The theme of money and happiness keeps coming up; I wrote about it last in April when the UN World Happiness Report came out. Yesterday I read a New York Times article in Canada’s National Post: Don’t indulge. Be happy. (http://www.nytimes.com/2012/07/08/opinion/sunday/dont-indulge-be-happy.html?_r=2&pagewanted=all)

The authors, University of British Columbia psychology professor Elizabeth Dunn and  Harvard Business School marketing professor Michael Norton make essentially the same argument as the UN World Happiness Report: that there is an upper limit of income after which additional money will not make us happier—but giving it away to others will. But unlike the UN report, Dunn and Norton suggest a specific upper limit we should impose on our annual income we can keep to ourselves to optimize our happiness—about $75,000. They argue that any income beyond that should be used for “buying for others”—allegedly because that would optimize our happiness. They base this number on a study by Princeton researchers who used Gallup data from about half a million Americans and concluded that the respondents’ perceived happiness brought on by higher income leveled off somewhere around $75,000.

Citing their own research, Dunn and Norton argue that in order to be happiest, rather than buying things for ourselves (they call it overindulging), we should give to others. How do they know? They gave some research participants lots of chocolate and some just a sampling. Those who had overindulged appreciated chocolate less when they were served it again, but those who had eaten chocolate sparingly, appreciated it more. In another study, the researchers handed $20 randomly to people on the street. Some were instructed to spend the money on themselves by the end of the day; others were told to spend it on others. Those who spent it on others reported being happier. Finally, they report someone else’s study of toddlers who were given goldfish crackers—toddlers who shared their crackers with others were the happiest (according to the researchers’ assessment of how broadly the toddlers were smiling).

While basing their argument on chocolate eating, spending  $20, and toddler behavior in itself is rather frivolous, I want to challenge Dunn and Norton’s underlying premise: that altruism is good for us. As I have argued before, there is nothing wrong with charity if and when it is voluntary and we can afford it; it can very gratifying when it is aligned with our values, but it is not a duty. These two professors, however, are making a case for income limits—based on the opinion of a half a million Americans—beyond which we should feel guilty of spending money on ourselves, and instead spend any additional money on others. And that is wrong.

Happiness results from the achievement of our values—values chosen by each individual. No-one can dictate to us, for example, that we should pursue a career in engineering, have two children, play tennis, and enjoy murder mysteries—or what to do with our money. Unchosen values are no values at all. Freedom (our own and that of others) to choose values, including the level of wealth to which we aspire and what we want to do with it, is the first requirement of happiness. Any proposals for limiting our freedom—by imposing limits on income or a duty to share it with others—should be rejected as anti-human and anti-happiness.

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada. She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada. Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.

2 COMMENTS

  1. It seems these reports assume happiness comes from consumption rather than production. That, as you state, simply is not true. Looking at the reports from the production angle, I would suspect that people over a certain level of income are all relatively the same in happiness because they have achieved highly satisfying careers. I noticed the same in my life, once I breached the $75,000 threshold. Is there an upper limit that productive efforts can add to happiness? I do not see a reason why there should be. But perhaps because of our culture and work/life expectations people do tend to limit their own happiness from careers. After that point, creating values might be mitigated to those around us. Not in the altruistic sense, but in the I love my family and friends and want them to do well too sense.

    • Thanks, John–that’s an excellent point about productive activity being a more fundamental source of happiness than consuming values. There can’t be consumption without production, but more fundamentally, productive work is what gives us purpose and self-esteem which are much more fundamental to happiness than possession of goods or consuming services. Without a central purpose we would not be able to determine whether something is of value to us or not and we could not prioritize our values, making consistent achievement of values–and happiness that follows–impossible.

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