An article in yesterday's New York Times reported another major drop in the average net worth of American families — a trend that has continued throughout the Great Recession. According to the Federal Reserve, we have been collectively set back to the early 1990s, as far as income and home values are concerned. In what ways is this erosion in the nation's financial foundations expected to affect the happiness of its citizens? Cognitive psychology does offer some answers to this question.
For the purposes of this discussion, we need to distinguish between two senses of happiness: experienced happiness and life satisfaction. Here is how Daniel Kahneman and Angus Deaton describe this distinction in a paper published in 2010 in the Proceedings of the National Academy of Sciences:
Emotional well-being (sometimes called hedonic well-being or experienced happiness) refers to the emotional quality of an individual's everyday experience—the frequency and intensity of experiences of joy, fascination, anxiety, sadness, anger, and affection that make one's life pleasant or unpleasant. Life evaluation refers to a person's thoughts about his or her life. Surveys of subjective well-being have traditionally emphasized life evaluation. The most commonly asked question in these surveys is the life satisfaction question: "How satisfied are you with your life as a whole these days?"
My first observation is that the capacity for moment-to-moment emotional happiness and the ability to appreciate one's life as a whole are both rooted deep in the human nature. The line of reasoning that supports this conclusion can be summarized as follows (for a book-length treatment of this idea, see The Happiness of Pursuit):
The mere ability to reap happiness as a reward for being good at things that evolution deems important does not, however, imply that one will indeed be happy on every "deserved" occasion to the full extent warranted by one's achievements. Nor is the variation in the experienced reward entirely random, as one reading of the famous passage from Ecclesiastes 9:11 ("time and chance happeneth to them all") would imply. A decidedly non-random factor that affects both how happy people are and how they see their lives is money.
To appreciate the effect of household income on both types of happiness, consider Figure 1 from Kahneman & Deaton (2010), reproduced below. In this diagram, the scale for emotional happiness appears on the left; the three curves to which it applies (dashed) plot, respectively, positive affect, lack of negative affect ("not blue", defined as 1 minus the incidence of worry and sadness), and freedom from stress. The scale on the right is for the "ladder" evaluation of life satisfaction, where 0 stands for worst and 10 for best possible life.
The data (distilled from 450,000 responses to the Gallup-Healthways Well-Being Index survey) do show that money can buy you happiness, up to a point (admittedly, more money can't buy you more happiness if you earn more than about $75,000 a year). Money can clearly also buy you life satisfaction, at least within the range of incomes considered (which covers about 95% of the American population).
While Kahneman & Deaton pointedly refrain from offering any discussion of the implications of their findings for policy making (as befits the spirit of the section of PNAS in which their paper was published), I believe that the public deserves to be informed about these matters, as well as about the wider context within which they arise. Not that I am very optimistic about the American public's willingness to engage in a serious discussion of the science of anything, including happiness, or about its ability to do so on a level that requires an attention span longer than 30 seconds. As we shall see, however, this in itself is part of the problem at hand, and the best one can do is try.
Following the ancient Roman model of jurisprudence (as well as more recent methodological advice from Daniel Dennett), we can inquire after the origins of the obfuscatory "happy pauper" meme: cui bono? ("who profits?") Given that this country's material well-being is pretty much a zero-sum game (instead of "trickling down", new wealth here opens new gaps between the rich and the poor, as indicated, in particular, by our present obscene level of income inequality), it would seem that members of the society who have the most vested interest in convincing you that money can't buy happiness are those with the most money.
Inequality in itself is a contributing factor to (un)happiness: a study spanning the period between 1972 and 2008 found that Americans were on average happier in the years with less income inequality than in the years with more income inequality (Income Inequality and Happiness, Shigehiro Oishi, Selin Kesebir, and Ed Diener, Psychological Science 22:1095-1100, 2011). Some of those on the far right of the income distribution curve genuinely care about doing good with their money; too many do not. Indeed, given the state of affairs in our society and our collective inaction in the face of it, we are all complicit in a cover-up akin to what Ursula K. Le Guin described in her short story The Ones Who Walk Away From Omelas, which no amount of hand-wringing on Facebook can make up for. Most of us just do not seem to care enough.
What can one do about this situation if one does care? Should the poor just rise up, level the plutocrats' mansions and divide their spoils? Radical redistribution of wealth has been tried in the past in other places, with much violence and without any enduring success (as the old Soviet joke went, "capitalism is exploitation of man by his fellow man; communism is the opposite"). Even leveling the playing field — a favorite American expression that expresses our idea of fair play — will not help in the long run: inequality will reassert itself, with the same kind of people (if not the same individuals) eventually coming out on top. Some of us are just better at accumulating power than others, as well as more strongly motivated to seek power.
That everyone can get to be as good as anyone else at any occupation or endeavor — from playing Genghis Khan to playing the violin or doing theoretical physics or trading derivatives — is a pernicious meme, which, just like that of the happy pauper, is shared by the rich and the poor, Left and Right. Alas, it is not so (see, for instance, Linda Gottfredson's review Life, Death, and Intelligencein the Journal of Cognitive Education and Psychology, 4:23-46, 2004). Unfortunately for our species, it looks like the dynamics of human societies has a deep, stable attractor in the region of the cognitive and social parameter landscape where these two memes run rampant: a society that develops into the Newspeak-riddled plutocracy that we live in actively resists change that would improve the life of its economic underclass, no matter that this underclass accounts for a vast majority of the population.
It seems to me that the only way out of this predicament is not through radical leveling but through radical education ("real revolution starts at learning") — a kind of cognitive behavioral therapy course for the nation, writ large. We need to learn to understand that humans are not all equal in all their abilities, yet all humans have equal rights, which must be guaranteed through sustained, painstaking, and often costly efforts on the part of the society. We need to learn to understand that "equal rights" do not end with the right to life, liberty, and the vaunted "pursuit of happiness", as long as life means, as it does for tens of millions of Americans, life in poverty and sometimes hunger; as long as liberty means liberty to go without health care for those who cannot afford it; and as long as happiness remains a carrot on a string that professional demagogues bankrolled by plutocrat super-PACs dangle in the face of a public that has been denied access to cognitive tools that would make it capable of seeing through the propaganda.
The odds against such an education project succeeding are very long indeed. Recent attempts on part of the Occupy movement to open the people's eyes to even just a small corner of their predicament met with a violent backlash from the plutocratic establishment. The armor-clad, armed storm troopers that cities and even universities (!) around the US routinely send to disperse peaceful demonstrators in the name of "public safety" are formidable enough, but they are only one manifestation of the force with which the plutocracy responds to any threat to the status quo. The system in whose great attractor we are stuck is being proactive, too: many, many aspects of the American experience, from the perpetual "war on terror" and the sad farce of TSA airport (and now also highway) searches, to the glut of Hollywood superhero drivel, ensure that we are kept distracted and occupied with hokum. Time to wake up, folks.