If I were a Rothschild - would I be happier?

Does a high salary and many assets make the lives of those who own them happier? New research reveals that the belief that happiness is linked to income levels is nothing but an illusion

Miriam Dishon-Berkowitz, Galileo

If you were richer - if you had a higher salary or many assets - would your life become happier? Most people asked this question believe so. However, from data emerging from a study conducted by the Nobel laureate in economics psychologist Daniel Kahneman and his colleagues Alan Kruger, David Schkade, Norbert Schwarz and Arthur Stone, which was published in the June issue of the journal Science", it turns out that the belief that happiness is related to the level of income is nothing but an illusion.

In a research way, happiness can be measured by answering questions like: "Considering all aspects, how satisfied are you with your life these days?" or "taking into account all aspects, would you define yourself as happy, fairly happy, or not happy at all?". In this type of questions, the individual is asked to evaluate his life in a comprehensive manner. In another research method, the respondents are asked to report several times a day on the level of happiness they experience at the moment they are asked. This way you can calculate a measure of the level of happiness experienced in real time. From studies conducted in several countries in the last decades, it becomes clear that the level of happiness or general satisfaction with life has not increased in the last four decades, despite considerable increases in the level of income per capita. For example, although between the years 1958 and 1987 real income in Japan grew fivefold, the level of happiness reported by individuals did not grow in the same way.

On top of that, as the level of national product per capita increases, there is a corresponding increase in life satisfaction, but only among low-income households (under $12,000 per year). Beyond this limit, there is no increase in general satisfaction with life. Finally, when a father's household experiences a sudden increase in income (which is not related to an increase in per capita income in the country), for example, following a job promotion of the main breadwinner, it was found that this increase has a positive effect on life satisfaction, but the positive effect is only transient.

The focus illusion

When people are asked to consider the weight that any single factor has on their life satisfaction (eg, marital status, health, or income level), they tend to overestimate its importance. Researchers call this tendency the focusing illusion, since people focus their attention only on the factor they were asked about, and they evaluate their lives in light of it.

For example, in one of the past studies, students were asked to answer these two questions: a. "How happy are you with your life in general" and "How many dates have you gone on in the last month?". No statistical relationship was found between the two questions, when they were asked in this order. However, when other subjects were asked the same two questions but in the opposite order, a clear statistical relationship was found between them. When the question about dating was asked first, it focused the subjects' attention on this aspect of their lives, so the respondents exaggerated its importance when they answered the second question, about general satisfaction with life.

Other studies have found similar effects of the illusion of focus when research participants focused on their health or marital status before answering general questions about life satisfaction. That is, people do not have one consistent answer to the question "how happy are you with your life", but the answer varies according to the focus on different aspects of life.

Daniel Kahneman and his colleagues examined the focus illusion in the context of income level and life satisfaction. The participants of their study were asked to estimate what percentage of the time they had been in a bad mood the day before. They were also asked to estimate what percentage of the time they thought low- or high-income people were in a bad mood on a typical day. The researchers compared these estimates to the mood reported by participants with high and low income.

The analysis of the results shows that the estimates were biased in two ways: First, there was an overestimation of the prevalence of a bad mood in general. Second, there was a large overestimation of the prevalence of bad mood among low-income people. This bias is consistent with the illusion of focus. That is, the study itself created an illusion of focus among the respondents, when they were asked to estimate the frequency of the other person's bad mood while focusing on the level of income, which led them to treat the level of income as a factor with a central influence on mood.

Additional studies confirm the claims

It also became clear, from an analysis of other data collected in 2004 in a large-scale study on happiness and income level, that the level of happiness of Americans with very high incomes (over ninety thousand dollars per year) was almost double the happiness level of Americans with very low incomes (under twenty thousand dollar). However - and this is the most interesting point - there is almost no difference in the level of happiness between Americans with a very high income (over ninety thousand dollars) and Americans with an average income (between fifty and ninety thousand dollars).

Kahneman and his colleagues also analyzed additional data, of 374 employees at Cornell University. These workers were asked to report how many emotions they felt every 25 minutes during an entire work day. They were asked to report the intensity with which they experience each emotion on a scale ranging from 0 (not at all) to 3 (very much). It turned out that no statistically significant relationship was found between the amount of income and the level of happiness that people experienced from moment to moment. Conversely, the more money people earned, the higher levels of anxiety, stress, and anger they reported.

Why does the level of income have such little effect on the level of happiness? There may be several explanations for this. First, it is possible that the relative level of income, and not the absolute level of income, is the factor that affects the level of happiness. That is, the question that interests people is not what their income is per se, but what their income level is compared to others: friends, co-workers, etc. This explanation even answers the question, why the general satisfaction with life or the level of happiness has not increased in the last four decades in various countries, despite considerable increases in the level of income per capita. For, when society as a whole becomes richer, the average income ranking of the individual does not change, even though his income increases. Although people have more financial means than in the past, when they are asked to report their satisfaction they do not compare their current situation to their past situation, but to the situation of other people with whom they come into contact today.

Why does the increase in the individual's income level, which leads to an increase in his relative economic ranking compared to his friends and colleagues, only have a passing effect on life satisfaction? Probably because such an increase necessarily entails a change of the comparison group. For example, after a job promotion that brings with it an increase in salary, the comparison group to which the individual compares himself changes. These are no longer the previous co-workers, who earned less, but the new colleagues, with more senior positions, who also earn more.

Other explanations for the fact that the level of income has little effect on the level of happiness claim that we tend to quickly get used to positive changes in our lives, and take them for granted. Also, when the level of income increases, material aspirations also increase. At the same time, many people do not derive much satisfaction in their lives from material things.

Finally, previous studies have found that as the level of income increases, people do not spend more time on enjoyable activities that may increase their level of happiness, but devote more time to work or other tasks. According to previous studies, these activities are not related to greater happiness, but rather to a higher level of stress. These data point to the contribution of the focus illusion to explaining the low relationship between happiness and the level of income. When people imagine how a higher income will change their lives, they believe they will spend more time on enjoyable activities – for example, they will have more money to go on longer and more expensive vacations – but in reality, they spend more time on and related to work (such as work-related travel) and less Time for fun leisure activities or social gatherings. The more time devoted to work and being tied to it does not increase the level of happiness, but on the contrary, it increases the level of stress.

Dr. Miriam Dishon-Berkowitz is a psychologist and organizational and marketing consultant