the hippies were right!

the financial times published an article yesterday about the relationship between money and happiness. they found that happiness and wealth have a direct linear relationship from $0 in earnings per year through $16,000 in earnings. that is, people's happiness levels rise at a constant rate as their wage levels increase from $0/year through $16,000/year. after that the relationship begins to disintegrate, and becomes much more statistically complex. but basically they found that above that level, increased wealth does not necessarily lead to increased happiness. in fact, people in some countries (i.e. women in the United States) have become less happy despite the vast economic growth of the last 100 years.

we discussed this in my economic development class because, well, economics has been focused thus far on the creation of wealth, based on the underlying assumption that increased wealth leads to increased utility, or happiness. and now economists are beginning to question that assumption. the implications are immense.

and endlessly exciting to a little hippie economist like myself.

unfortunately you have to subscribe to FT to read the whole article (the hippies were right all along about happiness) but you can read part of it here.