ESSA

ESSA

Wealth, Happiness, Heartening Banalities


Thomas Wu

By

October 24th, 2012


Money can’t buy happiness, but you need to be happy to get money.


It’s once again approaching the end of the academic year and to offset the inevitable onset of melancholy associated with plugging away at too many practice exams I thought it’d be a good idea to try and finish on a note of relative cheerfulness.

The relationship between a country’s GDP and its average level of happiness is a concept that is introduced to macroeconomics students from pretty much day one. It is, at its core, a lighthearted way of reinforcing to students that despite everything, money does not, in fact, buy you happiness.

To illustrate, most studies that have delved into this topic will churn out a logarithmic graph that looks similar to the following:

It becomes immediately apparent that (as a whole) the proverbial wisdom rings true – money does not necessarily buy you happiness. There is clearly a large cluster of poorer countries that have a happiness index similar to that of wealthier countries. Furthermore, after a certain level, income per capita has an almost negligible effect on individual happiness.

What I find especially intriguing about these results is that while you may not have to be rich to be happy, you do have to be happy to be rich. That is, by simply flipping the x and y-axis around, we discover that happiness is a condition that must be satisfied if one wishes to be wealthy.

In a way, this particular take on the study is just another reinforcement of another overly-banal and hackneyed platitude – that despite how hard you work or how much you study, if you’re not happy doing it, it’s going to be pretty tough to be successful (financially speaking of course).

Now while its true that we could argue the difference between correlation and causation until the cows come home, or scrutinize how this ‘happiness index’ comes about in the first place, I think at this time of year it’s nice having the following findings. Firstly, that up to a certain point money doesn’t (and can’t) buy you happiness. And secondly, that on your path to riches you simply have to do something you enjoy.

So on this exceptionally over-clichéd note I hope that all you student readers have an absolutely wonderful time with studying, swotvac, and exams; and most importantly, good luck and have fun!

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

  • Anon

    Given the shakiness of causality/correlation in those two variables, Not sure how much of this analysis is practical as you are looking at aggregate indicators which poses all sorts of problems as you said.

    I.e. While your conclusion is plausible, i’m not sure that would be the most convincing evidence to use.

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