Subjective Wellbeing Presentation Instruction Prepare a 8- to 10-slide Microsoft ® PowerPoint ® presentation that illustrates the relationship between subjective wellbeing and the following topics: Physical health Mental health Work Intelligence Religion Race, ethnicity, and stigma Format your presentation consistent with APA guidelines. Money, Happiness, and Culture Chapter Outline “The Paradox of Affluence” Well-Being Across Nations Between-Nations Comparisons Within-Nation Comparisons Interpreting National Comparisons Understanding Money and Happiness Focus on Research: Do Happy People Make More Money? Why Doesn’t Money Matter More? Genetics, Personality, and Relationships Adaptation and the Hedonic Treadmill Focus on Research: Adaptation to Extreme Events—Lottery Winners and Accident Victims Rising Expectations and the “Tyranny of the Unnecessary” Social Comparisons Excessive Materialism The Meaning of Happiness: Relative or Universal? Culture and Well-Being The Self in Individualistic and Collectivist Cultures Culture and the Meaning of Happiness The American-Individualistic Style of Happiness The Asian-Collectivist Style of Happiness Cultural Ideals Emotional Expressiveness Group Pride and Sensitivity Self-Critical Attitudes False Humility or Social Sensitivity? People appear to be of two minds regarding the relationship between money and happiness. On one hand, few of us would say that money buys happiness; that would be a crass and shallow view of life. Survey research affirms a widespread belief that there is more to life than money. People rank money near the bottom of important sources of life satisfaction. In their classic work on quality of life, Campbell and his colleagues (1976) found that money ranked 11th out of 12 listed sources of a satisfying life. Money and wealth were shown to be largely irrelevant to people’s judgments of the “good” life in a study by King and Nappa (1998). Both college students and adult community members judged happiness and meaningfulness—not wealth—to be the essential features of a life well-lived. A recent Time magazine poll asked 1,000 adults, “What one thing in your life has brought you the greatest happiness?” Neither money, wealth, or material possessions were included in the top eight answers (Special Mind & Body Issue: “The Science of Happiness,” January 17, 2005, p. A5). Taking a broad view, most of us don’t believe that money has much to do with a happy and satisfying life. On the other hand, when we focus on our own lives, most of us seem to believe that more money would make us happier. National opinion polls have asked people about the role money plays in their personal happiness and life satisfaction (see Myers, 1992,2000a, 2000b, for reviews). In answer to questions about what would improve quality of life, more money was the most common answer. In response to questions about what aspect of life interferes with achieving the “good life,” not having enough money was the most frequent answer. When they were asked what part of life (e.g., job, home, friends, education, etc.) was least satisfying, most people said it was the amount of money they had to live on. The idea expressed in these surveys (that more money will make people happier) makes sense when applied to the poor. The frustrations, stress, and unmet basic needs associated with poverty cause distress, unhappiness, and lower levels of subjective well-being (SWB) (Diener & Seligman, 2004; Diener, Suh, Lucas, & Smith, 1999). But for those with average and above-average incomes, the logic connecting money and happiness through the fulfillment of basic needs makes far less sense. This is clearly evident in a Chicago Tribune survey reported by Csikszentmihalyi (1999). The survey showed that regardless of their current income, people believed that more money would make them happier. People making $30,000 per year said that a $50,000 yearly income would allow them to fulfill their dreams. Those at $100,000 said it would take $250,000 to make them satisfied. All of this suggest that people share a general belief that money increases happiness. There seems to be little consideration of the possibility that at some point, more money might not have an appreciable effect. Surveys of college students taken over the last 30 years indicate that the importance of money in people’s lives may be increasing. A 1998 survey of over 200,000 students found that being financially well-off was endorsed as a major life objective by a majority of students (74%), whereas in 1970 only 39% had rated money as a very important objective (see Myers, 2000b, pp. 126–128). The apparent pervasiveness of the belief in a money–happiness connection led Myers to suggest that “the American dream seems to have become life, liberty and the purchase of happiness” (Myers, 2000b, p. 58). Myers’ conclusion becomes even more persuasive if we consider people’s actual behavior regarding money and material possessions. An emerging body of research within psychology suggests that the accumulation of wealth and material possessions are central features of many people’s lives (see Kasser, 2002;Kasser & Kanner, 2004). A big-picture view of life seems to lead to the conclusion that money and happiness are unrelated, while a smaller-picture view of one’s own life, in the here-and-now, seems to lead to an opposite conclusion. In short, people seem to “know” that money doesn’t buy happiness, but still act as if it does. This two-sided view raises a number of questions that will be addressed in this chapter. First and foremost are questions concerning whether money is related to happiness, and to what extent. Does increased income translate into increased happiness? Are rich people happier than the rest of us? Are people who live in wealthy countries happier than those in poorer countries? As our country has become more affluent, has the level of our happiness increased as well? In addition to these questions, we will also examine whether happiness has the same meaning in different cultures. For example, do Chinese and Japanese individuals place the same value on individual happiness as Americans do? Do the things that make Americans happy also make people happy in other cultures? We begin our discussion by putting the money–happiness issue in a cultural and historical context. “The Paradox of Affluence” The term “paradox of affluence” is drawn from the title of David Myers’ book The Paradox of Affluence: Spiritual Hunger in an Age of Plenty (Myers, 2000b). This book offers a detailed description of the disparity that has developed over the last 40 to 50 years in America between material well-being and psychosocial well-being. A recent review by Diener and Seligman (2004) also provides extensive statistical evidence that indices of material affluence and of well-being have gone in opposite directions since the 1950s. The disparities are startling. Both reviews note that since the 1950s per capita real income has tripled. Consumer statistics reveal a complementary pattern. Americans have doubled and tripled their ownership of cars, big-screen TVs, dishwashers, clothes dryers, and computers, and go out to eat twice as often as in the past (Myers, 2000a, 2000b). Statistics complied by Easterbrook (2003) provide striking evidence of our increased affluence: Nearly 23% of households (63 million people) in the United States make at least $75,000 per year. In 2001, Americans spent 25 billion dollars on recreational watercraft. This is more than the entire gross domestic product of North Korea. At a pace of 750,000 per year, Americans have purchased more than 3 million all-terrain vehicles since 1995. The typical new home averages 2,250 square feet, about double the size of the average home in the 1950s. Counting fast-food restaurants, Americans eat out four times a week. Counting only “sit-down” restaurants, the figure is once per week. During this same period of increased income and consumption, large-scale national surveys reveal that the American level of life satisfaction has remained “virtually flat” (Diener & Seligman, 2004). Figure 6.1 shows the lack of relationship between life satisfaction and rising GNP in the United States. On a 10-point life satisfaction rating scale, with 1 indicating very dissatisfied and 10 indicating very satisfied, the mean life satisfaction of Americans was 7.2, with little variation during the entire period from 1947 to 1998. The percentage of Americans reporting that they are very happy has remained relatively fixed at about 30% from the 1950s through the 1990s (Myers, 2000a). Most Americans are richer, but not happier than in the past. Figure 6.1 U.S. Gross National Product and Mean Life Satisfaction from 1947 to 1998 Source: Diener, E., & Seligman, M. (2004). Beyond money: Toward an economy of well-being. Psychology in the Public Interest, 5, 1–31. Copyright American Psychological Society. Reprinted with permission. One might think economic gains would at least have a positive impact on mental health. It seems reasonable to assume that increased material resources might enhance personal happiness by creating more mental health services and preventative programs that would help reduce the number of people suffering from emotional problems. With this assumption in mind, it is all the more surprising that mental health statistics reveal a discouraging picture of increased, rather than decreased, distress correlating with increased material wealth. Mental health statistics are based on incidence rates reported to community, state, and federal agencies, on national surveys that ask about mental illness symptoms, and on diagnostic interviews and intensive study of selected populations. Reviews of the mental health literature conclude that there are more people suffering from mental disorders and emotional distress today than in the past (Diener & Seligman, 2004; Kessler et al., 1994; Keyes, 2003; Keyes & Lopez, 2002). A comparison of national adult surveys taken in 1957, 1976, and 1996 found a steady increase in the percentage of people feeling an “impending nervous breakdown” (an everyday term for extreme subjective distress). In 1957, 18.9% of those surveyed had experienced an impending breakdown. In 1976, the figure was 20.9%, and by 1996 the percentage had risen to 26.4% (Swindle, Heller, Pescosolido, & Kikuzawa, 2000). Diagnostic interviews with samples of adult Americans show that nearly 50% have experienced at least one mental disorder in their lifetime; 30% have had a mental health episode within the last year and nearly 18% within the last month (Kessler & Frank, 1997; Kessler et al., 1994). Of all mental disorders, depression has shown the most dramatic increase in incidence. Diener and Seligman (2004) estimate a 10-fold increase in incidence rates over the last 50 years and note studies reporting that the average age of onset has fallen from 30 years into the teenage years. These authors review several lines of evidence revealing a substantial rise in the number of people suffering from depression and suggest a link between increased depression and increased affluence. Rates of depression seem to have increased across generations, with younger people suffering much higher rates than older people. Individuals born in the first decade of the twentieth century showed very low rates of depression, and each successive generation has experienced higher rates than the generation before. Diener and Seligman (2004) reviewed two studies supporting a general connection between depression and affluence. First, a large-scale international study (Cross National Collaborative Group, 1992) found that the depression–affluence relationship, so strongly evident in the United States, also occurs in a number of other countries. Second, a study of the Amish culture in Pennsylvania (Egeland & Hostetter, 1983) suggests that modern life may be implicated in the rising rates of depression. The Amish live in relative isolation from the modern world. Their communities are close-knit, bound together by a religious faith that rejects most aspects of the modern consumer-oriented society (e.g., electricity, cars, TVs, and computers). Few Americans would describe the Amish lifestyle as affluent, yet measures of SWB show the Amish to be quite satisfied with their lives. Based on rates of depression among the Amish described by Egeland and Hostetter (1983), Diener and Seligman estimate that Amish individuals have only 1/5 to 1/10 the risk of developing depression of those who live in our modern, affluent society. At this point, it’s anybody’s guess whether there is a causal association between increasing depression and increasing affluence. The idea that materialism and consumption may produce social and individual malaise has a long history within philosophy. In the next chapter, we will review studies focused on how an individual’s excessive materialism may compromise his or her well-being. Here, we note three arguments about social and historical changes that may be responsible for the “darker side” of our affluent culture. In an article titled, “Why the self is empty,” Phillip Cushman (1990) argues that our consumer culture has displaced the deeper meanings and purposes that were traditionally found within family life, social relationships, and religion. He believes that over time, advertising has convinced people that happiness is to be found in the marketplace. The family has become a site of consumption rather than a source of nurturance and close relationships. Holidays have become commercialized; the frantic rush for the perfect Christmas gift has replaced religious and traditional family celebrations. More and more people pursue a consumption-based “life-style solution” to the problem of finding meaning in life. But because material consumption cannot provide deep, sustaining life meanings, Cushman argues that people experience an “inner emptiness.” He believes that rising rates of drug abuse, eating disorders, compulsive buying, and depression are manifestations of the empty self. Robert Putnam (2000) agrees that aspects of modern society have damaging effects on social and individual life. Putnam regards people’s involvement in community, neighborhood, school, church, and social organizations as “social capital.” This social capital contributes to the well-being of individuals and communities by promoting shared trust and mutual help. Membership in community organizations across the country has been declining. People appear to be more focused on the pursuit of their individual life agendas and less on contributing to the good of their communities. Putnam believes this retreat from public involvement represents a loss of the social capital necessary for a healthy and prosperous life for both communities and individuals. The decline in social capital may play some role in the emotional difficulties so many people seem to be facing today. In his book, The Paradox of Choice: Why More Is Less (2004), Schwartz provides a third view of the paradox of affluence. Schwartz argues that people in modern consumer cultures have unprecedented freedom to choose among a myriad of alternatives in consumer products and individual lifestyles. Compared to the past, a typical American has considerably more freedom in choosing how to dress, what and where to eat, what car to drive, who to marry, and what career to pursue. However, the abundance of choice in nearly all matters of our lives contains a paradox that may undermine its benefits. The more choice we have, the more we may be dissatisfied with the results. Schwartz argues that high levels of choice within a society encourage a “maximizing”philosophy that increases the pressure to choose the “best possible” option, rather than be content with a “good enough” choice by following what he calls a “satisficing” policy. The problem with maximizing is that finding the best possible choice among a myriad of alternatives can be stressful and even paralyzing; ask college students trying to choose a college major and future career. More importantly, maximizing increases the intensity of self-blame and regret if our choices do not work out as planned. Freedom of choice and individual responsibility for those choices are strongly linked. Because we make the choices, it is easy to blame ourselves for poor ones. Because there are so many choices, it is also easy to second-guess ourselves. In the aftermath of a decision, we may experience some agony of regret over what we did not choose. Second-guessing may cause us to feel that initially rejected options are really lost opportunities. In support of these arguments, studies have shown that people with a maximizing orientation are more likely to experience regret, self-blame, and second-guessing than those following a “satisficing” or “good enough” philosophy (Schwartz & Ward, 2004). Because self-blame, second-guessing, and regret all detract from the potential well-being benefits of choice, they help explain Schwartz’s notion of a paradox of choice, in which more choice may reduce rather than increase well-being. Affirming this conclusion, researchers have found that compared to satisficers, maximizers are less happy, less optimistic, have lower self-esteem and higher levels of neuroticism, and greater risk of mild depression (see Schwartz & Ward, 2004, for a review). If Schwartz is right, then people might enjoy greater well-being if they relinquished their stressful pursuit of perfectionistic and “best possible choice” ideals and adopted a less problematic and more satisfying principle of “good enough.” Well-Being Across Nations Americans’ increased income over the last 50 years has not led to a corresponding rise in SWB. Is this because money is simply unrelated to a person’s level of happiness? Or might it result from the fact that most Americans are, and have been, fairly satisfied with life, so more money has had little effect on happiness? Comparisons of the wealth and well-being relationship across a broad array of countries help answer these questions. Much of the data for national comparisons comes from the World Values Survey—one of the largest ongoing international surveys. Over a 25-year period, surveys conducted by a consortium of social scientists from all over the world have been completed by hundreds of thousands of people in over 80 countries. Robert Inglehart at the University of Michigan’s Institute for Social Research has coordinated the compilation of findings. Information about these surveys can be found at the World Values Survey web site: or Ruut Veenhoven and his colleagues at Erasmus University Rotterdam-Netherlands have created the World Database of Happiness. Its web site is Together with studies by independent researchers, these international databases provide a wealth of information concerning the relationship of well-being to a variety of social, economic, and political variables within different countries. The major findings of international studies are summarized in a number of excellent review articles and books (e.g., Diener & Biswas-Diener, 2002; Diener & Suh, 2000a, 2000b; Easterbrook, 2003; Inglehart, 1990, 1997). Between-Nations Comparisons Between-nations comparisons have found substantial correlations (in the range of 0.50 to 0.70) between average per capita income and average level of SWB (see Diener & Biswas-Diener, 2002; Diener & Diener, 1995; Diener & Oishi, 2000). For example, in a study of 65 different nations, Inglehart and Klingemann (2000) reported a correlation of 0.70 between a combined measure of life satisfaction and happiness and a measure of purchasing power. Table 6.1 (following page) shows a sample of life satisfaction ratings and income rankings for 29 different nations, reported by Diener (2000). Life satisfaction ratings were made on a 10-point scale and were based on the World Values Survey, which sampled about 1,000 people in each country (World Values Survey Study Group, 1994). Income figures were based on estimates of purchasing power parity (PPP). This measure provides a common metric for comparing income levels among countries. The purchasing power measure may range from 0 to 100 (see World Bank, 1992). Table 6.1 Life satisfaction and income rankings across nations Nation Life Satisfaction Income Rank (PPP) Switzerland 8.36 96 Denmark 8.16 81 Canada 7.89 85 Ireland 7.88 52 Netherlands 7.77 76 United States 7.73 100 Finland 7.68 69 Norway 7.68 78 Chile 7.55 35 Brazil 7.38 23 Italy 7.30 77 China (PRC) 7.29 9 Argentina 7.25 25 Germany 7.22 89 Spain 7.15 57 Portugal 7.07 44 India 6.70 5 South Korea 6.69 39 Nigeria 6.59 6 Japan 6.53 87 Turkey 6.41 22 Hungary 6.03 25 Lithuania 6.01 16 Estonia 6.00 27 Romania 5.88 12 Latvia 5.70 20 Belarus 5.52 30 Russia 5.37 27 Bulgaria 5.03 22 Note: Rankings of countries are presented in reverse order (i.e., most satisfied to least satisfied) from that of the original article. Source: Diener, E. (2000). Subjective well-being: The science of happiness and a proposal for a national index. American Psychologist, 55, 34–43. Copyright American Psychological Association. Reprinted by permission. Examining the table you can see the general pattern of relationship between national income and life satisfaction. On average, people living in wealthy nations are happier than those living in less wealthy nations. However, you can also see some surprises. For example, the Irish have relatively high SWB but only moderate income, while the Japanese enjoy high income but only moderate SWB. The United States is at the top of the income measure, but 6th in self-reported life satisfaction. India and China both rank near the bottom in income, but show satisfaction ratings higher than Japan. Even countries in fairly close geographic proximity show large differences in life satisfaction. For example, among Western European countries, Denmark has consistently ranked higher in satisfaction ratings than Germany, France, or Italy. Based on percentage responses rather than the 10-point rating scale, some 50 to 65% of Danes have reported that they are very satisfied with their lives, over the last 25 years (Inglehart & Klingemann, 2000). Over the same period, the percentage of French and Italians reporting that they were very satisfied was never over 15% and the percentage of very satisfied Germans has been roughly half that of Danes. The relative rankings of countries in terms of SWB and income, with a few exceptions, have been quite stable over the 25-year history of international surveys (see Inglehart & Klingemann, 2000). That is, national measures of well-being do not seem to be the product of short-term events that might inflate or depress the average level of life satisfaction within a society. Within-Nation Comparisons Within-nation comparisons tell us about the difference in happiness between rich and poor people who live in the same country. In contrast to the moderately strong correlations found in between-nation comparisons, within-nation correlations between income and happiness are quite small. Diener and Oishi (2000) report an average within-nation correlation of only 0.13 (with 40 different nations studied). Within the United States, the correlation was 0.15. However, these low overall correlations mask two general patterns in the income–happiness relationship. Specifically, income and well-being show moderate correlations within poor countries and very small or non-significant correlations within wealthy countries. In the Diener and Oishi study, the highest correlations were found in the poorest countries (e.g., in South Africa the correlation was 0.38 and in Slovenia, 0.29). This is consistent with a study of extremely poor people living in Calcutta slums that found a happiness–income correlation of 0.45 (Biswas-Diener & Diener, 2001). Studies showing that financial satisfaction correlates more strongly with life satisfaction in poor than in rich countries also support the importance of money for those who have little (Oishi, Diener, Lucas, & Suh, 1999). However, within more affluent counties, the income–happiness connection essentially disappears. At a gross domestic product per capita of $10,000 per year, there is only a very small correlation (r = 0.08) between income and life satisfaction (Diener & Seligman, 2004). A Time magazine survey conducted in the United States found that happiness and income increased in tandem until people reached an annual income of about $50,000 (Special Mind & Body Issue: “The Science of Happiness,” January 17, 2005, p. A33). After that, increased income had no appreciable effect on happiness. One explanation for the apparent contribution of income to happiness among poor countries and its lack of significant contribution among wealthy countries has to do with fulfillment of basic needs (see Veenhoven, 1995). It is not difficult to conclude that a level of income insufficient to provide for basic needs such as nutrition, health care, sanitation, and housing would be frustrating and distressing, and would contribute to low levels of SWB. On the other hand, once basic needs are fulfilled and one enjoys a level of income that is shared by many others in one’s society, the source of happiness might shift away from income to other aspects of life. This explanation is consistent with Maslow’s classic model of the hierarchy of human needs (Maslow, 1954). Maslow argued that motivation to achieve higher-order needs for personal fulfillment, self-expression, and actualization of individual potentials was put on hold until lower-order needs relating to physiology (e.g., food, safety, and security) were met. Some research suggests that basic needs are not the whole story in the income–well-being relationship. One study reported that income beyond what is necessary to fulfill basic needs still added a measure of additional happiness (Diener, Diener, & Diener, 1995). Once basic needs are satisfied, increased income offers diminishing returns in happiness, but some returns, nonetheless. Interpreting National Comparisons You may be wondering why the between-country income–happiness relationship is so strong (r = 0.50 to 0.70), while the within-country relationship is so weak (r = about 0.13). The difference is, in part, an artifact of the information that goes into each correlation (Argyle, 2001; Diener & Oishi, 2000). Between-nation comparisons reflect the pattern of relationship among different countries for two numbers: the average level of well-being and average income. National averages aggregate across individuals in the country surveyed. This aggregation causes individual variability in the income–happiness relationship to be effectively factored out of the comparison. In contrast, within-country correlations are based on individual variability and are affected by many factors other than income. For example, we know that, independent of their income, extraverted people report higher levels of well-being than introverts. A very outgoing person at a low-income level may have a higher level of happiness than an introverted person making a lot of money. In other words, the connection of extraversion to well-being weakens the correlation between money and happiness. Because within-country correlations will be affected by the contribution of personality to well-being, they are lower than between-country correlations, which are not affected by personality differences. A further complication in interpreting national differences involves the many factors that co-vary with income. Money is certainly not the only difference between a rich nation and a poor one. For example, compared to poorer countries, affluent nations tend to have more democratic forms of government, offer more freedom and individual rights to citizens, and provide better health care, sanitation, and consumer goods. Studies show that freedom, individual rights, and trust in government are related to higher levels of satisfaction and happiness, and well-being is generally higher in democratic than in communist countries (see Diener & Seligman, 2004; Inglehart & Klingemann, 2000; Veenhoven, 2000, for reviews). Diener and Seligman note that when these variables are taken into consideration, the correlations between nations’ wealth and the happiness of their citizens become nonsignificant. Much more research is needed to disentangle all the variables related to the income–happiness relationship across nations. Researchers acknowledge that money is only a rough index of all the complex and interrelated variables associated with happiness. The contribution of cultural variables to differences in happiness will be examined in a later section of this chapter. Understanding Money and Happiness What can we conclude about the contribution of money to individual happiness? So far, our discussion suggests the following. People living in rich nations are, on average, happier than those living in poor nations; however, this conclusion must be tempered by all the factors that co-vary with wealth that may be responsible for the relationship. Among individuals within a particular country, the money–happiness correlation is quite small and primarily evident among the very poor. The role of income in fulfilling basic needs helps explain the importance of money for people living in poverty. Among economically and technologically advanced nations, increased economic growth over the last several decades has had little appreciable effect on SWB. In affluent nations the money–happiness association appears to be curvilinear, with money making a greater difference at lower income levels, but much less so at moderate or higher levels, so that the curve levels out after a certain income is reached. Within wealthy nations, beyond a certain point, increasing income does not yield continued increases in happiness. Even the richest Americans are only slightly happier than those with more moderate incomes. A study of people listed by Forbes magazine as the wealthiest Americans found about a one-point difference in life satisfaction (on a 7-point scale) between the super-rich and the average American (Diener, Horwitz, & Emmons, 1985). Overall, money makes a substantial contribution to the well-being of those who are poor, but contributes little to the happiness of those who have achieved some “average” level of income relative to others in their society. Two other lines of research reinforce this conclusion. At the individual level, the most relevant evidence for evaluating the importance of money comes from longitudinal studies that track the impact of increased or decreased income. Longitudinal studies follow the same individual over time. If money has a consistent relationship to happiness, then as a person’s income goes up or down, so should his or her level of happiness. Interestingly, Diener and Biswas-Diener’s review (2002) concluded that longitudinal studies do not show such a consistent relationship. Several studies report no effect of increased income on well-being and some have even found increased happiness associated with decreased income. Studies of pay raises also show mixed results (see Argyle, 2001). Pay increases produce only short-term gains in satisfaction and pay reductions seem to have little or no effect. Some of the most powerful evidence for the lack of direct connection between money and happiness comes from a study of lottery winners who reported no long-term increase in SWB despite their dramatic increases in income (Brickman, Coates, & Janoff-Bulman, 1978). Because the amount of money a person earns co-varies with many other factors such as education, employment status, and age, we may also ask whether income still affects SWB when these variables are controlled. A number of studies suggest that income has a small correlation with happiness and life satisfaction that is independent of many individual and social variables (Argyle 2001;Diener & Biswas-Diener, 2002; Diener et al., 1995). Income appears to have a direct, but relatively small correlation with well-being. In comparison, being married, being employed, and having supportive relationships are variables that make much more substantial contributions to happiness. Focus on Research: Do Happy People Make More Money? Even the small effect of money on happiness may have to be tempered by the bidirectional nature of the relationship. More money may make us somewhat happier, but happy people also seem to make more money. This is the finding of a longitudinal study by Diener, Nickerson, Lucas, and Sandvik (2002). These researchers took advantage of two large data sets made available by the Andrew W. Mellon Foundation. Both the Mellon Foundation (“College and Beyond” survey) and the University of California at Los Angeles (“The American Freshmen” survey) conduct annual surveys of thousands of college students at hundreds of universities across the United States. Surveys include both small private colleges and large public universities, as well as several historically black universities and colleges. These surveys ask about the attitudes, values, aspirations, abilities, personalities, and career plans of each entering freshmen class. The Mellon Foundation also conducts periodic follow-up surveys of students after graduation, collecting information regarding income, job history, life satisfaction, civic involvement, and evaluations of college experience. Diener and his colleagues studied survey data for 13,676 freshmen, who began their college careers in 1976 and were surveyed again about 19 years later between 1995 and 1997. Their index of happiness was a self-rated measure of cheerfulness included in the freshmen surveys. Students were asked to rate their level of cheerfulness in comparison to the average student of the same age on a five-point scale (1 = the lowest 10% of cheerfulness relative to the average student; 2 = below average; 3 = average, 4 = above average; and 5 = the upper 10%). Three variables were examined from the follow-up survey: income, job satisfaction, and unemployment history. Unemployment was defined as a period of 6 months or longer when the person was not working for pay. The overall pattern of results showed that those students who were the most cheerful at college entry went on to make more money, enjoyed higher job satisfaction, and suffered substantially less unemployment compared to their less cheerful classmates. The relationship of cheerfulness to income increased steeply at first, then leveled off. That is, increased cheerfulness had a larger effect at lower levels of cheerfulness and less effect at higher levels. As shown in Figure 6.2, for example, students whose parents had substantial annual incomes showed the following relationship between self-rated cheerfulness and current income, reported 19 years after graduation. Students rating themselves in the lowest 10% of cheerfulness (1) when they entered college were making about $50,000 per year. Students rating themselves below average (2) were making a little over $58,000. Those average in cheerfulness (3) were at $63,500. Students above average in cheerfulness (4) reported incomes of nearly $66,000, and those who considered themselves in the highest 10% of cheerfulness (5) were making a little over $65,000. Moving from the lowest cheerfulness category (1) to the next (2) was associated with an income increase of $8,000; the difference between (2) and (3) was associated with a $5,500 increase; the difference between cheerfulness ratings of (3) and (4) was associated with an income gain of $2,500; and the difference in income between those rating cheerfulness as (4) and (5) was associated with a decrease of $1,000. In other words, if you are an unhappy college student, cheer-up, even if only a little bit— you’ll make a lot more money if you do! And if you’re already above average in cheerfulness, don’t try to make it to the top 10%—it might cost you $1,000 per year! Figure 6.2 Mean after College Income as a Function of Cheerfulness and Parental Income at College Entry Source: Diener, E., & Seligman, M. (2004). Beyond money: Toward an economy of well-being. Psychology in the Public Interest, 5, 1–31. Copyright American Psychological Society. Reprinted with permission. Findings also showed that parental income moderated the effects of cheerfulness. Cheerfulness had a stronger association with current income for individuals whose parents had high incomes. As parents’ income increased, the effect of cheerfulness also increased. For example, at the lowest parental income level, students with the lowest cheerfulness ratings were making $39,232, while those with the highest cheerfulness made $44,691— a difference of $5,459. At the highest parental income level, students lowest in cheerfulness averaged $60,585 per year, while those with the highest cheerfulness were making $85,891—a difference of $25,306. For students with poor parents, increased cheerfulness had a relatively small effect on current income. For students with affluent parents, being more cheerful had quite large effects on income. Why do cheerful college students make more money than their less cheerful classmates? Assuming that a cheerful disposition remains relatively stable across time, Diener and his colleagues offer three possible explanations. First, a cheerful outlook may create a “can do” attitude that motivates students to meet new challenges and to suffer less from setbacks. This may result in more persistence and hard work that is valued by employers and therefore translates into higher incomes. Second, cheerfulness is a positive quality that others admire and it may also be related to better social skills. A cheerful disposition may make a person more approachable and easier to work with. Cheerful people may be better at persuading others concerning their ideas and may be skillful in increasing people’s willingness to provide assistance and support. Less cheerful people may not have these advantages. Finally, to the extent that cheerful people are simply more likeable because of their upbeat, positive attitude, employers may give them higher performance evaluations. Cheerfulness may create a halo effect. That is, even if a cheerful and less cheerful employee performed at the same level, employers might give the cheerful worker the edge because they are easier to like and work with. Diener and his colleagues were disappointed to find that parental income was so strongly related to students’ later earnings. Why should a cheerful student from a rich family go on to make considerably more money than an equally cheerful student from an economically disadvantaged family? As these researchers note, children from affluent families enjoy many advantages, from the quality of their pre-college education to enhanced extracurricular activities that allow for the development of personal and social talents. Perhaps for these and other reasons, students from advantaged backgrounds are more likely to get high-status professional jobs than students from disadvantaged backgrounds. Whatever the reasons, Diener and his colleagues conclude that “It is surprising and disturbing that the superb educations and opportunities offered by the collegiate institutions in this study are apparently not sufficient in many cases to overcome the disadvantages of having grown up in a less affluent family” (2002, p. 250). Why Doesn’t Money Matter More? Why do income and wealth show such a small relationship to happiness when money is so clearly related to many positive outcomes and advantages? In the United States, everything from the size of your house and the amount of crime in your neighborhood to the quality of health care and education for your kids is tied, in one way or another, to the amount of money you make. The small effect of income on happiness seems puzzling given the apparent advantages money can bring. Several explanations have been developed to address why money does not have a larger impact on SWB. Several of these explanations were discussed briefly in Chapter 5 to account for the small or short-term effects of life events and demographic variables on happiness. Genetics, Personality, and Relationships In Chapter 5, we discussed the role of genetically determined temperament and personality in producing long-term stability in people’s levels of happiness. Simply put, each of us seems to inherit or develop, early in life, a characteristic outlook that remains relatively consistent across the life span. This outlook plays a major role in how we react to life events, make decisions, and live our lives in general. Research shows that a variety of personality traits such as cheerfulness, optimism, extraversion, self-esteem, and a sense of personal control are strongly related to SWB (see Argyle, 2001; Diener & Lucas, 1999; Diener, Oishi, & Lucas, 2003; Diener et al., 1999; Lykken, 1999;Lyubomirsky, 2001; Myers, 1992; Ryan & Deci, 2001, for reviews). People at the positive end of these trait dimensions are considerably happier than those at the negative end (e.g., those with neurotic, pessimistic characteristics, and low self-esteem). How these traits contribute to the development and maintenance of happiness will be taken up in a subsequent chapter. Here, we note that if SWB is substantially rooted in internal traits and dispositions, it makes sense that external circumstances and changes would have less impact on a person’s happiness. For example, heritability studies discussed in Chapter 5 suggest that 40 to 55% of a person’s current level of happiness reflects a genetically determined temperament. Based on her studies comparing differences between happy and unhappy people, Lyubomirsky (2001, p. 244) concludes that happy and unhappy people “. . . appear to experience—indeed, to reside in—different subjective worlds.” Faced with the same situation, event, or task, happy individuals think and act in ways that sustain their happiness, and unhappy individuals think and act in ways that sustain their unhappiness. That is, it is people’s subjective interpretation of the world, rather than the world itself, that makes the biggest difference. Because money can’t buy you a cheerful personality, money isn’t a major contributor to individual happiness. The same kind of argument can be made regarding the importance of relationships. We have noted in several previous discussions that there is overwhelming evidence for the contribution of supportive and caring relationships to personal happiness (e.g., Diener & Seligman, 2004; Ryff & Singer, 2000). Just as money won’t buy you a happy temperament, it is also hard to imagine that money will buy you good relationships. Poverty and tight finances can certainly contribute to stress and conflict within marriages and families, but in most marriages conflict over money is symptomatic of problems in the relationship, rather than being the problem itself. The ability to buy expensive consumer goods for your family doesn’t make you a good parent or spouse. One only has to look at the sordid family and marital lives of the “rich and famous” to see that money and stable relationships are largely unrelated. The bottom line on personality, relationships, and money is this: some of the most significant sources of happiness are not much affected by how much money you make. Adaptation and the Hedonic Treadmill Sensory adaptation is a familiar part of everyday experience. When you walk out of a building into the bright sunlight you have trouble seeing clearly until your eyes adapt to the bright light. If you go into a dark room the same thing happens until you adjust to the dim light. Similarly, if you enter someone’s house that has a strong and unpleasant odor you may wonder how the occupants live with it, but after a few minutes you no longer notice the odor. If you go outside and then come back in, the smell is strong again. In general, our senses respond more to changing stimulation than to constant stimulation. We become largely oblivious to an unchanging or repeated stimulation. When people who wear glasses put them on in the morning they can feel the pressure against their nose and ears, but shortly, and for the rest of the day, they are unaware of these sensations and “forget” that they wear glasses. The idea of a hedonic adaptation, meaning adaptation to stimuli that arouse emotions, was drawn by analogy with sensory adaptation and the adaptation-level theory developed by Helson (1964). In a classic and much-cited article on adaptation, Brickman and Campbell (1971) argued that people are doomed to a hedonic treadmill that results in stable and relatively neutral levels of long-term happiness. Like a treadmill, where you walk and walk but don’t get anywhere, our emotional experiences fluctuate, but our overall level of long-term happiness does not change. The new car, the bigger house, and the pay raise all make us happier for awhile, but then the good feelings fade. This occurs because people quickly adapt to both negative and positive life changes and return to pre-event levels of happiness. Just as bright sunlight produces fading sensations of brightness overtime, the effects of emotionally-charged events quickly fade. And just as we can only re-experience brightness by closing our eyes or going into a darkened building, we only re-experience emotions by generating or encountering new emotional events (e.g., another new and more expensive car or an even bigger house). Emotions, like many sensory experiences, do not last. Hedonic adaptation most likely evolved in humans to serve various protective and survival-enhancing functions (Frederick & Lowenstein, 1999; Frijda, 1999; Zajonc, 1998). Our sensitivity to change makes us alert to things that might threaten or enhance our well-being. The fading of emotional responses over time reduces the potential negative effects of long-term emotional arousal. We noted in Chapter 4 that chronic stress and fear have destructive effects on the immune system. You can imagine how disruptive it would be if the fear you experienced the last time you narrowly missed having a car accident, or if the intense anger you felt when treated unfairly, or if the pain of a failed romantic relationship lasted for years. And we all might have very small families if all our sexual desires were fulfilled the first time we had sex. Emotions, such as fear, appear to serve short-term purposes (e.g., the fight or flight response) and are not made to last. As Myers argues (1992, p. 53, italics in original), “Every desirable experience—passionate love, a spiritual high, the pleasure of a new possession, the exhilaration of success—is transitory.” Focus on Research: Adaptation to Extreme Events—Lottery Winners and Accident Victims Dramatic evidence for adaptation comes from a classic study by Brickman and his colleagues (1978). Their research participants were two very different types of people: major lottery winners and individuals who had become paralyzed as the result of accidental injury. Based on adaptation-level theory, Brickman and his colleagues predicted that in the long run, lottery winners would be no happier, and victims of catastrophic injury would be no worse off emotionally than the rest of us. Adaptation-level theory offers two reasons for this prediction: contrast and habituation. The contrast explanation suggests that a major positive event like winning the lottery may cause more mundane and everyday pleasures to pale by comparison. Spending time with friends or watching TV in the evening may bring less pleasure because they contrast so sharply with the excitement of having won a lot of money. As a result, lottery winners may not experience any overall net gain in happiness because the thrill of winning is offset by a decline in everyday pleasures. Habituation means growing accustomed to new events so that their emotional impact is reduced. As lottery winners get used to the pleasures made possible by their dramatic increase in wealth, these pleasures will contribute less and less to their happiness. Contrast and habituation were predicted to have essentially the opposite effects for the adaptation of accident victims who suffered paraplegia or quadriplegia. Everyday activities—the simple pleasures of life—may bring increased enjoyment because they are contrasted with an extreme negative and life-threatening event. Habituation may occur as accident victims adjust and become more accustomed to the effects of paralysis. To test their hypothesis, the researchers interviewed three groups of people. The first group consisted of 22 individuals, who had won at least $5,000 (in 1978 dollars) in the Illinois State Lottery in the preceding 18 months. The second group was comprised of 11 paraplegic and 18 quadriplegic individuals who were patients at a rehabilitation institute as a result of injuries sustained within the past year. Using the phone book, the researchers identified 88 control participants who lived in close geographic proximity to the lottery winners, and were able to interview 22 of these individuals. The participants were asked questions about changes in their lifestyle, whether they thought they deserved what had happened to them, and to rate their winning of the lottery or their paralysis on a six-point scale ranging from (0) “the worst thing that could happen . . .” to (5) “the best thing that could happen. . . .” Happiness was rated regarding three time frames: (1) how happy they were at present; (2) how happy they were either before they won the lottery or before they became paralyzed, depending on their situation; and (3) how happy they expected to be in a couple of years. Participants also rated the pleasure obtained from seven mundane everyday activities (e.g., hearing a joke, talking with a friend, watching TV, etc.). The control group answered similar questions. Mean ratings for each group are shown in Table 6.2 Table 6.2 Mean general happiness and mundane pleasure ratings General Happiness Condition Past Present Future Mundane Pleasures Winners 3.77 4.00 4.20 3.33 Controls 3.32 3.82 4.14 3.82 Victims 4.41 2.96 4.32 3.48 Source: Brickman, P. D., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative?Journal of Personality and Social Psychology, 36, 917–927. Copyright American Psychological Association. Reprinted with permission. As you might expect, paralyzed individuals rated their accident as an extremely negative event, and lottery winners described their winning as a very positive event. Consistent with adaptation-level theory, however, lottery winners gave the seven ordinary life activities lower pleasure ratings than the control subjects. Also consistent with the theory, the lottery winners did not differ significantly from control subjects in their ratings of present, past, or anticipated happiness. In short, people who had won a major lottery were delighted to have won, but found less enjoyment in ordinary activities than control subjects, and did not report higher overall happiness levels than control subjects. In the short run, winning a large amount of money seems to make everyday activities less enjoyable by comparison, and over time, people habituate to having lots of money. The net result is no increase in overall happiness. Results for lottery winners provide strong evidence for the power of adaptation. Less support for the effects of contrast and habituation was shown among accident victims. Accident victims rated their past happiness as much higher and their present happiness significantly lower than the control group. Surprisingly, though, the accident victims’ happiness ratings were above the midpoint of the rating scale, suggesting they were not as unhappy as we might expect. However, contrary to predictions, enjoyment of everyday activities did not increase. This seemed to have occurred because the contrast for accident victims was between the pleasure obtained from ordinary activities in their past, and the present, in which those activities were no longer possible because of their paralysis. Paralyzed individuals experienced strong nostalgia for the way their lives were before the accident. The contrast between an unrecoverable past life and a forever-changed present life seemed to be the basis for the lower enjoyment of everyday events and overall happiness. Unlike the case for lottery winners, contrast and habituation effects did not return accident victims to their pre-accident levels of happiness. One limitation of this study is the small sample size (22 lottery winners and 29 accident victims). Other studies of lottery winners and people who inherited large sums of money have found evidence for an increase in happiness resulting from newfound wealth (see Diener & Biswas-Diener, 2002; Diener & Seligman, 2004, for reviews). However, studies also suggest that for many people the effects of dramatic increases in wealth or income may bring personal costs in the form of stress and damaged relationships. Lottery winners may quit their jobs and move to new neighborhoods and thus lose long-time friends. Friends and relatives may expect to share in the winnings and be angered or disappointed by what they receive. Having lots of money can create a variety of interpersonal problems and conflicts, including an increased risk of divorce, that may eventually mortgage short-term gains in happiness. Another limitation of Brickman and colleagues’ study is that it was not longitudinal. The amount of time that had passed since winning the lottery or suffering an accident varied considerably among study participants. Brickman and his colleagues did not find a significant relationship between time and present happiness. However, they acknowledge that studying the same individuals over longer periods of time would more accurately assess the extent and course of adaptation. Subsequent longitudinal studies generally support the concept of adaptation to life events, but have modified the idea of a hedonic treadmill and suggested that adaptation has its limits. For example, Silver (1982) studied spinal cord injury victims over an 8-week period following the accident that caused the paralysis. She found that the strong negative emotions immediately following the accident decreased over time while positive emotions increased, and by the 8th week positive emotions were stronger than negative emotions. Headey and Wearing (1989) studied 649 people over an 8-year period and tracked their reactions to a variety of good and bad life events (e.g., making new friends, conflicts with children, increases or decreases in financial situation). These researchers found that people initially had strong reactions, but then returned to their baseline levels of happiness. Personality was also found to moderate both the effects and the occurrence of life changes. Based on their research, Headey and Wearing (1989, 1992) made several modifications to the hedonic treadmill conception, in which people were thought to adapt quickly to new events and return to relatively neutral levels of happiness. Their dynamic equilibrium model suggests that people have positive rather than neutral happiness baselines, and that people return to differing baselines depending on their personalities. In addition, people’s level of happiness affects the likelihood of experiencing positive or negative events. In their study, happy people were found to experience more positive events and unhappy people more negative events. Adaptation processes are thus individualized—not uniform as suggested by the hedonic treadmill theory. Further evidence of the limitations of the hedonic treadmill hypothesis is revealed by studies finding that people do not adapt completely to all life events. Adaptation to increased income and material possessions is well-supported. However, people who have lost a child or a spouse, who have cared for a family member with Alzheimer’s disease, or who have a progressive disease such as multiple sclerosis, do not adapt to these conditions and return to baseline levels of happiness (see Diener et al., 1999; Frederick & Lowenstein, 1999, for reviews). Instead, well-being appears to be significantly and rather permanently lowered. Rising Expectations and the “Tyranny of the Unnecessary” Suppose your income increased by $10,000 per year—let’s say from $50,000 to $60,000. Ten-thousand dollars per year may seem like a lot, but a newer car, a house remodeling project, a few more vacations, more expensive Christmas gifts for your family, and a higher speed internet connection might leave your end-of-the-month checkbook balance no larger than it was when you were making $50,000. And odds are that you would begin thinking about what you could do when you hit $70,000. Both of your textbook authors experienced the “poverty” of graduate school and the “riches” of a full-time faculty position, and were amazed by how quickly their increased income disappeared. Spending habits quickly catch up to income. Easterbrook (2003) argues that rising incomes in the United States have brought rising expectations, made wants seem like needs, and produced a “tyranny of the unnecessary.” As he notes, most of us would probably agree that every home should have a television set. However, evidence shows that the average home has 3 televisions, that 5 sets in a single household is fairly common, and 65% of those under 18 years of age have a TV in their bedrooms (Easterbrook, 2003). A similar pattern of buying more of what you already have is true for CD and DVD players, cars, phones, and a variety of other consumer products. Easterbrook notes that the square footage of new homes has doubled over the last generation, while the average number of occupants has fallen. The storage shed business is booming! Homebuilders report that a frequent complaint of buyers is the lack of adequate storage space for all their possessions. This is part of the tyranny of the unnecessary—what to do with all our stuff— much of which sits idle most of the time. The other part of the tyranny is the tendency for yesterday’s wants to become today’s needs in an unending cycle of greater income and greater consumption. Diener and Biswas-Diener (2002) argue that rising expectations create a perpetual gap between material aspirations (things we would like to have) and current material possessions (things we already have), and a “chronic salience of desires.” Put simply, most people want more than they have, regardless of how much they have at any point in time. Some of the evidence Diener and Biswas-Diener cite in support of this conclusion includes the following: (1) Studies show that the amount of income needed to fulfill people’s consumer aspirations has doubled in recent years. (2) Surveys show that 84% of people now think the “good life” includes a vacation home. (3) A majority of people say they always have something in mind that they want to buy and, on average, people have six things on their “wish list,” with nearly half wanting a bigger house. Because each level of increased income seems to establish a higher level of expectation, we are always looking forward to what we want, rather than backward to what we have. Rising expectations are one major reason more money doesn’t bring more happiness. Our material expectations, wants, and desires always stay ahead of our incomes. Social Comparisons “Keeping up with the Joneses” is a familiar phrase describing the important role that others may play in individual judgments of material well-being. While we can and do judge ourselves by our own standards, we often rely on social comparisons as well. Social comparison effects are clearly demonstrated by a study that asked college students to keep track of their mental comparisons with others (Wheeler & Miyake, 1992). For 2 weeks, students made diary entries about comparisons of grades, social skills, phy

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