Can money buy happiness? Oxplore Live Event

Hi everyone. Thanks for tuning in. I’m
Viola. I’m a second year Classicist at New College and I also run on a YouTube
channel and weekly vlog at Oxford. With the fact of the consumerism of the
festive period I’m here today with two experts to ask the question: can money
buy happiness? So, if you could both introduce yourselves. My name is Michael Plant and I’m a third year PhD student in the
Philosophy department. I work on applied ethics, so how can we how can we live our
lives and do good things. The project I focus on is worldwide
happiness so what are the most effective things we can do if we want to increase
happiness around the world and in practice I work on sort of the gloomy
side of happiness. Pain, poverty, death drugs. What are the most
promising ways to make progress I’m Abi Adams I’m an Associate
Professor in the economics department here and also teach microeconomics and the more quantitative aspects of economics at New college. My research sits between
micro economics and behavioural economics and data within economics I ask a bunch of questions around how and why consumers
spend their money on particular goods and what that tells us about how well
markets are functioning. Thank you and before I forget you can ask any
questions in the comment section below. So first, Michael, what do you think as a philosopher? Sure made me start by saying or happiness is so so very
quickly there are two ways we can understand happiness happiness is either
is life satisfaction so overall how is your life go that’s kind of a judgment –
how about you feel you’re going against your standards or you can think of
happiness just in terms of your kind of moment by moment emotional states and I
tend to prefer it in the second half how can we if we added up all the individual
moments of your life how good or bad
be also good mental states things like contentment meaning elation bad that
this evades anything on that on that feels bad to you we don’t like and so
when we when we turn to measures of happiness which are mostly collected in
there asking people 0 to 10 how satisfied are the library all collected
by but most collects by economists what what we find is that is perhaps quite
surprising so that the most standout piece of information on their on the
happiness citric chair is known as the Eastland paradox since the 1970s we’ve
got much wealthier in the developed world also got healthier we live longer
we have all the modern conveniences the youtubes and that the Justin Bieber’s
and everything about it could really dream off but self-reported life
satisfaction scores are basically flat so people are no more satisfied with
their lives than they were thirty years ago which is rather puzzling given we
have all the kind of external things which we would imagine would make a big
difference so what explains this this mystery so one is hedonic adaptation so
basically we we get used to stuff and as an example so I’m communicating with you
by the power of the Internet and none of us are excited about this this is just
like a normal thing we’re all totally adapted to where as if you were to save
Julius Caesar Alexander the Great the bestest tool you could use to
communicate with people across the world in live time they would consider it
crazy but we think it’s just totally totally normal so we adapt to stuff and
it’s a really good evolutionary thing to do there’s a social comparison so your
game can be my pain your Lamborghini makes my Ferrari feel slow that sort of
things so because we judge ourselves against other people be kind of the game
some of us make can make other other the rest of us put left behind so that kind
of explains what happens but people are still mister but I think well surely if
I was much much richer than money would make a huge difference to our life but
you know I can imagine just what it’s like to sit and sit in my Lamborghini or
be jetting around the world and that must the surely that would make me happy
and so the last piece of the puzzle is that it turned
we’re not very good at psychologists cruet hedonic forecasting basically
we’re not very good at predicting our emotional states in the future and
they’re kind of the biggest piece of this is that when we imagine what it’s
like to say would you be happy if you lived in California want you to be happy
if you were rich how an unhappy would you be if you were disabled we tend to
focus on just those differences between our our lives and in that scenario our
own lives and we forget about everything else
so people might you know I would think how much happier what I would be if I
was richer but actually if you talked you collect survey data on rich people
and actually they find that they don’t spend very much time thinking about how
wealthy they are they spend time thinking about their family and friends
and what they’re doing day to day you know driving to work getting stuck in
traffic so just like we pay attention to our ordinary lives whereas when we think
about the importance of money we focus on our lives as a narrative so you know
what would my life be like if I were this rich person but that’s the
narrative our lives the life satisfaction element is very different
from kind of the moment by moment start so that’s kind of a little bit on why
you think money would make a difference in my debt doesn’t have nearly the kind
of impact it doesn’t a reality to say that but so but why do you think that
people believe that money could buy them happiness or could bring more happiness
to them I know a lot of so maybe yeah so one thought is that illusion airily
we’re trying the status it’s important for us to compare well against our peers
so that’s one bit the other bit of these kind of these focusing illusions I
mentioned so we think that how much fun would I have over sitting around looking
yo it’d be great so there’s a couple of ways in which are kind of our evolved
psychology misleads us and we just we can’t help but believe that these things
would make a difference and we’re kind of tricked by our own evolved set up
into sizing these things even though they
don’t actually make need as much difference in our experience life as we
do but and the stories are a bit more a little bit more complicated because one
reason it’s not just about how you it’s not just about how much money you have
it’s also how you spend it so you can differentiate between people who want to
spend good zaanse spend their money on stuff like my phones and those are
things we get used to because they stop moving so we stop paying attention to
them as if you spend your money on experiences that’s quite a lot more more
promising so if you take you know a couple of hundred pounds and you like
and go and do something with your friends you all know you will enjoy it
you will learn you start your experience you stop you’ll remember it where is
sort of consumer durable goods stuff it doesn’t move we just tend not to know it
doesn’t tend to have exception of that so there are things we can do a bit
better okay so what I want to focus on in my little spiel now is actually why
icon amidst think that money is a efficient mechanism for bringing about
happiness in other people the reason I wanted to focus on that is you know it’s
Christmas so we’re typically you know using our
well-earned cash to go out and buy gifts for other people and indeed a lot of the
extra spending at Christmas is for gifts for a sexy for for others so when I was
thinking about that you know this weekend actually I was coming up with a
list of everyone I needed to buy gifts for and sitting down and thinking about
a case of what would be what would they want
what should I spend my money on them to make them happy another problem with
this for economists is that we’re typically not very good at judging what
other people actually won so just economists but say we do know my own
examples yeah so you mean like Christmas I thought my dad this time have I ever
seen him wearing it no my own jumper has it moved from the bottom of
my wardrobe no and so now the what why economists are interested within this is
that you know he’s done kind of wider studies than just me trying to kind of
work out actually what the value of these Christmas gifts are to other
people and typically people will estimate kind of all valued gifts at
about 90% of the cost that they in a cost to the person who gave them so that
time that I brought my dad for say 10 pounds at a young you would’ve ever
bought you only ever spent 9 pounds trying to buy it now the kind of the key
with this missing which is kind of missing 10% of value so that’s what
economists call a deadweight loss ok so this is a kind of a waste that could be
eliminated and maybe a make people happier you know 10% happier without any
extra spending ok and so when we actually think about how big this waste
is of you know of us going out and buying other people’s gifts at Christmas
so people on average in the UK spend about 350 pounds on Christmas gifts
there are 27 point 1 million households in the UK’s when you kind of work out
all of their masses together it kind of implies that there’s about a billion a
billion pounds a year wasted on Christmas and that’s before you even get
into I don’t know what we think of as a social value of any of these own kind of
gifts anyway so what that would suggest what was an assets would suggest is that
instead of buying people gifts actually we should all just go around and give
people money because you know by giving people money they’re able to spend it
actually on what they what gives them value and what gives them happiness and
so this kind of insight actually isn’t just relevant for necessarily thinking
about Christmas but also informs a lot about how economists think about how a
welfare state should be set up so if we’re thinking about
distribution or poverty alleviation economists often think we need to have
really good reasons to deviate from giving people money rather than you know
telling them that giving them a particular set of goods because people
know what they is going to make them happier better than we do so we should
give people money to facilitate that happiness you know family members who
may or may not be watching don’t panic I’m not gonna you know give you all ten
pound notes wrapped up for Christmas you know so that’s the kind of baseline way
that economists think about the world but obviously there are other things
that we need to consider here in terms of this relationship between money and
happiness and gift-giving so there’s one set of reasons why I might think that we
can do better than just giving money to people so you know the love kind of time
for me which goes into picking those gift signals to my friends and family
members how much I care about that kind of signaling and kind of you know loving
aspect to give giving and how that creates value in goods which can’t just
be bought in on the high street there’s another set of kind of concerns we have
as economists switch relate to when we think that people might not spend their
money particularly wisely okay so perhaps I wouldn’t want to give my
younger sister a hundred pounds to go out and you know buy whatever she wants
on it cuz I might think it might be a bad use of her money and you know she
might be spending out topler or whatever it is and we might think that actually
her spending the money in that way is in conflict with her long term happiness or
her long term self this relates to a lot of work in behavioral economics now
around how people have time the posh way of saying it is that people have time
inconsistent preferences so we have money in our pocket today we might spend
it on things that no necessarily make us kind of happier in the long run so you
might be kind of eating the cakes and smoking cigarettes
whatever in the short-term I was actually spending about money kind of
better we should be kind of constraining our use of money now to make us better
off that in the long run until there’s the final thing that I wanted to say
about about this kind of question is so when we think about giving money to
people and perhaps that gives them happiness we we we also need to think
about the economist also interested in the external effects that for someone’s
own spending of money has so what like the impact of me spending our money on
things that make me happy what that might have on other people so for
example imagine that you know I had a deep love of cigarettes or you know or
my Lamborghini with its massive engine and you know that didn’t spend my money
in that way it would make me really happy but perhaps there are these
external effects that that kind of consumption creates in terms of you know
causing a bad health for other people or like damaging the environment and that
relates to an area of economics around market failure and externalities so
there are kind of hope to show there’s kind of a baseline way of how you know
in the limited sense how economists think about money and gift-giving and
happiness but it gets much more complicated as soon as you start
thinking about the real world thank you and we’ll go to a question
from the audience how much money do you need to get by so I’ll take this one so
there’s a it was a study done in America it was done by two very famous economist
called I know kind of money Angus Deaton about won the Nobel prizes in economics
they looked at about 450 Americans and they what they found is
that the the average household income once it got what’s got past $50,000
there was effectively no increase in people’s day-by-day mood so how happy
you were so $50,000 is yeah it’s like say like in
the UK if you that’s household income so if you in the UK you earn about 22,000
pounds yourself but past that point more money will not make very much difference
to a day-by-day life but the thought is your material needs are I kind of met at
that point and as you get richer you will continue to worry about stuff but
people worry all levels of wealth like Donald Trump is very wealthy and he
seems very worried about it is important some status so yeah focus that one kind
of that’s that’s kind of that’s what the data seems to say I’m also a on say on
like the bottom end of that so I guess that’s kind of as Michael was saying
it’s like oh that’s the top level at which extra money doesn’t make that much
difference but there’s quite a lot of what work done about how much money you
need at the bottom just to kind of make do and so Joseph Rowntree who like you
know I know of kind of fruit pastilles I guess he actually started a new way of
poverty measurement very long time ago now but he started thinking about what’s
the basket of goods that people need to get by so what is it that we assist like
the citizens require to actually participate in society so part that’s
going to be food there are nowadays that might also include things like internet
access or ability to get to work and be a kind of active member of society and
then what they would do is kind of calculate the price of all of this and
that tells you I think it’s converted into thinking about how to measure
poverty so then people who don’t earn enough to reach that particular basket
of goods and there thought that I could have been
lead of some additional country sources of state states state assistance and
they now actually say they still run kind of focus groups with groups of
people so obviously there’s a lot of contention about what what precisely is
that basket of goods like do you need access to the Internet and a youtube
channel to live a decent life this is the prompt there’s like a lot this
contention remember precisely where it leads because different people have
different ideas about what’s the basket of goods which you require to kind of
get by like should it just be kind of food and heating or should we also think
about a kind of wider conception about what it means to kind of participate how
do you measure happiness okay so do you say so in okay so becomes to be not so
in in practice there are the kind of the two ways I’ve mentioned early but I’ll
say a little bit more about them so the kind of the standard measure which is
used by economists to measure happiness is you ask someone on a scale of 0 to 10
how satisfied are you with your life these days so 10 extremely satisfied
zero not at all satisfied that’s kind of one measure then the other measure is
come your emotions and your mood this is what I think of as happiness and there’s
a couple of ways you can do this one way would be you give someone a smartphone
app but you asked to record know how they’re feeling different points in the
day and then that’s just kind of the average of that or you break yesterday
into a number of hours and you say you know how how good did you feel in order
zero to 10 like different hours so that’s like the sort of moment by moment
daily report there’s the other one with life
satisfaction and people often really worry that always and this isn’t this
terribly subjective just like does this make any sense so lots of people have
looked into this because there’s so much concern about is this a nonsense measure
it turns out that self-reported measures of happiness really strongly correlated
that kind of linked with with other people’s reports so how happy I say I am
it’s very like matches up very well with how happy you think I am it also matches
up with kind of what people choose to do so people who are not satisfied and more
like to leave jobs it also links with other other health measures so happier
people tend to be healthier and live longer and it matches the kind of
objective metrics so you can look at it kind of correlates with different things
going on in the brain and also with cortisol measures of course those that
kind of measure of stress yeah but I think when we think about measuring
happiness and people are a bit distrustful I said what how can you put
it on there on a scale and if I want to know how happy you are I’m just gonna
ask you right yeah like how like how how’s your life going and you you tell
me like various things and then I say you know how happy are you with your
life on a scale of zero to ten then she might not be telling the truth because
you have the pressure from you okay okay so but it’s what I was again with this
but it turns out these like people the measures people give tend to like
matched up with a whole bunch of other stuff and like it’s not that crazy a
question if I want to know how you like okay just ask you a numerical number you
might think it’s a bit strange but you know when you’ve had like you know
you’re having a 1 out of 10 day or ten day so yeah that’s a little bit of
no mystery to it it looks like it it checks out when you can’t work the
details so traditionally but this is I kind of
changed quite a lot in I’d guess say over the last decade economists were
pretty skeptical of the measures that Michael just spoke about so because of
precisely all the reasons that you mentioned and so the kind of more
traditional approach in economics is to start kind of trying so instead of
talking about happiness we talk about something called utility which we you
know usually think of as linked to people’s consumption behavior so we
measure happiness by thinking through people’s material consumption and value
like trying to place value on that through looking at the kind of choices
that people actually make there are you know benefits to this and that you might
on some walking-around some of this objectivity problems that thought like
as you want to be like brilliantly I kind of thought to play some of these
other measures and so now I’m at yeah we have to talk to you about this a little
bit um like this some of these subjects of subjectivity happiness measures often
you see people will say that they’re around a six or a seven the average yeah but then I’ve gone
there so that’s kind of one way that you might get around that if you look at
kind of all kind of people subjective kind of consumption and the material
aspect so that is the negative is obviously that there is much more to
people’s lives than just the material and our issue is that measuring that can
be very difficult so measuring how much value you place on kind of being healthy
or having clean air and that means kind of traditionally I think economists to
be more focused perhaps on GDP which is a kind of measure of overall income and
spending and consumption in the economy then perhaps you might think is optimal
if what you’re interested in is happiness rather than just like general
economic activity but yeah so what how do you get around the problem that
people like a six-and-a-half what do you mean well so David Cameron I can’t
remember this is a couple of years ago with planning on introducing a
supplement the supplementary measure of kind of economic activity so the so so
the you might be a bit surprised lens but the UK is actually the world either
on happiness measurement so the UK’s Office of National Statistics or the or
the ons as being so David Cameron talked about it as a I wanted just to measure
general well-being so GWB rather than GDP and yes so the ons asked 100,000
people a year and this may may be a surprise but actually a happiness has
been going up a little bit since the recession since 2008 the ons asks for
questions one is zero to ten how satisfied over the life overall they ask
you how happy were you yesterday zero to ten how stressed were you yesterday zero
to ten and to what extent you feel activities in your life are worthwhile
so the last one is sort of interesting so I mean what I’ve talked about other
is that the experience measure of happiness like how good bad you feel
there’s the evaluative measure of happiness how great
overall and there’s the third one which is called the new demonic level of
happiness and this goes back to Aristotle who thought that and our
Stoffels idea for flourishing so for eudaimonia from Greek means flourishing
so Aristotle thought like living up to your higher self as a human if you’re
doing that then you were flourishing so that’s the sort of sense of
meaningfulness but yeah so that’s of the UK looks at this and they compare it to
all these other things which happen in people’s lives I don’t know that I had
all the details but they’re like the general trend is that peoples are happy
I don’t know why it’s been going up in its happiness as a gold more important
than contentment fulfillment feeling positive so I want to say those are
basically the same thing so the way I understand happinesses is as any
positive conscious State so positive quantitate anything that feels good to
you that you like you enjoy and examples of this would be things like elation and
contentment so elation is like really excited and
you feel good contentment is like low levels of
excitement but you feel good as well and then you know if your work might be
working hard in there in the library or something and that might feel sort of
meaningful and feel good in sort of a different way so I want to say that
happiness is just any of the good stuff anything which feels good to you
unhappiness is the is the other side of things there can be a little bit of
tension between kind of happiness as a positive mental state and fulfillment
since you know I might be really unhappy when I’m you know marking essays or you
know preparing for a talk but I know that you
it’s worth it or you know so there’s kind of an immediate unhappiness but it
leads to kind of a general sense of later on and these kind of yeah temporal
trade-offs so I think so what I think you mentioning is is to further
gratification so I can make myself miserable now how to make myself happy
later and like you could think we can do that and sometimes you do it sensibly
but sometimes we we kind of get this wrong so this is kind of going back to
the some of the money stuff so people couldn’t think
oh I will be much happy if I get a really high paid job and they then work
at their job and it doesn’t actually give them it’s kind of stressful doesn’t
give them that much joy and then they get the money and then the money doesn’t
make as much difference as they thought so that can be that isn’t gratification
I can just be making a mistake but yeah I’m gonna take a wide conception of
happiness and there can be a trade-off as well I mean you could think like I
don’t really care about just feeling positive I want to feel like my life is
worthwhile like I’m meaning a meaningful life I don’t really care if I feel
positive during I just want to feel like I’m flourishing cuz that’s whatever so
you have to t be able to tell you okay I think that’s all we have time for today
so thank you very much to you my friend Ali for being here with us and answering
the questions and if you’ve enjoyed this you can find more big questions on
explored org where you can sign up for more updates and you can also follow
social media social media channels and also if you want an insight into student
life you can check out my youtube channel of iota hello other weekly blog
at Oxford and yeah thank you very much and I hope you have a good Christmas

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