Week 7

Question 1

what are the 3 pros of money/material wealth?

Answer 1

1. hedonic appeal of physical pleasures.
2. money = greater access to positive rewards.
3. material = enhanced autonomy, purpose, progress towards goals.

Question 2

what are the 4 cons of money/material wealth?

Answer 2

1. ambivalent feelings/stereotypes towards you (high competence, low warmth).
2. more time earning, less time for leisure and social relationships.
3. adaptation.
4. is materialistic mindset good for WB?

Question 3

what are the findings across nations regarding absolute income?

Answer 3

-SOME evidence of relation b/w wealthier nations having higher WB
-influence of other factors: political stability, cultural norms, social resources, etc.

Question 4

t or f: some countries LS is lower or higher than what we would predict based on GDP?

Answer 4

true

Question 5

what is the easterlin paradox?

Answer 5

at a point in time, happiness varies directly with income both among and within nations, but over time happiness does not trend upward as income continues to grow.

Question 6

what are the findings of income across nations regarding changes in national income?

Answer 6

-increases in income have little to no effect on WB
-decreases in income may have a negative effect on WB

-paradox only applies for increases

Question 7

what are the 3 possible explanations for increases in income at national level ACROSS NATIONS having little/no effect on WB but decreases negatively impacting WB?

Answer 7

1. changes in national income are unrelated to national well-being
2. desires keep pace with rising income, negating the effect of increasing national income.
3. moderated relationship: ex. correlation stronger for poorer nations compared to wealthier nations (absolute income is the moderator, if you have $0, $100 increases WB. but if you have $10k, $100 does not increase WB).

Question 8

what is the diminishing marginal utility function? what does this explain?

Answer 8

-at low income: increased income = larger increases in WB.

-at high income: increased income = smaller increases in WB.

-explains paradox!

Question 9

what does the diminishing marginal utility function imply?

Answer 9

-implies a “satiation point”, beyond which increases in income do not provide gains in WB.

-modified easterlin paradox.

Question 10

is there really a satiation point?

Answer 10

-there is a “weak” version: point after which increases in income provide SMALLER gains in WB.
-never actually levels off… just gets less steep.

Question 11

describe stevenson & wolfers (2013) study.

Answer 11

-tested strong & weak versions of easterlin & modified easterlin paradox across nations.
-used gallup world poll data (155 countries).
-used $15,000 as satiation point.

FINDINGS:
-no evidence that slope flattens out beyond any “satiation point.”
-no evidence to support strong/weak versions, just shows +income = +WB.
-findings replicated.

Question 12

what does easterlin’s paradox correctness seem to depend on (2)?

Answer 12

1. methodology
2. WB measure (ex. kahneman & deaton (2010): diminishing marginal returns using PA & NA, but no evidence of satiation point)

Question 13

income WITHIN nations: what are the correlations b/w absolute income and WB like? what are diener & biswas-diener’s contributions?

Answer 13

correlations b/w income and WB small to moderate (r = .1 to .3)

diener & biswas-diener find that correlations b/w income & WB vary depending on the aspect of WB (LS: r = 0.13, PA: r = 0.13, NA: r = -0.10).

Question 14

what are the 3 moderators for absolute income WITHIN NATIONS and WB?

Answer 14

1. sex (kinda)
   -ex. husband’s personal income influences both own and spouse’s life satisfaction, newer research: primary income earner* not necessarily husband.
2. wealth of society
   -correlation stronger in poorer nations than in wealthier nations.
3. participant sample
   -correlation weaker for college student samples, stronger for adults outside of college.

Question 15

t or f: education, occupation, employment, age, domain satisfaction and marital status moderate the income-WB relationship?

Answer 15

false

Question 16

income WITHIN nations: what are the findings regarding changes in individual income?

Answer 16

-evidence is mixed.

1. longitudinal studies
   -some find no effect of income changes on WB.
   -ex. Diener et al. (1993)
   income-decline group happier than income-increase group!
   -limitations: cannot establish causality.
2. experiments/quasi-experiments
   -again, some find no effect of income changes on WB.
   -limitations: time effects.

Question 17

income WITHIN nations: how can studying lottery winners explain why the evidence for findings regarding changes in individual income is mixed?

Answer 17

-increasing income brings both benefits and costs (e.g., declines in quality & quantity of social relationships, increased debt).
-HOW you spend your money matters (i.e., experiences > material things, others > self).

-michael norton’s 2011 tedx talk relevant here.

Question 18

describe michael norton’s 2011 tedx talk

Answer 18

1) gave campus students envelope with money + instructions to either spend on self or others, then asked how happy they are.
2) uganda: asked ppl to name last time spent money on self vs on others, then asked how happy they are.
3) work settings…
4) team settings…

findings:
-ppl who spent money on others became happier, people who spent on self did not increase in happiness (amt of $$ did not matter + this finding is cross-cultural!!!)
-spending money on team > spending money on self. prosocial investments = more happiness, more winning.

Question 19

some evidence shows a ___ relation between income and well-being.

Answer 19

curvilinear.

BUT
1. stronger at lower income levels.
2. gets weaker as income increases.

suggests diminishing marginal utility of income.

Question 20

at both the individual and national levels, high materialism is associated with ___ WB.

Answer 20

lower

Question 21

what did diener and biswas-diener find regarding materialism?

Answer 21

-materialism only benefits WB at high-income levels.
-valuing social relations = higher WB overall.

Question 22

what explains the relations between money and WB (3)?

Answer 22

1. human nature approach
2. monetary desire-fulfillment theory
3. relative standards approach

Question 23

what is the human nature approach that explains the relations between money and WB? what are the supporting evidence + problems?

Answer 23

-satisfaction of innate needs is positively related to WB, and income can be used to purchase them.

supporting evidence:
-curvilinear relation bw income & WB.
-little impact of national increases in income on WB.
-homeless individuals report lower WB than non-homeless individuals.
-Diener, ng, harter & arora (2010)*

problems:
-richest group being happier than second richest group?
-how do we define and measure when basic needs have been met?

Question 24

what is the monetary desire-fulfillment theory that explains the relations between money and WB? what are the supporting evidence + problems?

Answer 24

-MDFT assumes people are rational and make best choices for WB. more money = more options. more options = +WB.

supporting evidence:
-Diener, ng, harter & arora (2010)*

problems:
-sometimes we make choices that undermine our WB.
-having more options ≠ more likely to make the best choice.
-wealth does not always increase options.
-income is not a valid indicator of wealth.

Question 25

what is the relative standards approach that explains the relations between money and WB? what are the supporting evidence + problems?

Answer 25

-ppl use various standards to judge their WB (i.e., how they did in the past, how others are doing, current goals).
-standards vary depending on what is salient to individual.

supporting evidence:
-effects of past income and social comparisons on WB partially mediated by influence on material desires.
-consistent with lack of relation bw economic development + WB.
-as economic conditions increase, standards also increase.
-Diener, ng, harter & arora (2010)*

problems??? none???

Question 26

describe Diener, ng, harter & arora (2010)

Answer 26

purpose:
-is income equally related to the different aspects of SWB?
-do the three theories explain the income-SWB relation?

method:
-gallup poll of 152 countries (130k ppl).

findings:
-income pos associated with SWB but stronger for LS and weaker for PA/NA.
-LS: Fulfillment of material desires & societal conditions, needs and income (income 19% of variance).
-PA/NA: psychological and basic needs (income 3% of variance, satisfying needs 20%).

so, money can buy a little bit of happiness?

Question 27

what does “bidirectional relation bw income and WB” mean?

Answer 27

-that WB also positively impacts income.

supporting evidence:
-happier ppl tend to earn higher income.
-fleming (1999): happier ppl experienced greater increase in income.
-happier ppl less likely to be unemployed later.

Question 28

what did gere and schimmak (2017) contribute?

Answer 28

hypothesis: if income increases happiness, household income should increase happiness of all household members. if happiness increases income, then the relation between income and happiness should be stronger for primary income-earners.

main result:
-support for “income increases happiness” hypothesis.