WHERE MONEY SEEMS TO TALK

The Economist
Jul 12th 2007

EVERY summer, the world has its temperature taken twice–once by
climate scientists, literally; a second time by opinion pollsters,
metaphorically.

This year two new surveys have thrown up a lot of fresh data on how
the world really feels. And they have, so the pollsters say, cast
some unexpected light on the link between wealth and happiness.

Ever since social scientists at the University of Pennsylvania found
that mansion-dwelling American millionaires are barely happier than
Masai warriors in huts, some economists have been downplaying the link
between cash and contentment. In a 2005 book, Richard Layard, a British
scholar, said family circumstances, employment and health all mattered
more to a sense of well-being than income. Rich countries might be
happier than poor ones, but beyond a threshold, the connection weakens,
and more cash would not buy more happiness–so the theory goes.

The new polls cast some doubt on that school of thought. They add
weight to the contention that growth and income play a big part
in boosting people’s satisfaction with life and their attitude to
the future.

One of these surveys claims to be the first genuinely global opinion
poll.

Called World Poll, and conducted by the Gallup organisation, it spans
130 countries, many of which are being polled for the first time. Other
surveys are smaller. The respected Global Attitudes Survey of the
Pew Research Centre, an offshoot of an American charity, operates
annually in just over 50 countries. The World Values Survey run from
the University of Michigan is more comprehensive (over 80 countries),
but updated only once in five years.

Gallup’s pollsters asked a standard question: how satisfied are you
with your life, on a scale of nought to ten? In all the rich places
(America, Europe, Japan, Saudi Arabia), most people say they are
happy. In all the poor ones (mainly in Africa), people say they are
not. As Angus Deaton of Princeton University puts it, a map of the
results looks like an income plot of the world (see map). There
are some exceptions: Georgia and Armenia, though not among the
world’s poorest states, are among the 20 most miserable. Costa Rica
and Venezuela, though middle-income countries, are among the 20
happiest. The Brazilians, pictured above, seem a bit more cheerful
than their income level justifies.

But in general, declared levels of happiness are correlated with
wealth. The pattern also seems to hold true within countries, as well
as between them.

Rich Americans are happier than poor ones; rich Brazilians happier
than poorer ones.

The other new survey, by Ipsos, confirms the picture. Top of its
list of 20 countries ranged by happiness is the rich Netherlands
(with Gallup, it is Finland); China is bottom. The survey also asked
questions about confidence in the future, whether your children will
be better off than you are, and so on. Regardless of countries’ current
income, there was a close correlation between GDP growth and optimism,
with China, India and Russia most optimistic; France, Germany and
Italy were the least. If both polls are right, the Chinese are pretty
miserable now but they expect a dramatic turn for the better.

The Ipsos poll is not strictly comparable to Gallup’s because (for the
first time) it asks questions of what Ipsos calls "leaders and shapers
of public opinion", mostly business people and politicians. This
group has distinctive views–it takes a loftier view than the general
population (see table). The gap between elite and popular perceptions
is especially sharp in Russia, India and China. In those countries,
top people’s attitudes are far more upbeat than those of the general
population. In Europe and America, the attitudes of the elite are
roughly in line with–or slightly more pessimistic than–society as
a whole.

In fairness, the "new happiness" economists, such as Mr Layard, never
claimed there was no connection at all between money and feeling good.

What they have said is that once people climb out of poverty, the link
is weak, and may not work at all above a certain point (as one British
pundit put it, extra money "is now proved beyond doubt not to deliver
greater happiness, nationally or individually"). The evidence for this
comes from surveys in most rich countries (such as America’s general
social survey), which show that happiness has been flat for decades,
even though incomes have risen sharply.

On the face of it, the new findings are a counter-point to the
earlier data.

If the richest countries report greater "happiness" than moderately
rich ones, that would suggest there is no quantifiable level of
income at which extra cash fails to deliver extra contentment. Still,
the latest findings don’t invalidate the historic experience of
particular countries–like the United States–which have surged to
greater levels of wealth without experiencing any rise in general
levels of reported happiness.

But if you treat history as bunk and concentrate on the levels of
satisfaction that countries feel right now, the results are–in Mr
Deaton’s view–quite striking. He has compared Gallup’s satisfaction
score with national income based on purchasing-power parities, and
got a close fit.

So what should one make of the contradiction between these surveys
and previous evidence? Definitional problems may provide part of the
explanation. These are self-reported polls and people mean different
things by "happiness". Cultural problems are likely to be much greater
when 130 states are involved.

Another possibility is that "happiness" is really a proxy for something
else, such as health. Perhaps the main point is that money mitigates
poor health, so the rich are happier than the poor mainly because they
feel healthier. But that cannot be the whole story. More than half the
20 countries with the lowest level of satisfaction with health are in
the ex-Soviet Union or eastern Europe though in statistical terms they
seem relatively well off. In contrast, much poorer African countries
(with a far higher incidence of HIV/AIDS and other diseases) express
higher levels of health satisfaction. Expectations, or memories, may
be at work: medical woes in an ex-communist state feel worse because
people recall, albeit through rose-tinted spectacles, an era of full
health coverage.

Lastly, as the Ipsos poll clearly shows, happiness and optimism are not
just different, they can be contradictory. The Chinese are dissatisfied
but upbeat; Europeans are happy now but dread tomorrow. Many links
between happiness, income and optimism have yet to be teased out. This
new data–though not the last word on the subject–should help.