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But if we use an increase in our incomes to buy more of certain inconspicuous goods–such as freedom from a long commute or a stressful job–then the evidence paints a very different picture.
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Ding ding ding ding ding.
I am hopefully switching jobs in a few days. No increase/decrease in income. Except that I will not have to buy train tickets and bus passes to get to work, plus parking at the train station. Subsequently, a relative "increase" in income. This increase is more a satisfaction to my happiness as I will spend less money on travel and less time on travel.
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Consider the example of Japan, which was a very poor country in 1960. Between then and the late 1980s, its per capita income rose almost four-fold, placing it among the highest in the industrialized world. Yet the average happiness level reported by the Japanese was no higher in 1987 than in 1960.
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Sure, we have more money relatively, but inflation dictates that. We may have an income of say, $50,000 today, and in 1960, it was $5,000; yet with respect to costs, those were relative as well. A washing machine today may cost $1,000 but back then it was $100. The same percentage. So obviously
amount means nothing. It is percentage of spendable income that matters.
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The same pattern consistently shows up in other countries as well, and that’s a puzzle for economists. If getting more income doesn’t make people happier, why do they go to such lengths to get more income?
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Because, it is obvious to me that I would rather have the income to take care of my family if needed, watch the game on a wide screen TV in HD than on a B/W with an antaena.
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It may indeed explain why having bigger houses and faster cars doesn’t make us any happier...
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Because big houses have more responsibility, faster cars break down too.
Sorry, that is a long read, I didn't make it all the way...