Both crossover
Toxic effects of materialism
Wanting money more than other values
Being materialistic decreases life satisfaction
Capitalism
Effective at creating goods and services, creates new desires through marketing
How money is spent matters
Spending on others and giving increases SWB- Dunn
Experiential purchases, like trips, are also good- Van Boven
Spending money on luxury goods often have a lesser effect
Money and Lottery Winners
4.0 vs. 3.8 on scale ratings
Slightly happier byt new problems
Income inequality
Top incomes much high in poor nations is associated with lower LS and higher NA
Inequality is associated with lower SWB, but this is buffered by income redistribution
When economic growth ends up in wealthier hands, there in no benefit to life satisfaction
- but when economic growth is distributed across the population, there is an increase in LS
Unemployment
Lowers SWB substantially, don’t ever fully recover
