Money & happiness: an experiment

Norm proposes an experiment to find out whether money buys happiness:

Find two people of equivalent wealth, take all the money one of them has above that minimum threshold [ above which money is thought not to buy happiness], and give it to the other. Then ask [who is happier].

This won't do. Someone who has their money taken off them will feel unhappy because they'll feel a sense of injustice. Also, they'll feel powerless because someone can do such a thing to them; we know that autonomy makes people happy, so the loss of it will sadden them.
What's more, people adapt to their circumstances - this is thought to be one reason why money doesn't greatly increase happiness. So if those circumstances worsen, people feel uncomfortable. They are loss averse.
A better experiment would be to take two otherwise equivalent folk, give one of them a windfall, and see who's happier.
Andrew Oswald and Jonathan Gardner have done just this. They compared the well-being of people who won decent sums (£1,000-£120,000) on the lottery to that of people who didn't. And they found that lottery winners were significantly happier. What's more, this is true even two years after the win, so it's not just short-lived euphoria.
This isn't conclusive. Perhaps there's a selection effect here: the sort of people who choose to play the lottery are precisely those who are more likely to be happier if they had more money. But it's a better experiment than Norm suggests.

Comments

[james C]

Title of the paper-the bleeding obvious

[dearieme]

It's not an "experiment" at all. It's a mere observation.

[ChrisA]

Here is another example to show that money does buy happiness. According to the paper below East Germans life satisfaction increased by 20% after reunification, largely due to their increased incomes. Although the paper does not discuss this, this was despite increased inequality (I say this as East Germany was considerable poorer than the West before re-unification).

http://www.socialpolitik.de/tagungshps/2004/Papers/Haisken.pdf

[Meh]

ChrisA is neglecting the change in political system, which might have made some feel better... just maybe... if only by second order effects...

The big issue is that Chris points to the very variable we most need worry about in the "experiment." If you're poor or even if you're not, but have a mortgage hanging over you that the lottery win pays off, then the extra money makes a radical difference to the amount of autonomy in your life. This could affect happiness.

[ChrisA]

Meh

The paper attempts to control for the changes in freedom etc.

Chris

[Maynard Handley]

The various workers in this field have repeatedly told us that, in this exact situation, after some time the lottery winners are NOT happier. I've seen this in at least two books and heard it in at least five lectures, all by apparently professional academics.

So WTF is going on here?

I have no stake in the answer either way; but I would like to hear a justification for how researchers can come to two completely contradictory results for the exact same situation.

[Dipper]

An interesting experiment would be to take a generally un-materialistic un-competitive nerdy group of people such as mathematicians and scientists, throw humungous amounts of money at them, and see if it makes them happy.

Fortunately (for me anyway) that’s exactly what’s been happening in the City in recent times. A rigorous scientific survey of a few workmates drew the following conclusion; yes it makes us very happy thanks very much. And the control group (academics) are still the same miserable whinging rabble they always were.

More intriguing is why it makes them/us/me happy. They still don’t spend much, so its not because it satisfies some inner need for Porsches and gold swiss watches. Its probably to do with elevated social status and removal of worries.

Another intriguing observation is that no matter how much money you give mathematicians they are still incapable of buying clothes that fit.

[dearieme]

Cheeky bugger, Dipper. I'll have you know that when I left a lectureship, the students complimented me on the way in which I'd searched a whole city to find a pair of trousers that fitted perfectly. And then, they said, bought a pair two sizes bigger.

[Dipper]

I could have let you have a pair of mine (never worn - wrong size).

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